Zack Gross
Zack Gross

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Hunger Rises with Food Prices 

Brandon Sun “Small World” Column, Sunday,  March 20 / 11

Zack Gross

About one billion people, 14 per cent of the world’s population, are currently undernourished, a nice word for hungry. 

The current economic crisis, the continuing ineffectiveness or unwillingness of our “globalized” system to deal with hunger and climate change, and today’s quickly rising oil prices due to mid-East conflict are fueling not only higher, but also more unpredictable, food costs.

Many staple foods have jumped in price over the past year:  corn (75%), wheat (85%), sugar (77%) and cooking oil (57%).  These prices last jumped in 2007-08, causing riots around the world, and have remained high. 

Rice, meat and dairy products, while holding at past levels so far this year, are still stuck at the high 2007 levels.  Overall, the food price index, says the UN Food & Agricultural Organization (FAO), is up 3.4% for the past quarter, the highest ever recorded quarterly increase.  This past February was the eighth consecutive month that prices rose!

Prices are also going up in Western countries, 10% per year in Britain and Europe, for instance.  The UN expects that developed countries will see overall food prices rise by 40% over the next decade.  This puts the poor in our part of the world at greater risk. 

Among the usual victims of food price increases globally are women and children.  They are the most vulnerable, especially in more traditional societies where men get first options.  Increased poverty means children don’t go to school, creating a cycle of poverty into the future. 

Reduced production due to inclement weather (climate change) has been combined with increased, even panic, buying because of natural disasters such as floods, earthquakes and droughts (in Australia, Eastern Europe, New Zealand and East Africa), thus exacerbating price rises. 

Land lost due to the growth of biofuel production has also meant less food available, especially meat.  Increased oil prices mean increased cost of chemical fertilizers and transportation.

But, the big food trading companies are reporting growing profits, raising questions of speculation and profiteering in the marketplace.  One might think that poor farmers around the world would improve their livelihoods via higher prices.  However, the poor are not in control of the system.  They are also paying more for what they need and are getting less than what they deserve.

“Smallholders” sell their crops most often to single buyers who offer very low pay. 

When we purchase a food item, very little is returned to the producer.  Most goes to transportation, processing, packaging, advertising, “middlemen” and corporate profit. 

Peasants have limited access to land and water, pay top dollar for fertilizers and implements, and have no benefits or labour rights.

When the market price of food jumped three and four years ago, the UN and other “experts” blamed the usual causes, as outlined above, as well as the switch, particularly in now economically strong China to eating more meat. 

When evidence of hoarding by merchants surfaced, food riots ensued in twenty countries, forcing their governments to ban food exports and heavily subsidize staples for their people.  (The current violence and government change in the Middle East is thought to be evidence of this process taking place all over again!)

Now, however, economists are more comfortable blaming speculators.  Really no different than the speculation that led to the current economic collapse and the prosecution of financiers particularly in the US, lobbyists for deregulations pushed food commodities into the same category as oil, gold and metals.  This has led to distortions where food prices are more volatile than ever. 

The British newspaper, The Guardian, states:  “When hedging was tightly regulated, it worked well enough.  In a bad year, Farmer X got a good return but in a good year Trader Y did better.  The price of real food on the real world market was still set by real forces of supply and demand.  Now, commodity hedging is 70 to 80% speculation.”

As an example, the London hedge fund Armajaro bought a quarter of a million tonnes of cocoa beans, more than 7% of world stocks, in 2010, helping to drive chocolate to its highest price in thirty-three years.  Similarly, coffee prices went up 20% in three days due to hedge fund speculation. 

“People die from hunger while the banks make a killing from betting on food
,” says Deborah Doane, director of the World Development Movement in London, England. 

The question is:  Is food a right or a privilege?  Should the price of food be the result of banks rolling the dice to see how much they can make? 

As well, we need to take action on the climatic and governance issues that affect price, such as global warming, democratic development and civil and regional conflict. 

As consumers hand more cash over at the gas pumps and in the supermarket, all of this should be food for thought.

Zack Gross works for the 
Manitoba Council for International Co-operation (MCIC), a coalition of more than 40 international development organizations.

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