By PETE DOLACK*
The world food system brings inflation, hunger and waste
Market fundamentalists would have you believe this: if the provision of all human needs is left to the tender mercies of unregulated markets, a cornucopia of fabulous wealth will reach everyone. A powerful propaganda system proclaims this incessantly. And it is largely financed by those whose interest lies in accumulating unlimited wealth without regard to social or environmental harm.
Friedrich Hayek, when propagating the Austrian School of Economics, precursor of Milton Friedman's Chicago School, went so far as to state that solidarity, benevolence and the desire to work for the betterment of the community are "primitive instincts" and that human civilization consists of in a long struggle against these ideals, and that "market discipline" is the true purveyor of civilization and progress.
Milton Friedman, revered by those who have become ever richer and more powerful through deepening corporate control of society, promoted the idea that the only serious consideration for corporations is to maximize profits for shareholders; To do anything else – he said – would be “immoral”. So pervasive is this extremist ideology that corporations in the US are routinely sued by “activist shareholders” for failing to extract as much money as possible by any means necessary, certainly including instituting a systematic layoff, even if the company is already highly profitable.
Terrible inequality, wars, imperialism, billions without regular work, slums and a host of other ills, including global warming, are products of this allowance given to corporations: “markets” must increasingly determine the social outcomes; they must increasingly turn human needs into commodities, without excluding even the most basic needs such as water and housing.
But food too? Along with water and shelter, nothing is more necessary than food. Perhaps here we can find a silver lining in the corporate conquest of the world? Agriculture has made enormous progress over the past century. Farms have never been more productive and a wide variety of foods has never been more available in supermarkets.
However, food is also a commodity in a capitalist economy. Inflation, as is now certainly being realized, has not spared food. Food has become much more expensive in the last couple of years and this has been reflected in supermarket purchases and restaurant bills, which are now significantly higher.
In general, right-wing corporate ideology, which completely dominates the mass media, rarely misses a chance to blame any bout of inflation on wage increases. Yes, it's the greedy workers who believe they should be paid enough in exchange for work to be able to live with dignity. Rarely, if ever, is evidence presented to support these claims. Rather, they are presented as an indisputable fact of modern life.
And so it has been for the last two years: inflation has once again spread across the world, as has been routine for decades.
Everything is happening as if the interruptions of the Covid-19 pandemic had nothing to do with interruptions in the supply chain of the production of goods, or that the greed of financiers and corporate executives to raise prices could not be a decisive factor in this process. Food prices are not exempt from this managerial standard. So, although there are several reasons behind the rise in inflation, the above factors cannot be ruled out. In addition, there is the much broader, and more enduring, issue of the world's food supply.
This “efficiency” leaves billions starving
Let's try to address the food supply problem first. As stated in the 2023 report by the Food and Agriculture Organization of the United Nations (FAO), entitled The state of food security and nutrition in the world (The State of Food Security and Nutrition in the World), “Global hunger in 2022, as measured by the prevalence of undernutrition, remained far above pre-pandemic levels.” The FAO report estimates that around 10% of the world's population “faces chronic hunger” – around 122 million more people were in that category in 2022 than in 2019, i.e., a year before the pandemic.
Using a broader measure, more than a quarter of the world's population is “food insecure” and this pattern does have a gender bias. The report states that “insecurity is more prevalent among adult women than men in all regions of the world, although the difference has narrowed considerably at the global level from 2021 to 2022. In 2022, 27,8% of adult women were in moderate or severe food insecurity, compared to 25,4% of men. Furthermore, the proportion of women experiencing severe food insecurity was 10,6% compared to 9,5% of men.
And although the prevalence of short stature among children under five years of age due to malnutrition has decreased, it is estimated, however, that the total of these maltreated children will have been 148,1 million, in 2022, or 22,3% of the global age cohort. A system that leads to such inhumane and inexcusable results cannot be considered efficient. It would be correct to say that such a system is an abysmal failure. But the above numbers, as frightening as they are, probably underestimate the real scale of the famine.
The FAO report, The State of Food Security and Nutrition in the World (The State of Food Security and Nutrition in the World), published in 2021, was written under the warning that the world is in a critical food situation. While he notes that between 720 million and 811 million people face hunger, he says many more people were in a precarious position in accessing food. “Almost one in three people in the world (2,37 billion) did not have access to adequate food in 2020 – that's an increase of nearly 320 million people in just one year,” says the report. One third of the world's people! In addition, an even greater number of people cannot afford to eat healthy food – and this is what I return to in this article.
Eric Holt-Giménez, former executive director of FoodFirst in Oakland, California, and who has taught at several universities, including the University of California, argues that the extent of world hunger is underestimated. In one article, “Capitalism, food, and social movements: the political economy of food system transformation” (Capitalism, food and social movements: the political economy of food system transformation), published in Journal of Agriculture, Food Systems, and Community Development Peer-reviewed (“Journal” of agriculture, food system and community development) said one-seventh of the world's population is hungry.
At the same time, it notes that one and a half times more food is produced in the world as a whole. So, in principle, there is enough food for everyone. In any case, even if food production is quite large, the report considers that the estimate of one billion hungry people “is probably a gross underestimate”.
Dr. Holt-Giménez wrote that the total number of hungry people is underestimated because of the way hunger has been defined. He wrote that, explicitly, “this is due to the way hunger is measured. People are only identified as hungry if they go hungry 12 months a year. If they experience hunger for only 11 months of the year, they are not counted as hungry.
Second, this measure is based on caloric intake. Now, one can imagine that the required number of calories an individual should consume varies substantially according to height, sex, occupation, age, etc. The calorie intake threshold for determining hunger (about 2000 kilocalories) is good if you sit quietly behind a computer for 8 hours a day. But most of the world's hungry people are women farmers. In the developing world, they work in a hot sun all day; moreover, they are often nursing, as well as caring for one or more children. They need up to 5000 kilocalories per day. Official estimates do not reflect the true reality.”
When “market magic” yields waste, not cornucopia
Regardless of how the fact is presented, it is indisputable that capitalist agriculture is a failure. Certainly, even if “only” hundreds of millions of people, rather than billions, do not have sufficient access to food. In any case, it has been a monumental failure by any measure with a humanist content.
Those who seek to remove any responsibility from the “market subject” are quick to point to another culprit: through Malthusian-inspired whispers, they then claim that the problem lies in overpopulation. This is the favorite response of the cynics who defend this “guy”. But these excuses are just that – excuses. The world's farmers really do produce enough food for everyone on Earth. The root problem, however, lies in the accessibility and efficiency of the allocation. And that brings us to the issue of food waste.
About this, one almost always hears only the capitalist mantra. The “magic of the market” will ensure that everyone has enough food – market fundamentalists repeat over and over again. This is the promise made by the owners of food production in the world. However, the following is observed: what if billions of people cannot afford food? What if the food cannot reach those who want to eat it? Now, it is precisely the “markets” that are behind this failure to provide a large number of people with insufficient food.
The United Nations Environment Program’s 2021 Food Waste Index Report estimates that “food waste in households, retail establishments and the foodservice industry totals 931 million tonnes each year.” And that amounts to 17% of the total global production of groceries. A 2011 FAO report, however, estimated that around a third of food produced globally was lost or wasted.
These United Nations studies, however, may be underestimating the true extent of food waste. As is known, they blame everything, unduly, on personal behavior. A study by six scientists led by Peter Alexander of the University of Edinburgh calculated that nearly half of the world's food is wasted. The authors, as published in the Agricultural Systems, losses, ineffisciences and waste in the global food system (Agriculture Systems, Losses, Inefficiencies and Waste in the Global Food Production System), argue that “excessive food consumption” by the well-to-do population should be included as waste.
Here is what they write: “If human overconsumption, defined as the consumption of food above nutritional requirements, is included as an additional inefficiency, 48,4% of harvested crops were produced to be wasted (which represents 53,2 % energy and 42,3% protein). Overeating has been found to be a major contributor to both food system losses and consumer food waste.”
Excessive consumption by humans here is defined as the consumption of food above nutritional needs. But crucially, losses of food before it could be consumed comprise by far the largest part of this total: “Losses from harvested crops were also found to be substantial, with 44,0% of crop dry matter (36,9% of energy and 50,1% of protein) lost before human consumption” – they wrote.
This extensive crop loss is a crucial point because standard opinion tends to place most of the responsibility for food waste on consumer behavior. By blaming people, you ignore systemic causes and this can be very convenient for shameless profiteering.
And although food is certainly wasted at the consumer level, and also at the commerce level, the study of Agricultural Systems, one of the few to systematically analyze this issue, indicates that solutions can be found by better examining the inefficiencies of agricultural production. Simply increasing agricultural areas or seeking higher yields through the use of greater amounts of inputs (such as fertilizers, pesticides or water) can cause further global warming, deterioration of soil quality, water scarcity and loss of biodiversity.
The authors wrote: “The results demonstrate that agricultural production inefficiencies (both crop and livestock) account for the dominant overall losses within the food system, especially when either harvested crops or all biomass are considered. (…) Both the total primary production rate and the percentage that is harvested have been increasing over time, largely due to increased crop productivity. Livestock production efficiencies have also increased over time, but still account for a substantial loss. (…) Both consumer behavior and production practices play crucial roles in the efficiency of the food system”.
Here is how they complement this result: “The highest loss rates were associated with animal production. Consequently, changes in meat, dairy and egg consumption levels can substantially affect the overall efficiency of the food system, as well as produce associated environmental impacts (eg greenhouse gas emissions).
It is therefore unfortunate, from an environmental and food security perspective, that meat and dairy consumption rates continue to rise as median income rises, potentially reducing the efficiency of the overall food system, as well as increasing the implications health-associated negative effects (e.g., diabetes and heart disease).” The article says that livestock production is often not included in studies of food loss and waste. And that makes their authors find better results.
They state, in conclusion, that “changes that influence consumer behavior, such as, for example, eating less animal products, reducing food waste and reducing per capita consumption to be closer to nutrient needs help to provide the growing global population with food security in a sustainable way.”
“Free” for multinational companies, but not for farmers
Food waste is neither inevitable nor necessarily a consequence of basic human failings – even if some waste has to be tolerated at the consumer and retail level. Holt-Giménez, former executive director of FoodFirst, which was quoted earlier in this article, argues that food waste is inherent to capitalism, as it is an inevitable consequence of the relentless competition that characterizes this system. He wrote in his article “Capitalism, food, and social movements” something that needs to be highlighted: “It is often said that reducing food waste can eliminate hunger. While this is conceptually true, this statement ignores the ineffective performance of the capitalist food system itself.”
Food waste is part of this system. Industrial agriculture, capitalist agriculture, has to produce excessively for the markets to function properly; thus, food waste comes as a consequence.” Capitalist agriculture is particularly susceptible to overproduction because farmers are induced to produce more when crop prices fall because they have to cover heavy fixed costs; Furthermore, they are also induced to produce more in good years to compensate for the inevitable years of bad harvest – wrote Holt-Giménez. Farmers cannot plant less in bad years or move their farms.
Compounding all these inequalities is national disparity. Countries in the Global South, where impoverished farmers and starving populations are found in large numbers, are on the weaker side of the imperialist dynamic. The World Bank and the International Monetary Fund are two primary vehicles of domination and plunder and institutionally support this dynamic.
As Southern governments go into debt, they borrow, and these don't come without requirements: privatizing public assets (which can be sold far below market value to multinational corporations); cut social safety nets; drastically reduce the scope of government services; eliminate regulations; opening economies to multinational capital, even if it means destroying local industry and agriculture.
This process causes debt to always produce more debt. And that gives multinational corporations and the IMF even more leverage to impose additional external control, which includes demands to weaken environmental and labor laws. Furthermore, subsidized foods from the North are exported to the South under the “dictates” of the World Bank and the IMF or under so-called “free trade” agreements. These free market impositions bankrupt farmers in the South, as they cannot compete with the more capitalized system in the North.
Here's an example: almost five million Mexican family farmers were displaced in the first two decades of the North American Free Trade Agreement (NAFTA); thus, the number of Mexicans living below the poverty line increased by 14 million. Subsidized corn from the United States flooded into Mexico as it was sold below the costs faced by small Mexican farmers.
US corn imports have increased five-fold and Mexico's US pork imports have increased more than 20-fold, according to a report written by David Bacon on the website truthout. As a result, Mexican farmers were forced off their land; they then either became seasonal workers on agricultural farms or began to look for work in the cities or even migrated north.
Under "free trade" agreements, agricultural overproduction in the North, subsidized with proceeds from taxes on the general population, was dumped in the South - wrote Holt-Giménez. “Essentially, through this so-called market coercion, the food systems of the Global South were destroyed so that Big Grain could make its money. (…) In the 1970s, the Global South generated about a billion dollars of annual surplus from food production. By the end of the century, this had changed to an annual deficit of approximately $11 billion.”
Yes, Africans go hungry, but northern agribusiness profits
In addition to this Mexico case, many other examples could be cited, but to save space, only two more cases will be cited here and they refer to two very poor African countries, Zambia and Kenya. The terms dictated by the World Bank and the IMF in emergency loans, known by these lenders as "structural adjustment programs", forced small farmers in these two nations to integrate into global food markets to their detriment.
Programs of this type “meant that debt-ridden countries across the Global South had to undergo a conversion: instead of prioritizing native crops that local people depended on for survival, they had to produce crops for export because they are the ones that earn foreign exchange. needed to repay the loans made” – explained Adele Walton of Progressive International: “As a result of this decline in food affordability – and due to the negative ecological effects – local people and farmers have become more vulnerable to food shortages”.
Adele Watson's article states that “Capitalism is causing the food crisis – not the war – in countries like Zambia and Kenya”. The structural adjustment agenda included privatization and liberalization of the seed system, leading to a decline in support for farmer cooperatives. Zambian farmers were forced to prioritize maize as a cash crop, decreasing the variety of local crops, which resulted in fewer food sources.
“Corporate control of agriculture is undermining food security,” wrote Adele Watson. “Seed systems are no longer led by cooperatives (which gives farmers more control and fairer prices) to being led by companies (which prioritize profits).” Most smallholder farmers in Zambia do not have the resources to buy seeds at commercial prices. With more farmers forced to grow cash crops, which may be more susceptible to climate change, about half of Zambians have become unable to meet minimum calorie needs.
Kenyan farmers fared no better under this onslaught of capitalist agriculture which imposed harsh conditions on them. Excessive use of chemical fertilizers is now causing land degradation and this harms food production. “In Zambia, the culprit for the disastrous legacy also lies with the structural adjustment programs” – explained Adele Watson.
“In 1980, Kenya was one of the first countries to receive a structural adjustment loan from the World Bank. This required, as a condition, a reduction in essential subsidies for agricultural inputs, such as fertilizers. This process produced a change in agriculture, as it encouraged export crops that earn dollars, such as tea, coffee and tobacco, instead of growing essential staples for the local population, such as corn, wheat and rice.”
As a result of the imposition of the IMF, farmers now have to pay, if they can afford it, to obtain agricultural inputs that were previously free; as a result, 3,5 million people in Kenya are experiencing levels of hunger that were previously unheard of. There are projections according to which the number will rise to 5 million and they are in the report of the Save the Children and Oxfam. Here is Adele Watson's conclusion: “Structural adjustment has turned Kenya into a food exporter [while] malnutrition remains high”. It is not simply the lack of food that is a problem. The inaccessibility of healthy foods creates and worsens health problems.
In a review of 11 African countries, the FAO report on food security for the year 2023 noted that “the cost of a healthy diet exceeds the average food expenditure for low- and middle-income households in high- and low-budget countries. food in the 11 countries analyzed. Low-income households living in urban peripheries and rural areas are especially disadvantaged, as they would need to more than double their current food expenditures to ensure a healthy diet.”
Worldwide, there are 3 billion people who cannot afford a healthy diet, according to the UN's 2021 Food Waste Index Report. Low income also makes it extremely difficult for farmers in Africa, and elsewhere in the Global South, to maintain their farms and thus obtain necessary livelihoods. Small farmers, who are mostly women, produce more than half of the world's food, according to Holt-Giménez.
But because they are at the mercy of predatory capitalist practices, he writes: “Although poor peasants produce most of the world's food, most of them are starving. Their land plots are very small. What they get for the products is very little. They sell as soon as they harvest because they are poor and need money. Six months later they are buying food back at higher prices; as they don't have enough money, they starve. The women and girls who feed most of the world make up 70% of those who are hungry. And these small properties are getting smaller. (…) We are condemning most of these women farmers to poverty because their farms are too small”.
Many of these struggling smallholder farmers are African, yet they are seen as financial opportunities by corporations in advanced capitalist countries. Africa gets most of the attention when discussing global hunger, although most of the world's hungry are in the Asia-Pacific region, according to the Food and Agriculture Organization of the United Nations.
And this special attention is not for altruistic reasons. Well, Holt-Giménez explains why: “There is a reason for the high profile given to the issue of hunger in Africa compared to Asia. The routinely adopted approach to ending hunger is the “green revolution”: growing more food with more chemicals and high-yielding seed varieties. Asia has already had its “green revolution” and, consequently, is saturated with chemical fertilizers, GMOs and modern agricultural machinery”.
“Although this transition has not eliminated hunger in the region, it has boosted the market for machinery, chemical products and industrial seeds. However, Africa is still an open market for a “green revolution”; therefore, there are prospects for profits to be made by selling these technologies. And while it is important to talk about the issue of hunger in Africa, it is clear that hunger in this region receives much more attention than in Asia simply because it promises more profits.”
You pay more so the vampire can profit more
Consider again food price inflation, something every human who needs to eat has experienced over the last couple of years. This round of food inflation is not the first to occur in the past two decades. In fact, there was a notable increase in food prices after the 2008 financial crisis. Food prices then increased by 80% in 18 months; as a result, the number of the hungry was estimated at over a billion. After a drop in prices, 2011 saw another round of price increases. Financial speculation was behind this new inflationary surge – this is what Murray Worthy reports in the report of the World Development Movement. There he wrote: “Financial speculators now dominate the market, holding more than 60% of some markets, compared to just 12% 15 years ago. In the last 5 years alone, the total assets of financial speculators in these markets have almost doubled, from US$65 billion in 2006 to US$126 billion in 2011. This money is purely speculative; none of it is or was invested in agriculture; however, it now amounts to 20 times more than the total amount of aid granted globally to agriculture”.
“Their actions meant that prices were no longer driven by the supply and demand for food, as they began to depend on the “nose” of financial speculators and the performance of their investments in general. This created enormous inflationary pressure in the market, forcing food prices higher. The consequences were devastating. In the last six months of 2010 alone, 44 million people were pushed into extreme poverty because of rising food prices.”
“Futures contracts,” devices now often used by investment banks and other financial speculators to profit from food, were created in the 1930th century as a form of protection for farmers. It aimed to restrict the volatility of food commodity prices, allowing them to lock in a specific price for their crops. The Roosevelt administration, in the 1990s, enacted regulations to limit and contain the speculation that was already taking place; however, regulations were weakened in the 2000s and early XNUMXs, partly in response to lobbying from Goldman Sachs.
As a result, speculation increased dramatically and this had disastrous effects on food supply and prices. “The number of derivatives contracts in food commodities increased by more than 500% between 2002 and mid-2008,” wrote Tim Jones of the World Developments Movement, in an article entitled The great hunger: how banking lottery speculation causes food crises (The great lottery of hunger: with bank speculation it caused food crises). Speculators began to dominate long positions in food commodities – and no longer the food producers themselves. “For example, speculators held 65% of long corn contracts, 68% of soybeans and 80% of wheat” – reported Tim Jones.
“As early as April 2006, Merrill Lynch estimated that speculation was causing commodity prices to trade 50% higher than if they were based on fundamental supply and demand alone.” This shows how these operations are highly profitable for speculators. Goldman Sachs, the vampire with tentacles that dart wherever a dollar can be mined, made around $5 billion from commodity trading in 2009 and the Royal Bank of Scotland is estimated to have made more than $1. billion.
Tim Jones also explained this: the situation was probably best summarized by the famous businessman George Soros, himself a capitalist no stranger to financial speculation. In an interview with Stern Magazine published in the summer of 2008, Soros reflected on the nature of the crisis: “all speculation is also rooted in reality. (…) It is the speculators who create the bubbles and these are real. Your expectations, your bets on futures help to raise prices; behold, their trades distort the sale values of commodities, which is especially true of commodities. It's like hoarding food in the midst of a famine, only to profit from rising prices. This shouldn’t be possible.’”
In a rational world, this would not be possible. Speculation, however, has only accelerated in recent times. The FAO food price index rose 58% during 2021 and the first half of 2022, remaining well above pre-pandemic prices, even with some subsequent easing.
While the war in Ukraine and pandemic-era supply chain bottlenecks contribute to food price inflation, speculation plays a large role in driving prices higher. “While skyrocketing food prices threaten food security globally, large food trading companies are cashing in,” wrote Sophie van Huellen of the University of Manchester. “These companies are banking on rising food prices by storing or trading substantial amounts of goods – thus reaping large financial gains as a result.”
A former director of the US Commodity Futures Trading Commission, Michael Greenberger, estimates that up to 25% – possibly even more – of the price of wheat “is dictated by unregulated speculative activity” involving futures markets and derivatives. He stated that, in fact, “there is a market in which speculators act to raise prices”.
If it's a commodity, it's for profit and not for your stomach
What to do? In the long term, it is necessary to stop turning food into a commodity. And this is possible only through the abolition of the capitalist system. This will not happen, however, soon. Therefore, practical solutions are needed that can start to be implemented today. The FAO, in its 2023 Food Security report, offers only liberal remedies without great effectiveness, such as building rural infrastructure and using “behavioral science” as “an essential innovation (…) to develop evidence-based approaches” . Nothing wrong with these goals, but they don't touch the causal roots of the phenomenon.
A much more comprehensive set of ideas was presented in a report commissioned by WWF (World Wide Fund for Nature) written by six authors led by Eva Gladek. This report states that “simply ensuring a sufficient level of food production will not resolve the deep-rooted problems and humanitarian imbalances that exist within the food system”. “All existing systemic failures present opportunities for a transition of the food system in a direction in which it fully meets people's needs, without violating key limits. (…) It is possible to produce enough food, even for a much larger population, as long as structural changes are made in the way production and consumption are handled.”
Although it does not present concrete proposals to achieve these goals, the report details four main challenges for a safe transition to a sustainable and resilient food system. These are: (i) Adaptive capacity and resilience must be built into both the biophysical aspects of the system (through preserving biodiversity, maintaining healthy soil systems, maintaining the buffering capacity of water bodies, etc.) and socio-economic aspects of the system (transfer of knowledge, development or organizational capacity, elimination of the cycle of poverty, etc.).
(ii) Adequate nutrition for the world's population, including reducing food waste; switching to lower-impact, less resource-intensive food sources; prioritizing food production to the detriment of non-food uses; improving economic access to food; and improve the productivity of farmers in the developing world.
(iii) Stay within planetary boundaries in all key areas of biophysical impact throughout the entire life cycle of food production, consumption and disposal, including investment in the development of new sustainable agricultural techniques.
(iv) Structurally support the livelihoods and well-being of the people who work there. They need to feed and sustain themselves fully, earning a reasonable wage for average hours of work in the food system.
Can these worthy goals be achieved under capitalism? Can even food, water and other necessities of life be transformed into commodities, which are bought and sold for the highest possible values, regardless of social or environmental impact? It is true that we should try, but it is more than reasonable to question whether this is possible within the current world economic regime.
I have written this countless times, but I cannot help but emphasize again that capitalist markets today are simply the result of the aggregate interests of the largest and most powerful financiers and industrialists. Capitalist markets are not impassive entities that sit on clouds, dispassionately distinguishing and separating winners from losers. No.
Note, in addition, that these powerful financiers and industrialists can invoke the immense power of the most powerful national governments, as well as multilateral institutions, including, but not limited to, the World Bank and the IMF. And they can all impose these interests with unprecedented force on populations. They are also able to draw on the structures of global capitalism, which impose and intensify income and wealth inequalities. Therefore, one should not expect results different from those that one has now. How many lives still need to be lost for profit to continue to thrive?
*Pete Dolack is a journalist and writer. Author, among other books, of It's Not Over: Learning From the Socialist Experiment (Zero Books).
Translation: Eleutério FS Prado.
Originally published on the portal counter punch.
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