The easing of U.S. monetary policy and a weakening dollar on the back of a U.S. recession has also driven up commodity prices. This is made worse by food exporting nations restricting their exports to ensure that they are not faced with unexpected food shortages domestically. This food price bubble, however, could burst as the U.S. recession leads to a global slowdown.
In India, for instance, speculation has taken its toll. "The hoarding has been done by the big corporate houses and with the help of multinational corporations," said Krishan Bir Chaudhary, president of the Bharatiya Krishak Samaj, India's largest and oldest national farmers' organization with five million members.
There has been heavy foreign direct investment as well as futures trading by MNCs in the food sector, he pointed out.
Ironically, there is no shortage of food supply either at the global or at the domestic level -- though food stocks have fallen. In fact, the International Grain Council (IGC) expects world wheat production to reach 645 million tons for the 2008/2009 season, an increase of 41 million tons over the previous season.
Global rice production meanwhile is expected to rise by 1.8 percent -- or 12 million tons -- this year, said the UN Food and Agriculture Organization in a report last month. Paradoxically, international rice prices have soared 20 percent since January because of "limited supplies available for sale," given the restrictions by key exporting nations.
Krishan said, according to official estimates, India itself has achieved a record grain production of 220 million tons, with the production of rice, wheat and pulses hitting new highs. "We have enough food, and production has shown an increasing trend, but it is the big corporate houses who are twisting the prices," while farmers receive the lowest prices, said the wheat farmer in Ghaziabad in Uttar Pradesh, India's most populous state.
What does he think of the speculators? "They are blood-suckers," he said, angrily, during a telephone interview with IPS. Despite the good production, there has been a deliberate manipulation of food prices both globally and locally, he said. A few corporate players in the food business are buying produce from farmers cheap, hoarding stocks and manipulating prices.
Krishan wants the government to ban futures trading in agriculture and to reject the neo-liberal and corporate-led agriculture model and replace it with a farmer-centric one.
'The country is facing a lot of problems after liberalization," he lamented. He said that more than 200,000 farmers in India have committed suicide since 1996 after policies suited to the global market were imposed on farmers.
At the global level, he pointed out that Sub-Saharan countries were food-secure nations before 1980. But after implementing liberalization policies advocated by international financial institutions, some of these countries went ahead with the production of cotton and coffee for the MNCs. "Now (these countries) are asking for food," he said. "It is a very simple example of how these financial institutions are pressuring developing countries to lose food security."
Such liberalization, in the past, promoted the dumping of cheap food in developing countries and the drive towards industrialization and cash crops while dismantling protection of local farmers and agriculture. Countries like Malaysia also saw their self-sufficiency in rice falling from around 90 percent in the 1970s to around 70 percent now. Today, rice prices of non-controlled grades are rising here.
"Rice is now seen as a commodity for trade and so you have all this speculation and hoarding that is taking place," said Sarojeni Rengam, director of Pesticide Action Network's Asia Pacific regional office here.
The Malaysian authorities once felt that they could get cheap rice from elsewhere, and so they neglected self-sufficiency in rice, she said. "It is important that we produce enough rice in a safe, sustainable and ecologically friendly way," she stressed.
Like Krishan, Sarojeni also felt that the conversion of agricultural land for bio-fuels is not yet a huge factor behind rising prices in Asia unlike elsewhere. "But the potential for it to be expanded is there," she said.
She had just returned from participating in an international fact-finding mission in the north Borneo state of Sarawak, where oil palm plantations and state agencies are taking over native customary land from local communities, which used to grow their own fruit, orchards, rice and vegetables. There are now 173 cases in court relating to land ownership.
"The development of oil palm plantations at a rate of seven percent covering more than 40 percent of land in Sarawak has tremendously reduced food production; destroyed the rivers where communities depended on the fish," the team observed in a statement issued at the end of their mission. They noted that the pollution of the rivers, particularly with highly hazardous pesticides and of the environment had affected the health of communities with increase in diseases.
Sarojeni noted that there had been little investment in rice production. That could change as the Malaysian government now takes steps to boost spending in food production and agriculture. But some worry that the renewed interest in agriculture could take the form of corporate agriculture -- with expensive inputs of fertilisers and pesticides -- that could turn farmers from independent decision makers to contract workers.
Malaysian multinational corporation Sime Darby, for instance, is planning to wrest control of the food chain, from the supply of seeds to farmers to retailing through hypermarkets. Nestle, on the other hand, is eyeing red rice cultivation in Sarawak for its manufacturing needs.
Certainly not everyone is hurting from higher food prices. GRAIN, an international group which promotes the sustainable management of agricultural biodiversity based on people's control over genetic resources and local knowledge, pointed out in a report that huge profits are being made by large food corporations, grain traders and investors and traders such as Cargill, Bunge and ADM, which have all experienced profit surges ranging from 67 percent to 86 percent. Global retailing giants such as Tesco, Carrefour and the Walmart have also seen profit increases.
Agricultural policy has lost touch with its most basic goal: that of feeding people, noted GRAIN. Rather than rethink their own disastrous policies, governments and think tanks are blaming production problems, the growing demand for food in China and India, and biofuels, it said. "While these have played a role, the fundamental cause of today's food crisis is neoliberal globalization itself, which has transformed food from a source of livelihood security into a mere commodity to be gambled away, even at the cost of widespread hunger among the world's poorest people."
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Albion Monitor May
5, 2008 (http://www.albionmonitor.com)
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