Volume 42, Number 4: July/August 2008

The (Not-So) Sudden Crisis of the Global Food Ecomony

Rapidly rising food prices are casting millions of the world’s poor into increasingly desperate circumstances of malnourishment and hunger. Various food-centred scenes of suffering and associated social tensions have become regular fixtures in the news in 2008: people staving off hunger pangs by eating mud in Haiti; guarded warehouses and grain shipments in the Philippines; export prohibitions in India; food rationing in Pakistan; and food-price riots in more than thirty countries across the Global South. Josette Sheeran, head of the UN’s World Food Programme (WFP), recently likened the scale and suddenness of this humanitarian crisis to the 2004 tsunami in Asia, while noting that it is a crisis in which poor people still can often see “food on shelves, but … are priced out of the market.”

A Long-Term, Slow-Motion Crisis

The current rapid rise in food prices is both a manifestation and magnification of the contradictions of the global food economy. The global food economy is immensely imbalanced and unstable. In 2006, before food prices began to rise, 854 million people suffered from chronic hunger and malnourishment, which the Food and Agricultural Organization (FAO) described as a “covert famine.” At the same time, the World Health Organization was calling obesity a “global epidemic,” with the population of obese people topping one billion. The FAO estimated that enough food was produced to feed the world one-and-a-half times over. So, it should come as no great surprise that millions were becoming increasingly food-insecure amidst last year’s record grain harvest.

To appreciate the basic dynamics of the rise in prices and how these are magnifying global consumption imbalances, we need to focus on the system of production that dominates world trade in food, the industrial grain-livestock complex in the temperate world, and its chief actors, the transnational corporations (TNCs). More than half of the world’s agro-exports and an even larger share of the world’s grain and livestock exports come from a very small number of countries, like the U.S., Brazil, Argentina, Canada, Australia and France, which together represent less than two per cent of the world’s farmers. The flipside of this is the precarious dependence upon grain imports in most of the world’s poorest countries.

On a global scale, the “Big Three” cereals alone (maize, rice and wheat) account for roughly 85 per cent of the world’s total grain harvest by volume, and roughly half of all plant-based calories (with soy, an oilseed, fast becoming the fourth great basic crop). The combination of improved strains of the Big Three and other key crops, plus an enormous rise in external inputs since the 1950s, brought about a rough tripling of world grain production over a time when world population was merely doubling. Amidst this increasing production and demand, inflation-adjusted prices of the Big Three cereals declined by sixty per cent from 1960 to 2000 – and from 1974 to 2005, the decline in world market prices for a total food index was even greater: an astonishing 75 per cent.

Industrial monocultures are inextricably linked to soaring farm-animal populations (growing much faster than the human population) and more meat-intensive consumption patterns, a relentless trend linked closely to affluence. The per-capita consumption of animal flesh on a global scale has roughly doubled in the past half century alone. Today, the “Big Three” livestock species (pigs, chickens and cattle) account for almost ninety per cent of all animal flesh produced in the world, and these animals are being increasingly reared in factory-like conditions and consume an expanding share of the world’s cereals and oilseeds, while large percentages of plant protein, carbohydrates and fibre are lost as crops are cycled through animals to produce food.

This trajectory clearly reflects some of the most elemental tendencies of industrial capitalism: the drives to standardize production systems, substitute technology for labour and achieve economies of scale. But it also entails a host of biophysical problems, as soil biochemistry, insects, weeds and plant and animal pathogens do not willingly cooperate with this radical simplification of life.

Industrial monocultures using heavy machinery effectively mine the soil, as bare ground between planted rows and mechanized ploughing, planting and spraying increase susceptibility to soil erosion and nutrient loss and create further problems with compaction. The loss of soil fertility means that industrial monocultures require the regular application of external sources of key nutrients, the biggest of which is synthetic nutrients. One clear indication of this dependence is the fact that, while global grain yields per hectare grew by a factor of 2.4 between 1950 and 1990, synthetic fertilizer use grew by a factor of ten. Synthetic nitrogen fertilizer represents a large share of world fertilizer consumption, and after nitrogen the next most important soil nutrients lost are phosphorous and potassium, also replaced from a non-renewable base.

Further, because large-scale biological homogenization increases vulnerability to the rapid spread of pests, weeds and disease, industrial monocultures are dependent on a range of petrochemical-based pesticides and herbicides, while animal factories depend upon a growing volume of pharmaceuticals. All of these tend to have a treadmill effect, adding up to a diffuse but momentous toxic burden.

The ecological costs don’t end there. Industrial agriculture is also implicated in: the overdraft of rivers, streams and underground water supplies; the salinization of over-irrigated soils; the risks associated with genetic contamination where GMOs have been introduced; a host of pollution problems and the immeasurable suffering associated with factory farming; disease threats like avian flu and mad-cow disease; and large greenhouse-gas emissions.

Low-priced industrial foods bear no relation to the myriad costs to humans, animals and even the biophysical foundations of agriculture itself. Externalities represent an implicit subsidy to industrial agriculture, long compounded by the billions of dollars in explicit government subsidies concentrated on the largest farmers in the world’s agro-industrial heartlands.

The pressure to substitute labour with technology is part of a process in which value and decision-making in industrial agricultural systems have moved away from farms and farm communities. Agro-input corporations like Bayer, BASF, Dow, DuPont, Monsanto and Syngenta control increasing shares of global markets in chemicals, fertilizers, seeds and animal pharmaceuticals, and weave together input usage. Industrial methods are also entwined with rising “food miles” and the disarticulation of agricultural systems from place, culture and season, not to mention the increasing dominance of massive, corporate connections between farmers and consumers, from processors and distributors like Altria, Nestle, ConAgra and Archer Daniels Midland to retailers ranging from Wal-Mart to McDonald’s.

Farmers in the world’s agro-industrial heartlands, like Canada, have found themselves trapped in a long-term rising-cost, falling-price squeeze. This has reduced margins, led to heavy debt loads and bankruptcies, and sped the concentration of landholding. The distortions of this system have also been increasingly projected outward, de-stabilizing more labour-intensive, low-input and biodiverse farming systems. In the 1960s, the world’s low-income countries collectively ran a considerable net agro-trade surplus, importing very little food. However, dependence on cheap, industrialized food imports was sown through aid, subsidized dumping and the distorted measure of efficiency, deflating the earnings of small, domestically-oriented producers ever since.

As dependence on food imports deepened with the economic prescriptions of the International Monetary Fund and the World Bank in the 1980s and 1990s and the onset of the World Trade Organization in 1995, the accompanying “logic” was that food security was best ensured by liberalizing markets to cheap imports and maximizing the generation of foreign exchange by exporting according to comparative advantage – the so-called “free-market approach to food security.” This counsel came in spite of the fact that the earnings from major tropical agro-exports like sugar, cotton, coffee, tea, cocoa, palm oil and groundnuts – which dominated the best agricultural land since colonial times – were mired in precipitous, long-term declines.

Today, the world’s low-income countries collectively run a sizable net agro-trade deficit, projected by the FAO to grow considerably in the coming decades. This picture is made much worse – and more uneven, yet – by climate change. In 2007, the Intergovernmental Panel on Climate Change warned that increasing climatic variability and change will severely compromise agricultural productivity in many of the world’s poorest countries, including much of Sub-Saharan Africa.

In sum, the contradictions of the global food economy constitute a multi-dimensional crisis that was, until recently, unfolding in slow motion.

The Quickening Crisis

Steadily falling food prices accompanying expanding global food production have long been the veritable trump card of industrial capitalist agriculture, helping to brace it against the dislocation and social tensions induced. But the recent rise in global food prices marks the beginning of a new era of acute instability, with the rising costs and scarcity of fossil energy and derivatives being the proximate trigger, pulling industrial agriculture in two basic and opposed ways.

First, industrial agriculture is being conceived of as a technological fix for the shortage of liquid fuel posed by declining oil reserves. Many governments, led by the U.S., are pouring billions of dollars in subsidies into biofuels, and along with an emerging legion of corporate, auto and big-farmer interests are enthusiastically touting the potential of biofuels in future energy security (biofuel subsidies was also a key plank in Stephen Harper’s climate policy). However, increasing attention has been focused on the exceptionally poor energetic budgets of most of the “first generation” biofuels, like maize ethanol, when fossil-energy inputs (i.e. fertilizer, agro-chemicals, farm machinery, irrigation systems, fermenting/distilling, etc.) are weighed against biofuel outputs. “Second generation” biofuels are seen to hold the promise of better input-yield ratios, but these could still only substitute a modest share of current levels of oil consumption, and as yet represent a very small land area and investment relative to first-generation biofuels.

Though a dubious proposition, posing biofuels as a large-scale alternative to fossil fuels entails earmarking absolutely massive volumes of cereal grains. Here, the U.S. is front and centre, with forty per cent of world maize production and more than half of the world’s maize exports. The U.S. is now devoting more than one fifth of its maize harvest to biofuel production, even though this replaces only a miniscule fraction of its overall oil consumption. On a global scale, the share of global cereal production devoted to biofuels grew by fifteen per cent from 2006 to 2007 alone, and this trend is projected to continue rising, with the EU, China and India all having set ambitious targets for oil substitution with biofuels – even as the UN Special Rapporteur on Human Rights recently described biofuels as a “crime against humanity.”

The second major implication of rising costs and scarcity of fossil energy and derivatives is their reverberation throughout the food system. As oil and gas prices rise, the implicit subsidy they provide to industrial agriculture falls, making significantly higher food prices inevitable – particularly as this pressure intersects with the growing draw on global grain supplies by biofuels and livestock consumption.

Yet, despite the mounting social tensions surrounding food, and the converging problems of peak oil, climate change, soil degradation and water shortages, the quickening crisis of industrial agriculture is not yet de-stabilizing the dominant actors (TNCs) and their imperatives of profit maximization, which direct the global food economy. Industrial grain and livestock production is still in the midst of a fossilized boom (Australia notwithstanding), with the profits of agro-input and agro-food TNCs growing as food insecurity worsens. Related to this obscene dynamic are rising speculative capital flows into “hot” agricultural commodities, which some critics have blamed for pushing food prices higher still.

So, we can expect more regressive outcomes in the short term. Hence there is an urgent need for short-term emergency assistance. But beyond short-term band-aids, as in any systemic crisis there is hope of heightened consciousness, and that people may begin to see the systemic contradictions more clearly. While the heads of the World Bank and WTO recently claimed that the current problems stem from insufficient trade liberalization and insist that rising food prices point to the need to renew the stalled round of WTO negotiations, such ideological abstractions about the benefits of market integration to the world’s poor ring more hollow than ever.

In the longer-term, hopefully, in eroding the viability of farming by way of massive monocultures and factory farms and food durables traveling ever-greater distances with huge corporations directing the system, the biophysical crisis of industrial agriculture will create new spaces for progressive transformations. In these de-stabilizing spaces, various producer and consumer movements working both to challenge the dominant system and construct more equitable, (re-)localized and ecologically rational alternatives are likely to find increasingly fertile and common ground.

At the core of the struggles to build alternatives will be questions of how to redistribute land, prevent its re-accumulation and foster equitable and stable agrarian livelihoods. Agrarian reform is much more probable in many parts of the Global South, where it is typically discussed, than in heavily industrialized and de-populated rural landscapes like Canada. But as the system of industrial capitalist agriculture breaks down, it will become increasingly evident that agrarian reform is urgent here, too.

Further Reading

For further sources and discussion on this “long-term, slow-motion crisis,” see: Tony Weis, The Global Food Economy: The Battle for the Future of Farming (Zed Books, 2007)

For a big-picture context, see also: Raj Patel, Stuffed and Starved: Markets, Power and the Hidden Battle for the World Food System (HarperCollins, 2008). More from this fabulous scholar, writer and activist at rajpatel.org.

The ETC Group provides an excellent resource for tracking the concentration of corporate power in agriculture in its Oligopoly, Inc. reports, available at etcgroup.org.

The wildly regressive current dynamics are described in a recent report from GRAIN, entitled “Making a Killing from Hunger.” Find it here grain.org/articles/?id=39.