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Surrendering to Hunger at the FAO

10-Jun-2008



Convened against a background of hyperinflation in basic food staples and global hunger riots, the most striking achievement of the recent FAO High Level Conference on World Food Security in Rome was its ringing call to continue with business as usual. Ostensibly organized to resolve urgent issues of food security, climate change and bioenergy, the Conference's Final Declaration ultimately had nothing to offer in any of these areas.

Thanks to heavy lobbying by the US, EU and Brazil, the massive diversion of crops from food to fuel through biofuel production, and its role in inflating the price of food staples, was reduced to a "challenge" and "opportunity" - without explaining how biofuel expansion will alleviate hunger. The diversion will therefore continue - along with rising prices and growing hunger.

The Conference offered nothing to remedy the huge influx of speculative capital into food commodity future markets which in conjunction with the biofuel rush is pushing staple prices skywards. Rhetorical support for less energy-intensive agricultural methods was embedded in the language of connecting greater numbers of small producers with a world market whose volatility has been undermining livelihoods for decades - regardless of whether prices are plunging or skyrocketing. The issues facing agricultural workers - poverty, starvation, violence, access to potable water and the daily violations of fundamental rights - were not even on the agenda. Despite the talk about "urgent action", that left only humanitarian assistance - and a call for the rapid conclusion of the Doha Round WTO negotiations on further liberalizing the agricultural trade system whose progressive liberalization is at the heart of the problem.

The Conference failed because the food crisis was essentially reduced to the rapid escalation in food prices over the past three years. Yet this is only one manifestation of a persistent, longer-term crisis in which the right to adequate food is routinely denied to more than 800 million people, including those who work in agriculture.

The question the Conference organizers neglected to ask is why are so many millions already on the edge, and why are so many of them employed in agriculture? It has been estimated that every percentage point increase in the price of staple foodstuffs can send an additional 16 million people in developing countries into hunger. Prices of some key staples have doubled and tripled in the space of a year, some of them in the space of months. On March 31, the price of rice on futures exchanges rose by 31% in a single day; on February 25, that of wheat by 27%. Hunger riots should come as no surprise.

While it is an urgent necessity to halt the rise in prices, why there are no official proposals to raise rural workers' incomes to compensate for the loss of purchasing power and the reduction in calories? Why did millions of rural workers sink into hunger and poverty when agricultural commodity prices fell steadily downwards, as they did through the 1990s? We should ask why the retail prices of, for example, coffee, tea, or sugar remained essentially stable, or even increased, for over a decade, while world market prices for these commodities were in prolonged free fall. Why, during these years, did the profits of the transnational processors and traders increase, along with their buying and marketing power; while the wages of coffee, tea, and sugar workers stagnated or fell, sometimes drastically?

Where is the linkage between commodity prices, retail prices, wages and purchasing power the WTO assured us liberalized trade would achieve through the "optimal utilization of resources"? The WTO regime – and the Agreement on Agriculture in particular - facilitated import surges that have devastated systems of local and national food production. Dependence on volatile global commodity prices has pushed entire populations to the brink of starvation.

Commodity prices in themselves tell us nothing about the capacity of the world's agricultural workers to feed themselves, or the urban poor. The key issues are vulnerability, volatility, and the extraction of value along the food chain.

While an additional 100 million people face possible starvation as a result of rapidly rising cereal and oilseed prices, corporate profits for the traders and primary processors are at record levels. Cargill, the world's leading trader, registered an 86% increase in profits from commodity trading in the first quarter of this year. 2007 profits for ADM, the second global trader, were up 67% per cent last year. Bunge, riding the wave of demand for oilseed for biodiesel, enjoyed a 77% increase in first quarter profits this year. Nestlé, the world's largest food corporation, posted exceptional 2007 profits and launched a 25 billion dollar share buyback program - while telling its workers that higher input prices mean they should brace themselves for layoffs and wage cuts.

You can search in vain for the word 'corporation' in the FAO's 50 page briefing paper for the World Food Crisis Conference - this in a report entitled "Facts, Perspectives, Impacts and Actions Required". You won't find it either in the OECD-FAO Agricultural Outlook 2008-2017 - though you will find a message to the global poor that they'll be facing unaffordable food prices for the next decade or more. In these documents, the main issues and actors in the crisis of the world food system have been erased. The driving force behind liberalizing agricultural trade over the past decade - the enormous increase in the reach, power and market share of transnational corporations, not only across borders but within local and national markets through intra-company trade and subsidiaries - is entirely absent. There are only markets, market signals, and prices. With these "facts" and this "perspective", how can we understand the real mechanisms at work, and meaningfully address the issues?

While international agencies have suddenly discovered underinvestment in agriculture, investment in commodity indexes has climbed from USD13 billion in 2003 to $260-billion in March 2008 - and according to some analysts may soon hit a trillion US dollars. Private equity and hedge funds - investors focused on short-term, high-yield gains - have been expanding beyond futures markets and are now pouring billions into acquiring farmland, inputs and infrastructure. Yet the FAO briefing paper for the Rome Conference devoted a dismissive two paragraphs to the phenomenon in its "assessment of recent developments", and nothing in its concluding "policy options". No lobbying was required to suppress calls at the Conference for the re-regulation of financial markets - it wasn't even up for serious discussion. Yet even a modest tax on these enormous profits would provide substantial resources to start repairing the damage to the food system.

With the major actors rendered invisible - and in particular, the corporations and the financial investors who increasingly dictate how and what kind of food is planted, harvested, processed and marketed at what price, we’re left with an "action plan" which tells the poor it will essentially be business as usual. What should have been an opportunity in Rome for governments to show their commitment to following through on their obligation under international law to protect and enforce the right to food was surrendered to the agrofood lobbies.

Help for developing countries with balance of payments problems arising from a massive food import deficit cannot solve the basic problem. What's on offer at the WTO negotiations will only exacerbate global hunger, no matter how elaborately it's wrapped in vague mumbling about "sustainability".

The IUF Agricultural Workers Trade Group, meeting in India in 2005 just prior to the WTO Hong Kong Ministerial, emphasized that the real issues facing agricultural workers were once again not on the table: "Sustained resources must be mobilized internationally to facilitate and support recovery measures to reverse the social and environmental damage arising from export-oriented intensive production methods and the rebuilding of agriculture to serve its primary function in fulfilling the right to safe, adequate and nutritious food under decent work conditions." The Rome Conference marked three more years of lost time and lost lives.