Rising Food Prices And The Importance Of Fundamental Change
By Chandra Muzaffar
21 January, 2011
The sharp increase in global food prices and their consequences raises some fundamental questions about the state of the world economy and how we organise our lives.
According to the UN’s Food and Agricultural Organisation (FAO) its food price index hit an all-time high in December 2010. It was partly because of soaring prices that 925 million people worldwide suffered from hunger in 2010, an increase of 150 million since 1995-97. There have been mass protests and riots in a number of countries, including Algeria and Jordan. The escalating cost of bread was one of the many factors that led to the ouster of the Tunisian dictator, Zine-El-Abidine Ben Ali, by the people on 14 January 2011. In other countries, such as India and China the inflationary trend in food prices has forced their central banks to push up interest rates. This will have repercussions for their pace of growth which in turn may affect the global economic recovery.
There are many reasons that explain the present escalation in food prices. Climate change is one of them. Unseasonal rains and floods and rising temperatures have impacted adversely upon food production in a number of countries. It has been estimated that a one degree Celsius increase in temperature above the optimum during the growing season can result in a 10% decline in grain yields.
The use of food crops to produce fuel for vehicles is another factor. According to Lester Brown, President of the Earth Policy Institute, “In the United States which harvested 416 million tons of grain in 2009, 119 million tons went to ethanol distilleries to produce fuel for cars. That’s enough to feed 350 million people for a year.”
Related to this is the massive conversion of farm lands to land for roads, parking lots and housing and industrial complexes. In rapidly urbanising and industrialising economies, the implications of this for food production have been severe.
Global population increase, and what is even more important, the expansion of the global middle class in recent years, have led to a significant growth in food consumption. Since supply is struggling to keep pace with demand, prices have expectedly shot up.
The situation has been aggravated further by soil erosion and the shrinking of irrigated areas in certain parts of the world. With less scope for improving grain yields to meet the increasing demand, food prices have been climbing up steadily.
But more than the demand factor, there is another major cause for food inflation that is seldom highlighted in the mainstream media. This is rampant speculation in commodity prices including food staples such as wheat, corn and rice. One of the main reasons why speculation has become rife in recent months is because of the effect of “quantitative easing”---- the cheap dollar policy pursued by the US government which has increased the flow of hot money especially to emerging economies. It provides huge opportunities to hedge funds, banks and corporations to speculate upon not only food grains but also other commodities such as oil. In fact, the rise in the price of oil which stands today at over 90 US dollars a barrel is also linked to some extent to speculation. It has increased transport costs for food and other goods.
This is why curbing speculation through fundamental reforms to the international financial system is a vital necessity. There are powerful vested interests that are totally opposed to any attempt to check this unethical practice driven by greed and selfishness. Nonetheless, those who are concerned about the well-being of the human family--- including the basic right of every human being to eat--- should continue to press for change.
They should also demand that the global powers-that-be address the colossal challenges emanating from climate change and other serious environmental woes that are responsible directly or indirectly for rising food prices and the food crisis in general. In similar vein, there should be a more concerted campaign worldwide to enhance public transportation since the adulation of the private car, as we have seen, has a bearing upon food production. What this means is that priorities both at the individual and collective level will have to undergo a massive transformation. The human family as a whole should realise that the public good should--- in most circumstances--- take precedence over private gain.
For this to happen there has to be a holistic change in our attitudes, habits and values. It calls for a revolution of the heart. Only if there is such a spiritual and moral revolution will we be able to overcome the crisis of rising food prices and indeed all the other monumental crises that confront the human family today.
Dr. Chandra Muzaffar is President of the International Movement for a Just World (JUST) and Professor of Gobal Studies at Universiti Sains Malaysia(USM).
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