Wednesday, April 16, 2008

The Food Crisis

Photo: AP
Here's a good explanation by Heidi Fritschel of the basics of the food crisis, though the article assumes an orthodox economic response. The crisis has led to riots in Haiti and elsewhere, and these will grow since people in urban areas must buy nearly all of their food. The urban poor are often the most distressed in times of rapidly rising food prices.

Tony Karon, writing at Time, says,
Haiti is in flames as food riots have turned into a violent challenge to the vulnerable government; Egypt's authoritarian regime faces a mounting political threat over its inability to maintain a steady supply of heavily subsidized bread to its impoverished citizens; Cote D'Ivoire, Cameroon, Mozambique, Uzbekistan, Yemen and Indonesia are among the countries that have recently seen violent food riots or demonstrations. World Bank president Robert Zoellick noted last week that world food prices had risen 80% over the past three years, and warned that at least 33 countries face social unrest as a result.

The sociology of the food riot is pretty straightforward: The usually impoverished majority of citizens may acquiesce to the rule of detested corrupt and repressive regimes when they are preoccupied with the daily struggle to feed their children and themselves, but when circumstances render it impossible to feed their hungry children, normally passive citizens can very quickly become militants with nothing to lose. That's especially true when the source of their hunger is not the absence of food supplies but their inability to afford to buy the available food supplies. And that's precisely what we're seeing in the current wave of global food-price inflation. As Josette Sheeran of the U.N. World Food Program put it last month, "We are seeing food on the shelves but people being unable to afford it."

Famine is a distribution problem, not a supply problem, as Amartya Sen showed in work that won him the Nobel (a nice piece by him here from 1990; and here's the go-to book). The situation isn't one of famine yet, but the riots are signs that it could be, and even while food may sit on the shelves.

This situation appears as a supply problem in that diversion of croplands to other uses is indeed one factor leading to higher prices. Much of the media narrative treats it as such. But it's actually a more complex distribution problem than the famines Sen studied. Poverty and the structural conditions of global inequality which reproduce that poverty are ultimately the combined problem, while rapacious consumerism is the direct cause of conversion of croplands to uses other than human food production. Namely, rising oil prices making alternative fuel sources (biofuels) more profitable, more demands from countries with growing incomes like China for meat products, and environmental factors such as the drought in Australia. That's actually a distribution problem of consumerism (except for the drought), diverting crucial resources towards more profitable commodity-production for wealthier consumers. If we frame it as a supply problem, we're once again assuming that no changes of behavior need take place - only changes in the quantity of industrial production.

Capitalism and its necessary reproduction of rapacious consumers may drive the global economy in raw quantitative terms, but it also causes crises such as this one that are resolvable through smart government spending on food programs and assistance.

Note, however, this item from the Fritschel piece:
Some very poor countries - such as Ethiopia, Malawi, and Sierra Leone - have relied heavily on food aid even when food prices were low. Food aid will be more important to these countries than ever, but as food prices rise, food aid tonnage falls. "Food aid providers like the US Agency for International Development (USAID) and the World Food Programme (WFP) are going to be hit hard as long as food aid is budgeted in dollars", says IFPRI research fellow Marc Cohen. Because aid donors such as the United States allocate a certain dollar amount to food aid each year, those dollars buy less food when prices are high.

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