Hunger Games

Food prices today are rising similar to prices during the 2007-2008 food crisis, when a number of simultaneous factors led to a sharp rise in world food prices. This is in turn led to political and social unrest, as people took to the streets in cities worldwide to protest the cost of food. The protests in Mexico were perhaps the most well known. Dubbed the "Tortilla Riots” by the media, Mexican cities saw a number of violent and colorful riots as the price of Tortillas- the staple of Mexican food- soared uncontrollably out of the reach of average Mexicans. 

The Mexico crisis came about through three major reasons:

First, the introduction of NAFTA (North American Free Trade Agreement) in 1994, brought in large amounts of cheaper American corn and maize (ingredients in Tortillas) into Mexico. Over the next decade, cheaper imported corn put Mexican farmers out of commission and made Mexico increasingly dependent on foreign imports and distributors.

Secondly, in the early 2000s, a major shift occurred in US corn production thanks to the growing importance of alternate energy in the US. Corn can be used in the biofuel industry to make ethanol and corn farmers began to realize that the biofuel industry paid more for corn than the food industry. The International Food Policy Research Institute says that biofuels from food sources, alone contribute to 30% of the global food price rise as the lines blur between food and fuel industries. As a result, a smaller percentage of corn was available for export and competition from ethanol production drove corn prices up.

Make more ethanol, make less tortillas- Taken from Timothy Wise (2012)

Finally, corn exporters and distributors to Mexico, seeing greater profit in rising prices, began hoarding supplies to wait for even higher prices. With local production in Mexico destroyed by international competition, the only corn available on the market was the highly inflated imports coming in through these distributors.

On the streets in Mexico, far removed from all this global wrangling, the 52 million people below the poverty line (that’s 47% of the population) suddenly find that bread cost more than two-thirds of their income. Unfortunately, hunger is actually profitable to some.

The pattern is uncomfortably familiar.

Global trade supplanting local industry leading to devastating consequences for local vulnerable populations. The solutions offered by the World Bank and the WTO at the time however, remained faithful to their official mission: the expansion of trade and the removal of trade barriers. In 2008, The heads of the World Bank and the World Trade Organization, Robert Zoellick and Pascal Lamy, called for more liberal trade to fight food price inflation. On the other hand, the UN, the FAO and the WFP announced aid programs for farmers in developing countries and other support for local food industries.

The inherent danger of surrendering local industry to global distributors, whose end goal is profit, is summed up in two words: Food Security. Giving up local, regional and even national food security for economic reasons may promise lower food prices and greater availability of food but it comes with certain risks. For developing countries with political or economic instabilities, those risks may end up hurting the most vulnerable in the population.

Food insecurity vs. Daily Calorie intake- Countries with more food, also eat way more than they should (The Guardian/Chartsbin)

 

The danger isn’t just limited to raw food imports but also extends to retail distribution. Populations the size of entire nations now depend on large consumer retail giants such as Tesco and Walmart for food. The problem with retail giants, as with any profit-seeking entity, is that they prefer cheap and efficient over local or sustainable.  In the aisles of any major retail giant, we love the choice of 50 different brands of cereal but also find coconuts from Malaysia, olives from Spain and tulips from Holland. For such companies, it makes more sense to concentrate their sources to save on transportation and storage. The problem with this is that the moment a food source is threatened by war, drought, souring diplomatic relations etc, there is no local industry to turn to. Also, as in the case of Mexico, most corporations favor profit over people.

It isn’t just food that is up for grabs. Prime agricultural land is also being traded away at a global scale without consideration to local needs. In Ethiopia for example, nearly 7.4million acres of rich fertile land have been leased to foreign corporations to create nation-sized farms (watch video report from The Guardian here). Ethiopia also receives billions of dollars in food aid to feed its people. The irony is delicious but doesn’t fill a dinner plate- on one hand Ethiopia needs food aid while simultaneously giving away its best resource to fight hunger- land. Give a man food, he will eat for a day, give him a farm he will eat for life. Sadly, allegations of forced displacement also cloud the murky land grabbing scene that is all too common in Africa today.

Across the ocean from Ethiopia, another major developing country opened its markets to foreign investment. Last month, the Indian government reversed a previous ruling and decided to allow foreign retail giants into the Indian market. It is anticipated that this move will improve the highly inefficient food production process in India. However, much like everywhere else, the move is also expected to adversely affect local retail and local farm production. In India, where farmers remain a vulnerable population despite an agriculture-dominant economy and food habits have long stressed on fresh, healthy food, it may mean poorer farmers and a widening of the gap between the farm and the dinner plate.

No doubt, international competitiveness brings numerous advantages to the Indian market. More than a third of food produced in India is lost in transport and storage and most farmers use traditional and unsustainable practices. However, it is imperative for India and other countries with a high food security risk to carefully consider stories such as Mexico’s Tortilla riots to avoid the same fate. Governments can take steps to ensure that foreign distributors support local industry by requiring investment in certain sectors or by sourcing locally- down to a district or city level. By dangling the incentives just right, it is possible to steer these behemoths to more desirable outcomes for small business, farms and local retail, without tampering with prices.

Moreover, making local farms globally competitive would seem like a worthy challenge for agencies such as the WTO to take on. Farms in developed nations are able to market directly onto the global scene or to major wholesale and retail distributors through technology and modern communication. Farms in poorer nations however, rely largely on local markets. Investing in farms would bring security to both farmers and the nation. For the WTO, raising barriers on trade should ideally mean more for farmers than just retail giants. The current focus on nation states and large corporations fail to address concerns of the average citizen and important things like Tortillas get lost in the mix.