FOCUS ON TRADE: SPECIAL ISSUE ON THE GLOBAL FOOD CRISIS

HOW TO MANUFACTURE A GLOBAL FOOD CRISIS: LESSONS FROM THE WORLD BANK,
IMF, AND WTO
Walden Bello

HUNGER AND FOOD CRISES: A VIEW FROM THE GROUND
Shalmali Guttal

FOOD CRISIS EXPOSES FAILINGS OF INDIA’S ECONOMIC REFORMS
Afsar Jafri

PRICE HIKES HIT THE POOR, EVEN IN THAILAND
Jacques-chai Chomthongdi

PHILIPPINES: SUPPLY CRUNCH ROCKS WEAK AGRICULTURE SECTOR
Mary Ann Manahan

FOOD CRISIS SYMPTOM OF DUBIOUS LIBERALISATION
Aileen Kwa

THE TIME HAS COME FOR LA VIA CAMPESINA AND FOOD SOVEREIGNTY
Peter Rosset

(A shorter version of this piece appeared in the June 2, 2008, issue of
The Nation.)

When tens of thousands of people staged demonstrations in Mexico last
year to protest a sharp increase of over 60 per cent in the price of
tortilla, the flat unleavened bread that is Mexico?s staple, many
analysts pointed to biofuels as the culprit. Owing to US government
subsidies, turning corn into ethanol had become more profitable than
growing it for food consumption, prompting American farmers to devote
more and more of their acreage to it, in the process sparking off a
steep rise in corn prices.

The diversion of corn from tortillas to biofuel was certainly one of the
proximate causes of the skyrocketing prices, though speculation on
likely trends in biofuel demand by transnational middlemen may have
played a bigger role. (1) However, an intriguing question escaped many
observers: How on earth did Mexicans, who live in the land where corn
was first domesticated, become ?dependent? on imports of US corn in the
first place?

ERODING THE MEXICAN COUNTRYSIDE
The Mexican food crisis cannot be fully understood without taking into
account the fact that in the years preceding the tortilla crisis, the
homeland of corn had been converted to a corn importing economy by free
market policies promoted by the International Monetary Fund (IMF), World
Bank, and Washington. The process began with the debt crisis of the
early eighties. One of the two biggest developing country debtors,
Mexico was forced to beg for money to service its debt to international
commercial banks from the World Bank and the IMF. The quid pro quo for
a multibillion dollar bailout package was what a member of the World
Bank executive board described as a program marked by ?unprecedented
thoroughgoing interventionism? that was designed to pay off the amount
advanced by the Bank and the Fund while doing away simultaneously with
the high tariffs, state regulations, and government support institutions
that the ascendant neoliberal doctrine identified as the barriers to
economic efficiency. (2)

As a portion of total government expenditures, interest payments rose
from 19 per cent in 1982 to 57 per cent in 1988 while capital
expenditures dropped from an already low 19.3 per cent to 4.4 per cent.
(3) The contraction of government spending translated in the countryside
into a protracted process of dismantling a system of state credit,
government-subsidized agricultural inputs, price supports, state
marketing boards, and extension services. Contributing to the
destabilization of peasant producers were the effects of a program of
unilateral liberalization of agricultural trade.

This blow to peasant agriculture was followed by an even bigger one in
1994, when the North American Free Trade Agreement (NAFTA) went into
effect. Although NAFTA had a 15-year tariff phase-out of protection for
agricultural products including corn, highly subsidized US corn flooded
in, bringing prices down by half and plunging the corn sector into
chronic crisis. Today, largely as a result of this 14-year-old
agreement, Mexico?s status as a net food importer sourcing 40 per cent
of its food in foreign markets has been firmly established.

With the shutting down of the state marketing agency for corn,
distribution of both US corn imports and Mexican grain has come to be
monopolized by a few transnational traders such as the US-owned Cargill
and the partly US-owned Maseca operating on both sides of the border.
This has given them tremendous power to speculate on trade trends, so
that real movements in biofuel demand can be manipulated and magnified
many times over price-wise, as seems to have happened during the
tortilla price crisis. At the same time, monopoly control of domestic
trade has ensured that a rise in international corn prices does not
translate into significantly higher prices paid to small producers at
the local level. (For a comprehensive treatment on the role of
speculation by the transnational middlemen in the Tortilla Crisis, see
Ana de Ita, ?Fourteen Years of NAFTA and the Tortilla Crisis,? America
Program, Center for International Policy, January 10, 2008;
http://americas.irc-online.org/am/4879.)

Yet, against all odds, three million farmers continue to grow corn, many
of them sustained in a money-losing operation by remittances from
relatives working in the United States. Year by year, however, it
becomes more and more difficult for these farmers to avoid the fate of
many of their fellow corn cultivators and the large numbers of
smallholders in sectors such as rice, beef, poultry, and pork who have
gone under owing to the advantages conferred on subsidized US producers
by NAFTA. According to a 2003 Carnegie Endowment report, imports of US
agricultural products threw at least 1.3 million farmers out of work,
many of whom found their way to the United States. (4)

What are the prospects of a change for the better? Not much, and not
least among the reasons is the fact that a state controlled by
neoliberals continues to systematically dismantle an agricultural
support system for peasant producers that was a key legacy of the
Mexican Revolution. As Food First Executive Director Eric Holt Gimenez
sees it, ?It will take time and effort to recover smallholder capacity,
and there does not appear to be any political will for this–to say
nothing of the fact that NAFTA would have to be renegotiated.? (5)

CREATING A RISE CRISIS IN THE PHILIPPINES
That the current global food crisis stems mainly from the free-market
restructuring of agriculture in the developing world emerges more
clearly in the case of rice. Unlike corn, less than 10 per cent of rice
produced globally is traded. Moreover, there has been no diversion of
rice from food consumption to serving as a biofuel feedstock. Yet, this
year alone, prices nearly trebled from $380 in January to over $1000 in
April. Undoubtedly, the price inflation stems partly from speculation
by powerful cartels of wholesalers at a time of tightening supplies.
However, as in the case of Mexico and corn, the big puzzle is why a
number of rice-consuming countries that used to be self sufficient have
come to be severely dependent on imports.

The Philippines provides a grim example of how neoliberal economic
restructuring transforms a country from a net food exporter to a net
food importer. The country is now the world?s biggest importer of rice,
regularly sourcing 1-2 million tons of its annual rice requirements in
the international market. Manila?s desperate effort to secure rice
supplies at whatever price has become front page news, and pictures of
soldiers providing security for rice distribution in poor communities
have become emblematic of the global food crisis. Yet this was a country
that as late as 1993 was a net food exporter that had only
intermittently imported relatively small quantities of rice. What
happened to make this country slip into a greater and greater dependency
on rice and other agricultural imports?

The broad contours of the Philippine story parallel are similar to that
of Mexico. The dictator Ferdinand Marcos was guilty of many crimes and
misdeeds, including failure to follow through on land reform, but one
thing he could not be accused off was starving the agricultural sector
of government support. To head off peasant discontent, the regime
provided farmers with subsidized fertilizer and seeds, launched credit
schemes, and built rural infrastructure, with land under irrigation
rising from 500,000 hectares in the mid-sixties to 1.5 million in the
mid-eighties. Owing to these investments, the Philippines achieved self
sufficiency in rice for most of the Marcos period, though in its last
full year, 1985, it had to import over 500,000 tons. When Marcos fled
the country in 1986, however, it was reported that there were 900,000
metric tons of rice in government warehouses. (6)

Paradoxically, the next few years under the new democratic dispensation
saw government investment capacity gutted drastically. As in Mexico,
the World Bank and IMF, working on behalf of the country?s international
creditors, pressured the administration of President Corazon Aquino to
make repayment of the foreign debt of $21.5 billion the national
economic priority instead of development. Aquino acquiesced, though she
was collectively warned by the country?s top economists that the ?search
for a recovery program that is consistent with a debt repayment schedule
determined by our creditors is a futile one and should therefore be
abandoned. (7)

In the critical period 1986-1993, an amount coming to some 8 to 10 per
cent of GDP left the Philippines yearly in debt service payments?roughly
the same proportion as in Mexico. To service a foreign debt that stood
at $21.5 billion in 1986, some $30 billion flowed out of the country
during the period. (8) This outflow was supported by a radical
restructuring of the national budget: interest payments as a percentage
of government expenditures rose from 7 per cent in 1980 to 28 per cent
in 1994; capital expenditures or investment plunged from 26 per cent to
16 per cent. (9) Debt servicing, in short, became the national budgetary
priority, and this was legally enshrined by an ?automatic appropriations
law? that obligated the government to place payment of the debt falling
due ahead of all other obligations.

Among the items to be cut most sharply was spending on agriculture,
which fell by more than half, from 7.5 per cent of total government
spending in 1982 under Marcos to 3.3 per cent in 1988 under Aquino. (10)
The World Bank and its local acolytes were not worried, however, since
part of the purpose of the whole belt-tightening exercise was to get the
market and the private sector to march into the breach and energize the
countryside. But the country?s agricultural capacity quickly eroded.
The amount of cultivated land covered by irrigation stagnated at 1.3
million out of 4.7 million hectares. By the end of the nineties, only 17
per cent of the Philippines? road network was paved, compared to 82 per
cent in Thailand, and 75 per cent in Malaysia. Crop yields across the
board were anemic, with the average yield in rice of 2.8 metric tons per
hectare way below yields in China and Vietnam, (11) where
interventionist governments took an active role in promoting rural
production. Already weak and riddled with loopholes, the post-Marcos
agrarian reform program shriveled, deprived of funding for support
services that had been the key to successful land reforms in Taiwan and
Korea.

What this discouraging panorama underlines is that as in Mexico, what
peasants were confronted with in the Philippines was the comprehensive
retreat of the state from being a provider of comprehensive support?a
role that their success in production had come to depend on.

As in the case of Mexico, the cutback in agricultural programs by IMF
and World Bank-imposed adjustment was followed by trade liberalization,
with the Philippines? entry into the World Trade Organization (WTO) in
1995 playing the role that adherence to NAFTA played in Mexico.

Membership in the WTO required the Philippines to eliminate quotas on
all agricultural imports and allow a certain amount of each commodity to
enter at low tariff rates. While the country was allowed to maintain a
quota on rice imports, it was nevertheless required to admit the
equivalent of one per cent of domestic consumption in 1995 rising to 4
per cent in 2004. In fact, due to the gravely weakened state of rice
production owing to its being starved of state support, the government
imported more than it was obligated to under the WTO?s Agreement on
Agriculture in order to supply local needs. These imports, which rose
from 263,000 metric tons in 1995 to 2.1 million tons in 1998, had the
effect of depressing the price of rice, discouraging farmers and keeping
the growth in rice production at a rate far below those of the country?s
two top suppliers, Thailand and Vietnam. (12)

Entry into the WTO destabilized rice production, but it barreled through
the rest of Philippine agriculture like a super-typhoon. Corn farmers
in Mindanao, reported trade analyst Aileen Kwa, ?have been wiped out.
It is not an uncommon sight to see farmers there leaving their corn to
rot in the fields as the domestic corn prices have dropped to levels [at
which] they have not been able to compete.? (13) Swamped by cheap corn
imports, a large part of it subsidized American grain, it was not
surprising that farmers would sharply reduce the land devoted to corn
from 3,149,300 hectares in 1993 to 2,510,300 hectares in 2000. (14) The
travails of corn were paralleled in other sectors: massive importation
of chicken parts nearly killed the chicken parts industry while surges
in imports destabilized the poultry, hog, and vegetable industries. (15)

During the campaign to ratify WTO membership in 1994, government
economists coached by their World Bank handlers promised that the losses
in corn and other traditional crops would be more than compensated by
the emergence of a new export industry specializing in the production of
so-called ?high-value-added? crops such as cutflowers, asparagus,
broccoli, and snowpeas. This did not materialize. Neither did the
500,000 new agricultural jobs that was supposed to be created yearly by
the ?magic? of the market; instead, employment in agriculture dropped
from 11.2 million people in 1994 to 10.8 million in 2001. (16)

The magic didn?t work. All that came from the one-two punch of
IMF-imposed adjustment and WTO-imposed trade liberalization were the
swift transformation of a largely self-sufficient agricultural economy
into one that was permanently import-dependent and the steady
marginalization of small farmers. It was a wrenching process, the pain
of which was captured by a Philippine government negotiator during one
of the sessions of the WTO?s Agricultural Committee in Geneva. ?Our
agricultural sectors that are strategic to food and livelihood security
and rural employment,? he told the body, ?have already been destabilized
as our small producers are being slaughtered by the gross unfairness of
the international trading environment. Even as I speak, our small
producers are being slaughtered in our own markets, [and] even the more
resilient and efficient are in distress.? (17)

THE GREAT TRANSFORMATION
The experience of Mexico and the Philippines was paralleled in one
country after another that was subjected to the fatal combination of
IMF-imposed structural adjustment and WTO-mandated trade liberalization.
A study of 14 countries by the Food and Agricultural Organization
(FAO) found that the levels of their food imports in 1995-98 exceeded
those in 1990-94. (18) This was not surprising since one of the main
goals of the WTO?s Agreement on Agriculture was to open up developing
country markets so they could absorb surplus production in the North.
As then US Agriculture Secretary John Block put it at the start of the
Uruguay Round of trade negotiations in 1986, ?the idea that developing
countries should feed themselves is an anachronism from a bygone era.
They could better ensure their food security by relying on US
agricultural products, which are available, in most cases at lower
cost.? (19)

What Block did not say was that the lower cost of US products stemmed
from subsidies, and this became more massive with each passing year,
despite the fact that the WTO was supposed to phase out all forms of
subsidy. From $367 billion in 1995, the first year of the WTO, the
total amount of agricultural subsidies provided by developed country
governments rose to $388 billion in 2004. (20) Subsidies now account for
40 per cent of the value of agricultural production in the European
Union (EU) and 25 per cent in the United States. (21)

The apostles of the free market and the defenders of dumping may seem to
be at different ends of the policy spectrum. However, the effects on
developing countries of the policies they advocate are the same: the
globalization of capitalist industrial agriculture. The system to which
agriculture in developing countries is being integrated is one where
export-oriented production of meat and grain is undertaken in large
industrial farms such as those run by the Thai multinational CP; where
technology is continually upgraded by advances in genetic engineering
from firms like Monsanto; and where the elimination of tariff and
non-tariff barriers brings into being a profitable global agricultural
supermarket of elite and middle-class consumers serviced by
globe-spanning giant grain-trading corporations like the US-owned
Cargill and Archer Daniels Midland and transnational food retailers like
the British-owned Tesco and the French-owned Carrefour.

There is little room for the hundreds of millions of rural and urban
poor in this integrated global market. They are confined to giant
suburban favelas where they contend with prices that are often much
higher than the supermarket price of food or to rural reservations where
they are trapped in marginal agricultural activities and increasingly
vulnerable to hunger. Indeed, within the same country, famine in the
marginalized sector may coexist with prosperity in the globalized
sector?a situation that evokes Frances Moore Lappe and Joe Collins?
classic description of Ethiopia in the early eighties, where vast
acreages of prime land were producing cotton and sugar cane for export
while poor subsistence farmers were starving in adjacent areas. (22)

Small-scale peasant production stands in the way of this structural
transformation and has to go. What is taking place is not simply the
erosion of national food self-sufficiency or food security but what the
Oxford Africanist Deborah Bryceson calls ?de-peasantization?–the
progressive phasing out of a mode of production to make the countryside
a more congenial site for intensive capital accumulation. (23) This
transformation is a traumatic one for hundreds of millions of people
throughout the world since peasant production is not simply an economic
activity. It is a way of life, a culture, which is one key reason why
in India, peasants displaced or marginalized by trade liberalization and
corporate agriculture have taken to committing suicide. In the state of
Andra Pradesh alone, farmers? suicides rose from 233 in 1998 to 2,600 in
2002. (24) One estimate is that some 150,000 farmers in India have taken
their lives. (25) Severe economic distress linked to, among other
things, collapse of prices from trade liberalization and loss of control
over seeds to biotech firms like Monsanto, is part of a more
comprehensive problem behind the suicides, says Vandana Shiva: ?[Un]nder
globalisation, the farmer is losing her / his social, cultural, economic
identity as a producer. A farmer is now a “consumer” of costly seeds and
costly chemicals sold by powerful global corporations through powerful
landlords and money lenders locally.? (26)

ADJUSTING AFRICAN AGRICULTURE
De-peasantization is at an advanced state in Latin America and Asia.
And if the World Bank were to have its way, Africa would travel in the
same direction. As Deborah Bryceson and her colleagues correctly point
out in a recent article, the World Bank Development Report for 2008,
which touches extensively on agriculture in Africa, is practically a
blueprint for the transformation of the peasant-based agriculture of the
continent into large-scale commercial farming. (Kjell Havnevik, Debkorah
Bryceson, Lars-Erik Birgegard, Prosper Matandi, and Atakilte Beyene,
?African Agriculture and the World Bank: Development or
Impoverishment??, Pambazuka News, March 11, 2008;
http://www.pambazuka.org/en/category/features/46564.)

The problem is
that, as in many other places today, the Bank?s wards are moving from
sullen resentment to outright defiance.

At the time of decolonization in the sixties, Africa was not just self
sufficient in food but was actually a net food exporter, its exports
averaging 1.3 million tons a year between 1966-70. (27) Today, the
continent imports 25 per cent of its food, with almost every country
being a net food importer. (28) Hunger and famine have become recurrent
phenomena, with the last three years alone seeing food emergencies break
out in the Horn of Africa, the Sahel, Southern Africa, and Central
Africa. (29)

Agriculture is in deep crisis, and the causes range from wars to bad
governance, lack of productivity-enhancing agricultural technology, and
the spread of HIV-AIDS. However, as in Mexico and the Philippines, a
very important part of the explanation was the phasing out of government
controls and support mechanisms under the structural adjustment programs
to which most African countries were subjected as the price for getting
IMF and World Bank assistance to service their external debt.

Instead of triggering a virtuous spiral of growth and prosperity,
structural adjustment imprisoned Africa in a low-level trap in which low
investment, increased unemployment, reduced social spending, reduced
consumption, and low output interacted to create a vicious cycle of
stagnation and decline.

Lifting price controls on fertilizers while simultaneously cutting back
on agricultural credit systems simply led to reduced applications, lower
yields, and lower investment. Moreover, reality refused to conform to
the doctrinal expectation that the withdrawal of the state would pave
the way for the market and private sector to dynamize agriculture.
Instead, the private sector saw reduced state expenditures as creating
more risk and failed to step into the breach. In country after country,
the opposite of that predicted by neoliberal doctrine occurred: the
departure of the state ?crowded out? rather than ?crowded in? private
investment. In those instances where private traders did come in to
replace the state, an Oxfam report noted, ?they have sometimes done so
on highly unfavorable terms for poor farmers,? leaving ?farmers more
food insecure, and governments reliant on unpredictable aid flows.? (30)
The usually pro-private sector Economist agreed, admitting that ?many of
the private firms brought in to replace state researchers turned out to
be rent-seeking monopolists.? (31)

What support the government was allowed to muster was channeled by the
Bank to export agriculture to generate the foreign exchange earnings
that the state needed to earn to service its debt to the Bank and the
Fund. But, as in Ethiopia during the famine of the early 1980?s, this
led to the dedication of good land to export crops, with food crops
forced into more and more unsuitable soil, thus exacerbating food
insecurity. Moreover, the Bank?s encouraging several economies
undergoing adjustment to focus on export production of the same crops
simultaneously often led to overproduction that then triggered a price
collapse in international markets. For instance, the very success of
Ghana?s program to expand cocoa production triggered a 48 per cent drop
in the international price of cocoa between 1986 and 1989, threatening,
as one account put it, ?to increase the vulnerability of the entire
economy to the vagaries of the cocoa market.? (32) In 2002-2003, a
collapse in coffee prices contributed to another food emergency in
Ethiopia. (33)

As in Mexico and the Philippines, structural adjustment in Africa was
not simply underinvestment but state divestment. But there was one
major difference. In the Philippines and Mexico, the Bank and Fund
confined themselves to macromanagement, or supervising the dismantling
of the state?s economic role from above, leaving the dirty details of
implementation to the bureaucracy. In Africa, where they dealt with much
weaker governments, the Bank and Fund micromanaged, reaching down to
make decisions on how fast subsidies should be phased out, how many
civil servants had to be fired, or even, as in the case of Malawi, how
much of the country?s grain reserve should be sold and to whom. (34) In
other words, Bank and IMF resident proconsuls reached to the very
innards of the state?s involvement in the agricultural economy to rip it up.

Compounding the negative impact of adjustment were unfair trade
practices on the part of the EU and the United States. Trade
liberalization simply allowed low-priced subsidized EU beef to enter and
drive many West African and South African cattle raisers to ruin. With
their subsidies legitimized by the WTO?s Agreement on Agriculture, US
cotton growers offloaded their cotton on world markets at between 20 to
55 per cent of the cost of production, bankrupting in the process West
African and Central African cotton farmers. (35)

According to Oxfam, the number of people living on less than a dollar a
day more than doubled to 313 million people between 1981 and 2001?or 46
per cent of the whole continent. (36) The role of structural adjustment
in creating poverty, as well as severely weakening the continent?s
agricultural base and consolidating import dependency, was hard to deny.
As the World Bank?s Chief Economist for Africa admitted, ?We did not
think that the human costs of these programs could be so great, and the
economic gains would be so slow in coming.? (37)

That was, however, a rare moment of candor. What was especially
disturbing was that, as Oxford University political economist Ngaire
Woods pointed out, the ?seeming blindness of the Fund and Bank to the
failure of their approach to sub-Saharan Africa persisted even as the
studies of the IMF and the World Bank themselves failed to elicit
positive investment effects.? (38)

MALAWI: FROM COMPLIANCE TO DEFIANCE
This stubbornness led to tragedy in Malawi. It was a tragedy preceded by
success. In 1998 and 1999, the government initiated a program to give
each small-holder family a ?starter pack? of free fertilizers and seeds.
This followed several years of successful experimentation in which the
packs were provided only to the poorest families. (39)The result was a
national surplus of corn. What came after is a story that will
definitely have to be enshrined as a classic case study in a future book
on the ten greatest blunders of neo-liberal economics.

The World Bank and other aid donors forced the drastic scaling down and
eventual scrapping of the program, arguing that the subsidy distorted
trade. (40) Without the free packs, food output plummeted. In the
meantime, the IMF insisted that the government sell off a large portion
of its strategic grain reserves to enable the food reserve agency to
settle its commercial debts. The government complied. When the crisis
in food production turned into a famine in 2001-2002 there were hardly
any reserves left to rush to the countryside. About 1500 people
perished. (41) The IMF, however, was unrepentant; in fact, it suspended
its disbursements on an adjustment program with the government on the
grounds that ?the parastatal sector will continue to pose risks to the
successful implementation of the 2002/03 budget. Government
interventions in the food and other agricultural markets?crowd out more
productive spending.? (42)

When an even worse food crisis developed in 2005, the government finally
had enough of the Bank and IMF?s institutionalized stupidity. A new
president reintroduced the fertilizer subsidy program, enabling two
million households to buy fertilizer at a third of the retail price and
seeds at a discount. The results: bumper harvests for two years in a
row, a surplus of one million tons of maize, and the country transformed
into a supplier of corn to other countries in Southern Africa.

But the World Bank, like its sister agency, still stubbornly clung to
the discredited doctrine. As the Bank?s country director told the
Toronto Globe and Mail, ?All those farmers who begged, borrowed, and
stole to buy extra fertilizer last year are now looking at that decision
and rethinking it. The lower the maize price, the better for food
security but worse for market development.? (43)

FLEEING FAILURE
Malawi?s defiance of the World Bank would probably have been an act of
heroic but futile resistance a decade ago. The environment is different
today. Owing to the absence of any clear case of success, structural
adjustment has been widely discredited throughout Africa. Even some
donor governments that used to subscribe to it have distanced themselves
from the Bank, the most prominent case being the official British aid
agency DFID, which co-funded the latest subsidized fertilizer program in
Malawi. (44) Perhaps the motivation of these institutions is to prevent
their diminishing influence in the continent from being further eroded
by their association with a failed approach and unpopular institutions
at a time that Chinese aid is emerging as an alternative to World Bank,
IMF, and Western government aid programs with all their conditionalities.

Beyond Africa, even former supporters of adjustment, like the
International Food Policy Research Institute (IFPRI) in Washington and
the rabidly neoliberal Economist acknowledged that the state?s
abdication from agriculture was a mistake. In a recent commentary on
the rise of food prices, for instance, IFPRI asserted that ?rural
investments have been sorely neglected in recent decades,? and says that
it is time for ?developing country governments [to] increase their
medium- and long-term investments in agricultural research and
extension, rural infrastructure, and market access for small farmers.?
(45) At the same time, the Bank and IMF?s espousal of free trade came
under attack from the heart of the economics establishment itself, with
a panel of luminaries headed by Princeton?s Angus Deaton accusing the
Bank?s research department of being biased and ?selective? in its
research and presentation of data. (46) As the old saying goes, success
has a thousand parents and failure is an orphan.

Unable to deny the obvious, the Bank has finally acknowledged that the
whole structural adjustment enterprise was a mistake, though it smuggled
this concession into the middle of the 2008 World Development Report,
perhaps in the hope that it would not attract too much attention.
Nevertheless, it was a damning admission:

“Structural adjustment in the 1980s dismantled the elaborate system of
public agencies that provided farmers with access to land, credit,
insurance inputs, and cooperative organization. The expectation was that
removing the state would free the market for private actors to take over
these functions?reducing their costs, improving their quality, and
eliminating their regressive bias. Too often, that didn?t happen. In
some places, the state?s withdrawal was tentative at best, limiting
private entry. Elsewhere, the private sector emerged only slowly and
partially — mainly serving commercial farmers but leaving small-holders
exposed to extensive market failures, high transaction costs and risks,
and service gaps. Incomplete markets and institutional gaps impose huge
costs in forgone growth and welfare losses for small-holders,
threatening their competitiveness and, in many cases, their survival.? (47)

FOOD SOVEREIGNTY: AN ALTERNATIVE PARADIGM?
But it is not only defiance from governments like Malawi and dissent
from their erstwhile allies that are undermining the IMF and the World
Bank. Peasant organizations throughout the world have increasingly been
vocal and militant in their resistance to the globalization of
industrial agriculture. Indeed, it is on account of pressure from
farmers? groups that the governments of the South have refused to grant
wider access to their agricultural markets and demanded a massive
slashing of US and EU agricultural subsidies, bringing the WTO?s ?Doha
Development Round? of negotiations to a standstill.

Farmers? groups have networked internationally, and one of the most
dynamic networks to emerge is Via Campesina (literally translated from
the Spanish as ?the Peasant?s Path?). Via does not only seek to get ?WTO
out of agriculture? or oppose the paradigm of a globalized capitalist
industrial agriculture promoted by the Bank. It proposes an
alternative: ?food sovereignty.? Food sovereignty means first of all,
the right of a country to determine its production and consumption of
food and the exemption of agriculture from global trade regimes like the
WTO. It also means the consolidation of a smallholder-centered
agriculture via protection of the domestic market from low-priced
imports, remunerative prices for farmers and fisherfolk, abolition of
all direct and indirect export subsidies, and the phasing out of
domestic subsidies that promote unsustainable agriculture. (48) Via?s
platform also calls for an end to the Trade Related Intellectual
Property Rights TRIPs regime that allows corporations to patent plant
seeds, opposes agro-technology based on genetic engineering, and demands
land reform. (49) In contrast to the integrated global monoculture being
created by capitalist industrial agriculture, it offers the vision of an
international economy marked by diverse national agricultural economies
relating to one another but focused primarily on domestic production.

Once regarded as relics of the pre-industrial era, peasants are now
leading the opposition to the paradigm of capitalist industrial
agriculture that would consign them to the dustbin of history. They
have become what Karl Marx described as a politically conscious ?class-
for-itself,? contradicting Marx?s own predictions about their demise.
With the current global food crisis, they are moving to center stage?and
they are not without allies and supporters. For as peasants fight
de-peasantization and refuse to ?go gently into that good night,? to
borrow a line from Dylan Thomas, developments in the 21st century are
revealing the panacea of globalized capitalist industrial agriculture to
be a nightmare. With environmental crises multiplying, the social
dysfunctions of urban-industrial life piling up, and capitalist
industrial agriculture creating more and more food insecurity, the
farmers? movement increasingly has relevance not only to peasants but to
everyone threatened by the catastrophic consequences of global capital?s
vision for organizing production, community, and life.

* Walden Bello is a senior analyst at and former executive director of
the Bangkok-based research and advocacy institute Focus on the Global
South. He can be contacted at [email protected]. He is also
president for the Freedom from Debt Coalition and professor of sociology
at the University of the Philippines.

NOTES
1. Ana de Ita, ?Fourteen Years of NAFTA and the Tortilla Crisis,?
America Program, Center for International Policy, January 10, 2008;
http://americas.irc-online.org/am/4879.
2. Morris Miller, Debt and the Environment: Converging Crisis (New York:
UN, 1991) , p. 215.
3. Walden Bello, Shea Cunningham, and Bill Rau, Dark Victory: the United
States, Structural Adjustment, and Global Poverty (San Francisco: Food
First, 19994), p. 39.
4. Cited in Michael Pollan, ?A Flood of US Corn Rips at Mexico,? Common
Dreams News Center, April 23, 2004;
http://www.commondreams.org/cgi-bin/print.cgi?file=views04/0423-02.htm
5. Email communication, April 30, 2008
6. Ibid,
7. Florian Alburo, et al., ?Towards Recovery and Sustainable Growth,?
School of Economics, University of the Philippines, Diliman, Quezon
City, September 1985
8. World Bank, World Bank Debt Tables, Vol. 2 (Washington, DC: World
Bank, 1994), p. 378.
9. World Bank, World Development Indicators 1998 (Washington, DC: World
Bank, 1997), p. 199
10. Government data from Riza Bernabe, personal communication, May 5, 2008.
11. Rovik Obanil, ?Rice Safety Nets Act: More of a Burden than a
Shield,? Farm News and Views (1st Quarter 2002), p. 10
12. Selected Agricultural Statistics, 1998 and 2002 (Quezon City:
Department of Agriculture, 1998 and 2002); Rovik Obanil, ?Rice Safety
Nets Act: More of a Burden than a Shield,? Farm News and Views First
Quarter 2002), p. 10
13. Aileen Kwa, ?A Guide to the WTO?s Doha Work Program: the
?Development? Agenda Undermines Development,? Focus on the Global South,
Bangkok, January 2003.
14. Selected Agricultural Statistics, 1998, 2002 (Quezon City:
Department of Agriculture, 1998, 2002).
15. See Walden Bello et al., The Anti-Development State: the Political
Economy of Permanent Crisis in the Philippines (Quezon City: University
of the Philippines, 2004), pp. 146-148.
16. Selected Agricultural Statistics 1998, 2002 (Quezon City: Department
of Agriculture, 1998, 2002).
17. Submission of Republic of the Philippines, World Trade Organization
Committee on Agriculture, Geneva, July 1, 2003.
18. Food and Agricultural Organization (FAO), ?Agriculture, Trade, and
Food Security: Issues and Options in the WTO Negotiations from the
Perspective of the Developing Countries, Vol. 2: Country Case Studies
(Rome: FAO, 2000), p. 25
19. Quoted in ?Cakes and Caviar: the Dunkel Draft and Third World
Agriculture,? Ecologist, Vol. 23, No. 6 (Nov-Dec 1993), p. 220
20. OECD Agricultural Trade Statistics,
http://www.oecd.org/dataoecd/48/2/40010981.xls
21. Oxfam International, Rigged Rules and Double Standards (Oxford:
Oxfam International, 2002), p. 112.
22. Frances Moore Lappe, Joe Collins, and Peter Rosset, World Hunger:
Twelve Myths (New York: Grove Press, 1986), pp. 19-20.
23. Deborah Bryceson, ?Disappearing Peasantries? Rural Labor Redundancy
in the Neo-Liberal Era and Beyond,? in Bryceson, Cristobal Kay, and Jos
Mooij, eds., Disappearing Peasantries? Rural Labor in Africa, Asia, and
Latin America (London: 2000), p. 304-305; cired in Mike Davis, Planet of
Slums (London: Veerso, 2006), p. 15.
24. Utsa Patnaik, ?External Trade, Domestic Employment, and Food
Security: Recent Outcomes of Trade Liberalization and Neo-Liberal
Economic Reforms in India,? Paper presented at the International
Workshop on Policies against Hunger III, Berlin, Oct. 20-22, 2004, p. 1
25. The Hindu, Nov. 12, 2007;
http://www.hindu.com/2007/11/12/stories/2007111257790100.htm
26. Vandana Shiva, ?The Suicide Economy,? Znet, April 2004,
http://www.countercurrents.org/glo-shiva050404.htm
27. ?Africa?s Hunger?A Systemic Crisis,? BBC News, Jan 21, 2006;
http://news.bbc.co.uk/2/hi/afria/462232.stm
28. ?The Development of African Agriculture,?
http://www.africangreenrevolution.com/cgi-bin/african_green_rev/printer_frie
ndly.cgi?f
29. See, inter alia, Oxfam International, Causing Hunger: An Overview of
the Food Crisis in Africa (Oxford: Oxfam, July 2006)
30. Ibid.,p. 18.
31. ?The New Face of Hunger,? Economist, April 17, 2008;
http://www.economist.com/world/internatiional/PrinterFriendly.cfm?story_id=1
1049284
32. Charles Abugre, ?Behind Crowded Shelves: as Assessment of Ghana?s
Structural Adjustment Experiences, 1983-1991,? (San Francisco: food
First, 1993), p. 87.
33. Oxfam, p. 20
34. See ?Did the IMF Cause a Famine?,?Yingsakfoodnetwork.com, April 28,
2008, http://wwwyingsakfoodnetwork.com/did_the_imf.asp
35. ?Trade Talks Round Going Nowhere sans Progress in Farm Reform,?
Business World (Phil), Sept. 8, 2003, p. 15
36. Oxfam, p. 13
37. Quoted in Miller, p. 70
38. Ngaire Woods, The Globalizers: the IMF, the World Bank, and their
Borrowers (Thaca: Cornell University Press, 2006), p. 158
39. Stephanie Nolen, ?How Malawi Went from a Nation of Famine to a
Nation of Feast,? Globe and Mail, Oct. 12, 2007; ?Starter Packs: a
Strategy to Fight Hunger in Developing Countries: Lessons from Malawi,?
CAB Abstracts,
http://www.cababstractsplus.org/google/abstract.asp?aspAcNo=20053142997
40. Nolen
41. Nolen
42. IMF statement, quoted ?Famine in Malawi Exposes IMF Negligence,?
Economic Justice News, Vol. 5, No. 2 (June 2002;
http://www.50years.org/cms/ejn/story/89. This article summarizes a
report by ActionAid, State of Disaster: Causes, Consequences, and Policy
Lessons from Malawi, released on June 13, 2002
43. Wold Bank Country Director Tim Gilbo, quoted in Nolen
44. Department for International Development (DFID), ?A Record Harvest
in Malawi,? Case Studies, May 8, 2007;
http://www.dfid.gov.uk/casestudies/files/africa%5Cmalawi-harvest.asp
45. Joachim von Braun, ?Rising Food Prices: What Should be Done??, IFPRI
Policy Brief, April 2008; http://www.ifpri.org
46. See Abhijit Banerjee, Angus Deaton, Nora Lustig, and Ken Rogoff, ?An
Evaluation of World Bank Research, 1998-2005,?
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/0,,contentMDK:21165468~page
PK:64165401~piPK:64165026~theSitePK:469372,00.html
47. World Bank, World Bank Development Report 2008: Agriculture for
Development (Washington, DC: World Bank, 2008), p. 138
48. Henry Seragih and Ahmad Ya?kub, ?The Impact of WTO and Alternatives
to Agricultural Trade,? Paper presented at the Regional Conference on
Agricultural Negotiations in the WTO: Implications for Trade and
Agriculture in East Asia, Hong Kong, January 12-14, 2004.
49. Ibid.

*****************************************************

HUNGER AND FOOD CRISES: A VIEW FROM THE GROUND
by Shalmali Guttal

In a press conference in Timor Leste’s capital city Dili on May 14, top
UN officials declared that the country is not at a risk of starvation
from the global food crisis. According to the World Food Programme
(WFP) Country Director Joan Fleuren in Timor Leste, ?The Government is
working hard to increase its imports? and sell it at subsidised prices
in an effort to manage the situation and ensure that there is no food
crisis. (1) The Ministry of Agriculture estimates that annual rice
consumption in Timor Leste averages about 83,000 metric tones (mt) of
which, 40,000 mt are produced domestically. The shortfall is made up
through imports which are already at 50-60,000 tones and rising. Acting
Special Representative of the Secretary-General to Timor Leste,
Reske-Nielsen, suggests that rice imports provide the Timorese
Government with time to come up with medium and long term solutions. (2)

This view, however, differs significantly from that of many Timorese
analysts, who fear that the country is locked into a dangerous
dependency on imports to meet its food needs and already displays the
early symptoms of a chronic food crisis. About four months ago, before
the onset of the food crisis, the price of rice was 14$ – 16$ for a sack
(about 35 kg). Now it averages about $25 a sack in Dili and is
significantly higher in rural areas — if it reaches there at all. And
despite the Timorese Government’s recent move to subsidise rice prices,
there simply isn’t enough subsidised rice to go around. Most of it is
swallowed up in Dili and according to Dili locals, a significant portion
is sold at much higher prices by rice traders, especially in rural
areas. Like most net food importing countries, Timor Leste does not
have control over the import prices of rice and other staples. Equally
serious, it does not have an effective public distribution system to
ensure that food imports reach its rural population. Relying on private
companies to handle distribution, the Government cannot even ensure that
those who need subsidies most are actually able to avail of them.
According to Elda Guterres da’Silva from KBH, a Timorese organisation
dedicated to vocational education, (3) ?The new government is out of
touch with problems in the rural areas; it seems intent to put in a
market system and this will increase the number of poor people. Only
those with money can buy rice.?

Hunger is not new to Timor Leste. In 2004, reports of severe hunger and
starvation were reported among tens of thousands of households in at
least five districts and people in eleven out of thirteen districts
survived largely on food aid. (4) Majority of Timor Leste’s population
of one million (approximately 80 percent) resides in rural areas and is
engaged in subsistence agriculture. Local production is not sufficient
to meet the population’s food needs throughout the year and in 2001,
about 80 percent of villages were estimated to face food shortages at
some time during the year. (5) While food shortages during the lean
period of an agricultural cycle are common in subsistence economies, a
combination of historical factors and recent government policies are
entrenching what many Timorese fear will be a long term, chronic, food
crisis. Although reliable updated consumption statistics are difficult
to come by, reports from some rural areas indicate that there is already
not enough food and people can only eat once a day.

The problem is not only imports, but also rice itself. According to
Arsenio Pereira of HASATIL (6), a Timorese organisation committed to
sustainable agriculture, ?There is too much dependency on rice.
Indonesians promoted this dependency. Before Indonesian occupation,
there were a variety of staples that Timorese people ate, especially in
dry and mountainous areas, but the Indonesians insisted that everyone
grow and eat rice; current government food policy is also focussed on
rice.? This view was echoed by other people I talked with in Dili last
week, who pointed out that even today in rural areas, there are many
other staples that are consumed — what they call traditional foods.
Pereira explained, ?Rice is important, but not the only food. We have
more than 10 varieties of beans, 20 varieties of maize, and varieties of
yams, cassavas, bananas and sweet potato. But if these traditional
foods are not given importance, they will be lost and we will be
entirely dependent on rice.?

Although Timor Leste’s rural areas are generally cut off from even the
minimal level of services available in Dili, hunger is as high in Dili
as in many rural areas. Dili residents are almost entirely dependent on
rice as their staple food, unlike rural communities for whom traditional
foods still form an important part of their daily diets.

INDEPENDENECE BRINGS DEPENDENCE
But Timor Leste’s food shortages have as much, if not more, to do with
the country’s policy regime as with low production. Upon the
insistence of international donors, the World Bank and the International
Monetary Fund (IMF), the country’s post-war reconstruction has been
modeled on free market economics with severe restrictions on direct
governmental involvement in providing public services, price supports
and building up a strong domestic economy through investment in public
infrastructure in crucial areas such as agriculture, food security,
education and local cottage industry. The economy has been radically
liberalized and the government is seeking to make the country a haven
for private investors through tax holidays, land concessions and other
privileges. Job creation, which could have received a boost through
public investment, has been left to the dynamics of free market competition.

At least a quarter of the country’s arable land is being handed over to
private companies (mostly foreign with some local collaboration) for
growing agro-fuels, particularly sugarcane and jatropha. Agricultural
land is also dogged by intensifying conflicts among competing claimants,
and among farmers and private concessionaires. Timorese locals report
that import contracts for rice and other goods and economic concessions
are routinely handed over to foreign companies without a public tender
process and ?single sources? that are personal contacts of the country’s
senior leadership. Rural communities do not usually even know that their
lands — which are their only assets — are now the ?property? of a
private company and that they are soon to become contract labour on the
lands that they have tended for generations. In the upland district of
Ermera, conflicts remain unresolved between local coffee producers and
Timor Global, a private company that secured a 25 year concession on all
coffee growing lands in the district. According to Antero da’Silva, a
professor at the National University, ?The government’s plans are
oriented towards making farmers more dependent on markets, imports and
free trade, and not on independence.?

In the agriculture sector, the World Bank and bilateral donors
(particularly Australia and the US) have focussed almost entirely on
rice and a handful of cash crops such as vanilla and coffee and at the
cost of other staples that constitute the country’s traditional foods.
However, decades of intensive and chemically driven rice production
during Indonesian occupation have resulted in serious soil degradation
in several rice growing areas, bringing down yields and rendering the
land unsuitable for producing other crops. ?Land used for rice
production during Indonesian times cannot be used now, it was destroyed
because of too many chemicals to intensify rice production. The soil
needs to be regenerated,? says da’Silva.

Such ecological considerations are not a priority under the
post-independence donor regime in which official agriculture policy has
continued to promote intensive, chemical inputs driven agriculture, but
under free market conditions. Over the past six odd years, production
inputs and rural transportation have become so costly that that locally
produced rice cannot compete with imported rice in price and quality.
Genetically modified seed trials are now reportedly being conducted in
Betano and Maliana districts by ?experts? from an Australian company
through a project called Seed of Life. ?The donors and WB trying to
increase production using hybrid seeds, chemical fertilisers, etc.
Their emphasis is not on increasing food security through internal
capacity and resources, or by promoting local foods, but by importing
rice and food from outside, including food aid from WFP and FAO,? adds
Pereira.

The combination of land conflicts, rising and unaffordable agricultural
production costs, and hunger has prompted many rural people to move to
Dili and large towns looking for jobs. But life in the city is as much,
if not more of a struggle as back home in the village. The adoption of
the US dollar as the national currency has inflated the prices of even
the most basic food necessities. And then there is the international
aid industry that set up shop in Dili immediately after the 1999
referendum. Timor Leste recieved over US$ 3 billion in ?reconstruction
assistance,? much of which went to pay for bloated salaries and
facilities for international ?experts.? Faithfully following market
signals, the food and service industries adapted themselves to servicing
the needs of an international community flush with reconstruction cash.
A domestic, business elite emerged from among those who had land and
houses to rent to expatriates and assets to invest in restaurants,
hotels, supermarkets private security, etc. The upshot of all this was
the cost of living in Dili rocketed way above the average salary of
ordinary Timorese — US$ 30-60 per month. Even the earlier ?pre-crisis?
cost of rice (which is now remembered fondly by the Timorese) of US$
14-16 per sack was a big burden on an a family with children and elderly
to feed.

The promised foreign investment that was supposed to create jobs did not
arrive. Start-up and operating costs are high in Timor Leste, as water,
electricity, telecommunications and equipment are all extremely
expensive. Restaurant owners and expatriates prefer to shop at
supermarkets that sell imported products rather than local produce and
meat markets, citing concerns of hygiene and quality. The lack of
public investment in education and vocational training has resulted in
an extremely small number of young people who are considered employable
by the aid industry and its private sector appendages. According to
Rigoberto Monteiro, General Secretary of the Timor Leste Trade Union
Confederation and member of the National Labour Board, only 500 jobs are
available every year in the public and private sectors. Majority of
those looking for work in the city end up in a weak and unpredictable
informal sector, without secure and sufficient income.

Little wonder then that hunger and malnutrition are as high in Dili,
alongside markets filled with food, as they are in the country’s villages.

In 2005, Ben Moxham, a researcher with Focus on the Global South based
in Timor Leste poignantly observed, ?While Timor’s harsh climate is
partly responsible, the question that screams to be asked is why a
nation of just under a million people, which in the last five years is
supposed to have received more donor funds per capita than anywhere else
in the world, is going hungry.” (7)

COWBOY CAPITALISM RIDES THE RANGE
Further to the west, in a country that underwent a similar process of
post-conflict reconstruction 17 years earlier than Timor Leste, severe
hunger and malnutrition are become increasingly visible alongside an
explosion of affluence and a concentration of wealth. As a ward of the
international reconstruction and development industry since 1991,
Cambodia too adopted the free market model demanded by international
donors, the World Bank and the IMF. What has resulted is a cowboy
capitalist economy where practically everything is for sale to the
highest bidder. Small pockets of plentiful consumption are surrounded
by large areas of scarcity and deprivation.

Economic growth has averaged at 11 percent over the past three years,
spurred by booms in the tourism, garment manufacturing and real estate
sectors. But not everyone has benefitted from these booms. Agriculture
and fisheries, the mainstays of the majority of Cambodia’s population,
have been systematically assaulted by free market policies,
privatisation and liberalisation. The private sector has been
aggressively promoted in every possible sphere — the economy,
environment, agriculture, education, health, water supply, etc.
Cambodia’s multilateral creditors, the World Bank, IMF and the Asian
Development Bank (ADB), have demanded and achieved complete government
?disinvestment? in essential public infrastructure, supports and
services, and exhorted the country’s peasant farmers and artisanal
fishers to compete in a free market that they are completely ill
equipped for. As a result, farming and fishing has become increasingly
precarious occupations for rural families, driving them into debt traps
and eventually forcing them to abandon agriculture altogether.

Ruling elites in the Cambodian Government have facilitated a frenzy of
land-grabbing in both rural and urban areas creating landlessness,
homelessness and destitution at a scale never envisaged by ordinary
Cambodians who really believed that they were in for better times. Vast
tracts of fertile agricultural lands and rich forests (ranging from
10,000 to 300,000 hectares) have been given away as economic land
concessions to foreign companies under 99-year leases for industrial
tree plantations, agribusiness activities, tourist resorts, golf courses
and other recreational facilities. Economic concessions extend to
fishing areas, wetlands and even the country’s coast and islands. A
growing, wealthy, domestic middle class has also joined the band-wagon,
buying up land from small farmers and fishers unable to meet the rising
costs of agricultural production, health care and food. Many of the
country’s powerful bilateral allies (for example, China, Vietnam,
Thailand and Singapore) have also claimed their piece of the prosperity
pie through exclusive, no-bid contracts for infrastructure, energy,
mining and oil and gas projects.

The prosperity of the domestic (largely urban) elites and foreign land
owning companies classes has resulted in severely negative impacts among
the rural and urban poor and even the middle classes, creating new
vulnerabilities and poverty. Inflation is high (almost 11 percent at
official count, though locals say that it is actually higher) and the
cost of food and staple goods have increased sharply, creating twin
crises of hunger and malnutrition. According to Boua Chanthou, the
Director of PADEK, a Cambodian NGO working on integrated community
development in more than 500 poor villages in Cambodia, ?A crucial
factor related to food is land; Cambodian farmers do not own enough
land. A recent study shows that 60 p[ercent of Cambodian farmers are
either landless or own less than half a hectare. How can they produce
enough food for even their own consumption? A family of five people
needs at least two hectares of land to be able to produce enough food.
The Government needs to act quickly to implement social land concessions
and redistribute land to the farmers.?

The problem is not lack of food per se, but lack of access to food and
the means to produce food among rapidly increasingly numbers of people
who are being systematically stripped of their abilities to feed
themselves. While it is true that much of Cambodia’s agriculture
(including fisheries) is small-hold and susceptible to weather and
climate conditions, Cambodia is a rice and food exporter and till
recently, it was the sixth largest rice exporter in Asia. Large
agribusiness companies such as Thailand’s Charoen Pokphand (CP) have
established operations in Cambodia for producing animal feed as well as
pig and chicken farming. High grade Cambodian rice is grown under
contract for Thai businesses in the western part of the country while
Vietnam buys lower grade rice grown in the eastern part of the country.
Fish from Cambodia’s Great Lake, the Tonle Sap, is exported to
neighboring countries and to the numerous restaurants and resorts that
cater to the tourist industry.

And yet, the people who produce this food are poor, hungry and
malnourished. Since agricultural production does not provide sufficient
food for the entire year, nor does it bring them enough income, they
don’t have the cash to buy rice and food from markets that are
over-flowing with food. Other important sources of food for rural
families are the natural commons such as forests, wetlands, rivers and
lakes from which they harvest food and medicinal plants. But the
enclosure of these resources by private interests, as well as their
degradation resulting from over-use has cut off rural communities from
their last, fall back source of food and nourishment.

A Food Security Atlas launched in February 2008 by the WFP shows high
levels of hunger and malnutrition in the country, especially in areas
plagued by land-grabbing, economic land concessions and extractive
industry. Included in the 10 ?hot-spot? provinces that are considered
the most food insecure and vulnerable is Siem Riep, home of the famous
Angkor era temples and the tourist mecca of the Mekong region. Province
residents say that the boom in the tourist industry has served as a
massive suction pump, sucking away resources from local communities and
leaving them poor, hungry and vulnerable.

Says Chanthou, ?The open market system to export rice is not working in
favour of the poor, who do not have enough money to buy food when prices
go up. Therefore, the Government needs to intervene. The Government has
taken some positive action recently, but should have done more.?

CHRONICLES OF CRISES FORETOLD
In both Timor Leste and Cambodia, the roots of severe hunger,
malnutrition and starvation were planted a long time ago. In the case
of Timor Leste, they can be traced back to Portuguese colonialism and
the imposition of plantation agriculture on a traditional, multi-crop
agricultural system. But what we see today in both countries are not
simply ghosts from distant colonial pasts. There have been significant
(and nightmarish) events over the past few decades that have entrenched
food deprivation among innocent civilians.

The report of the Committee for Truth and Reconciliation (CAVR) Chega!
documents how famine was induced in Timor Leste in 1977-78 by Indonesian
military occupation and the war against Timorese independence forces.
(8) At least 80,000 people died of hunger and related diseases during
this time as military objectives were more important to the Indonesian
military than the lives of occupied peoples. During the same period in
Cambodia, millions of Cambodians were brutalised and starved by the
Khmer Rouge in labour camps that were set up — ironically — to grow
rice for the Khmer Rouge and its most important ally, China. In both
countries, food and agricultural systems were militarised and
fractured, and food itself became a weapon by which power was wielded.

The transitions of both Cambodia and Timor Leste to independent,
?post-conflict? nation states did not result in freedom from hunger for
the majority of their populations. Certainly, gains were made on many
fronts — social, economic and political — but these gains were not
equitably shared by all , nor did they include rebuilding the potential
of families and communities to feed themselves. On the contrary, the
economic blueprints devised by donors and creditors emphasised cash
crops over food crops, and placed domestic producers and workers at the
mercy of markets in which they had no leverage or space to maneuver.
The World Bank, IMF and ADB were more interested in whether commodity
markets functioned efficiently and whether suitably ?enabling
environments? for the private sector had been created, than whether
local people had enough to eat.

Today, all the global trends related to rising food prices are
reproduced at local levels in Timor Leste and Cambodia: rising costs of
fuel and essential goods, doubling of the price of staples, diversion of
grain to bio-fuels and animal feed, the conversion of agricultural lands
to industrial, housing and tourism estates, the hoarding and
manipulation of food supply by traders, profiteering by speculators
through futures trade, etc. And as in every developing country, rising
prices of rice, wheat, soy, corn and other staples have not translated
into higher prices for small-scale producers or into increased food
security for them. On the contrary, middlemen, traders, speculators and
agribusiness companies are making a killing — literally.

But even when world food prices come down, unless economic and
agricultural policies are drastically amended in both countries, food
shortages, hunger and malnutrition are not likely to abate. ?Now we can
see the negative impacts of the free market? said Mateus Tilman from
Kdadalak Sulimutuk Institute (KSI), an organisation working on land
reform in Timor Leste. According to Tilman and HASATIL’s Pereira,
resolving land conflicts and governmental investment in rural
infrastructure are crucial steps to tackle food shortages and hunger.
?Our dream is to have comprehensive agrarian reform and empower our
farmers. Land must remain in the hands of the farmers? Tilman adds. KSI
works closely with HASATIL, whose members are promoting food sovereignty
as a long term solution to the country’s food crisis. ?We need to plant
more local food crops, build independence in food and reduce dependence
on imported seeds and fertilisers. We also need to promote local
knowledge among farmers — use and nurture their local knowledge and
build more; and we need to provide information to farmers about climate
change, trade and other related issues.?

Unfortunately, there are few such visionaries in Cambodia. Most
development NGOs are reluctant to take on the country’s elite power
structures and confront national economic policies that are accelerating
land and resource crises and reproducing the food crisis. However,
local farming, fishing and indigenous communities are organising and
federating in an attempt to build a strong and collective national voice.

Mirroring trends elsewhere, the tragedy in both countries is not that
there is not enough food, but that the food does not reach everyone who
needs it. Even in instances of actual food shortages, food is available
in neighboring areas and countries, and with timely governmental
intervention, serious food crises can be averted. But as has become
evident over the past year, the world can have record grain production
as in 2007 (2.3 billion tons) and still people can be impoverished by
rising food prices. (9) The high profits recorded by agribusiness
companies and futures traders in 2007 show that food has become a
commodity for speculation and profit making. While governments in
developing countries, especially net food importing countries, are
finally taking some actions to protect their economies and food stocks,
it is uncertain whether they will have the courage to move away from the
economic orthodoxy of free market theory preached by the World Bank and
the IMF, and commit to the drastic transformations of national economic,
agricultural and food policies needed to build genuine, long term food
security.

It is extremely important that we start to rebuild the capacities of our
communities and societies to feed ourselves. La Via Campesina’s
proposed paradigm of peoples’ food sovereignty offers the most
appropriate and adaptable selection of strategies to do this. For Timor
Leste and Cambodia, peoples’ food sovereignty can ensure that
independence, national reconstruction and peace building find
longer-term, sustainable and home-grown expressions.

* Shalmali Guttal is a senior associate with Focus on the Global South.
She can be contacted at [email protected]

NOTES
1. See UNMIT Weekly number 42:
http://www.unmit.org/unmisetwebsite.nsf/p9999/$FILE/42.weekly.english.190508
.pdf
2. ibid
3. KBH is the acronym for Knua Bua Hatene, a Timorese non-governmental
organisation that provides vocational education to youth and vulnerable
groups to facilitate employment and food security.
4. East Timor: a Tiny Half Island of “Surplus Humanity. Ben Moxham,
February 18, 2005. http://www.counterpunch.org/moxham02182005.html
5. ibid
6. HASATIL is the acronym for Hametin Agricultura Sustentavel Timor
Lorosai which means ‘Strengthening Sustainable Agriculture in Timor
Leste in Tetum, one of Timor Leste’s national languages.’
7. ‘East Timor: a Tiny Half Island of “Surplus Humanity”‘. Ben Moxham,
February 18, 2005. http://www.counterpunch.org/moxham02182005.html
8. http://www.cavr-timorleste.org
9. Making a Killing from Hunger. Against the grain, April 2008, GRAIN.
http://www.grain.org/atg/

*********************************************

FOOD CRISIS EXPOSES FAILINGS OF INDIA’S ECONOMIC REFORMS
Afsar Jafri*

The recent escalation in food prices is the latest calamity to hit the
poor and marginalised communities in India. The price of food and other
essentials has been rising for the last 12 weeks and the current
inflation level is the highest witnessed since November 2004. Retail
prices of some essential food commodities have seen a sharp increase.
Retail prices of gram, sugar, mustard oil, vanaspati and onions have
increased by up to 11 per cent in the national capital in last one
month, pushing inflation to a 39-month high of seven per cent. (1)

“SHINING INDIA” AT THE COST OF “SUFFERING INDIA”
Facing public outrage on rising food prices, the United Progressive
Alliance (UPA) government, took refuge by issuing statements that
inflation is a global phenomenon. Even though it is a global phenomenon
and food riots have been witnessed in more than 30 countries, the food
crisis in India is primarily caused by the pro-market biased policies of
the government. Indians (along with the Chinese) have been accused of
eating more due to rising prosperity resulting in the global food
shortages. But the per capita food consumption and calorie intake
indicates that irrespective of the current inflationary trend, majority
in India are facing hunger and starvation since liberalisation policies
were introduced.

The irony is that though signs of the food and agriculture crisis were
evident, policy makers continued with neoliberal policies to benefit
corporations. The government is witness to the increasing schism between
‘shining India? and ?suffering India? but their mantra has always been
that only the pro-capitalist, corporation driven economy can bring
sustained economic growth which will trickle down to benefit the
disadvantaged sections of the population. Despite looming inflation, the
Economic Advisory Council to the Prime Minister of India believes that
robust investment growth and strong corporate performance would drive
India towards prosperity. It also says that ?in the current year, the
strong growth in agricultural GDP has come mostly from activity other
than food grain production, namely commercial crops, horticulture and
animal husbandry.? (2)

This paradigm shift in foodgrain production was introduced under the
World Bank direction which ?required India to move away from the
existing subsidy-based regime and instead, invest in building a solid
foundation for a highly productive, globally competitive and diversified
farm sector.? (3). The report recommended the removal of subsidies
related to grain procurement and Public Distribution System (PDS),
diversification of Indian agricultural development, increased space for
the private sector in agriculture extension services, contract farming
and for agro-industry in general. Interestingly during the recent crisis
the Indian government severely criticised the World Bank for their
advice to countries to shift from food crops for domestic population to
cash crops for exports. (4) Addressing a special meeting of the United
Nations Economic and Social Council to consider the issue of rising food
prices, India?s UN Ambassador Nirupama Sen, said that the ?tradition of
these institutions? advice was partly responsible for the crisis in the
first place?.

The corporate led growth regime has contributed to mass displacement of
mainly small and marginal farmers, leading to loss of livelihood
opportunities and employment generation for the common people. The
widespread farmers? suicides, which reached 150,000 (5) in just eight
years (1997-2005), is a manifestation of the ongoing corporatisation and
mindless deregulation of the agricultural sector. Though India is seen
as a rising economic power and it is hoped that a trickle down effect
will benefit the poor and marginalized, in reality the gap between
?Shining India? and ?Suffering India? is widening: 77 percent (6) of the
Indian population who survive on Rs. 20/- (half a US dollar) a day, does
not figure in this ?booming Indian economy?.

MYTH OF GLOBAL MARKET INTEGRATION
Two years of wheat imports have exposed the fallacies of neoliberal
policies. India, once a wheat exporting country was forced to become the
largest wheat importer through a design to benefit the global food
corporations. The declining procurement of locally produced wheat by the
Food Corporation of India (FCI) prepared the ground for wheat imports.
This was a sea change from the situation during 2001-2002 to 2004-2005,
when the country exported 12.4 million tonnes of wheat. Since early
2006, the USA was pressuring India to break its tariff wall and open up
for wheat imports. In March, despite predictions of a bumper wheat
harvest, the US Wheat Associates (7) said India would import up to 30
lakh tonnes of wheat in that year. (lakh = 100,000). Following this,
the government reduced the applied tariff on wheat from 60 per cent to
zero for imports by the State Trading Corporation of India (STC) while
for private traders, the duty was brought down to five per cent. This
led to import of 5.5 million tonne of wheat in 2006 at prices ranging in
between US $178.75 to US $228.94 (8) a tonne when the local wheat
production was 69 million tonnes. In 2007 the government first scrapped
a wheat import tender at an average price of $263 per tonne in June
citing high prices but in July, less than 40 days later, it contracted
5.11 lakh tonne of wheat at an average price of $325.59 per tonne. Then
again on September 3, it contracted 7.95 lakh tonne of wheat at an
average price of $389.45 (9) but only 1.8 million tonnes of wheat
finally landed on Indian ports at double the price of last year despite
increase in wheat production upto 74.82 million tonnes in that year.
Thus the government paid foreign traders exorbitant price upto Rs 16,000
per tonne while the MSP (market spot price) was only Rs. 8500 per tonne.
And the main beneficiaries of the India?s wheat import were giant grain
corporation like Glencore, Toepfer, Cargill and the Australian Wheat
Board who gained at the cost of Indian farmers. However, the import of
wheat at expensive rates led to the sharp increase in local wheat and
wheat flour prices making it unaffordable for the poor.

The story of wheat is not different from what happened in late 1990s in
the edible oil sector when under pressure from the USA, India reduced
the duty on the crude edible oil to 15 per cent in August 1998. In July
1999 Oil World reported that India was set to replace China as the
world’s largest vegetable oil importer and projected India?s import
around 3.6 million tonnes (MT) in 1998-99 oil year. In the first nine
months India had imported 3 MT oil and during 1998-99 oil year, edible
oil import amounted to a massive 4.4 MT, an increase of 111 per cent
over the previous year’s 2.08 MT. The increasing reliance on imports
considerably weakened the domestic edible oil production.

In spite of the above experiences, early this year the government
allowed liberalisation of imports to deal with rising inflation by
reducing import duty to zero in respect of articles like pulses, edible
oil and maize; withdrawal of four per cent additional duty on edible
commodities; reducing import duty on refined oil and vegetable oil by
7.5 per cent; reduction of import duty on butter and ghee to 30 per
cent. But does the reduction in import duties and import of food grain
help in containing the domestic food prices? In June 2006 the same
government had unilaterally liberalised imports to bolster the supply
side of essential commodities but this couldn?t control inflation. The
government?s Economic Survey 2006-07 had said that ?duty free wheat
imports did not help to check price rise, rather the rising global
prices impacted the domestic market in a subtle way?. A billion plus
population of India cannot depend on the ?ship-to-mouth? existence and
the government needs to restore its policy to build up food grain
reserves in order to serve the farmers and the consumers. Moreover there
is greater threat that the unilateral trade liberalisation as a solution
to inflation would soften India?s position in WTO.

PUBLIC DISTRIBUTION UNDERMINED BY CORPORATIONS
The Public Distribution System (PDS) (10) has been one of the most
crucial elements of food policy and food security system in the country.
But the Indian government has been deliberately weakening the public
distribution system under the World Bank pressure to benefit the
agribusiness corporations. India witnessed a shortage of wheat in
2005-2007 because systematically the foodgrain (wheat and rice) buffer
stocks were lowered through below target offtake of grains by government
from the farmers.

In order to make a case for wheat import under US pressure, the
government went slow on the procurement of wheat in 2005-2007 and
deliberately kept the government’s purchasing price low to allow
multinational corporations to enter the trade. In 2006, Cargill India,
the Australian Wheat Board, and two Indian based companies with a lot of
foreign equity, ITC and Adani Export, procured 30 lakh tonnes of wheat.
In 2003-04, government procured 16.8 million tones of wheat which went
down to 14.8 million tonnes in 2004-05 and it further reduced to 11.1
million tonnes in 2005-2006 and last year it was just 9.2 million
tonnes. (11) The government deliberately created a situation of food
insecurity in the country by allowing multinational corporations to move
into agro-business and large procurement. However in 2008 it corrected
its faulty policy of reduced procurement and procured a record 20.5
million tonnes (12) till 20 May this year, which is a huge jump from a
meagre 11.1 million tonnes in the entire season last year, helped by a
bumper crop and higher prices. Moreover the government went a step
further and Indian Railways decided to stop allocating wagons for
transporting wheat from the growing areas by the private trader,
impacting their wheat procurement.

The reduced procurement of food grains resulted in reduced amount of off
take by the state governments for the subsidized grain distribution
through a network of more than 450,000 Fair Price Shops (FPS). An
analysis of data from 2005-06 onward reflects a consistent fall in
allocation of wheat in the BPL (below the poverty line) category, even
while there was a perceptible upward shift in demand. (13) It means
that at a time when open market prices of wheat were rising, there
wasn?t enough wheat in the PDS for those eligible to buy it there for
less than the market prices.

COMMODITY FUTURE: TRADING ON HUNGER
Besides the agribusiness, the traders engaged in future trading in
commodities were beneficiaries of the declining food procurement and
shrinking of buffer stocks. Infact the opposition parties in India
claimed that the lowering of procurement and shrinking of buffer stocks
was meant to facilitate the speculative trading of foodgrains. Reduction
in government stocks is imperative for the private traders and
speculators to speculate on prices of foodgrains. Mr. Sitaram Yechury
representing the Community Party of India (Marxist), debating the issue
of price rise in the Parliament said that, ?three billion dollars a day
is the speculation that is taking place in the commodity exchange market
of futures and forward trading? across three national level electronic
exchanges and twenty-one regional exchanges. In just two weeks, from 17
March to 31 March 2008, the total value of trading at these commodity
exchanges was Rs. 2,12,465.17 crores (14). The cumulative value of trade
in the last financial year, from 1 April 2007 to 31 March 2008 was to
the tune of Rs. 40,65,989 crores as compared to Rs. 5,71,759 two years
ago in 2004-2005. One firm calculates that the amount of speculative
money in commodities futures markets, where investors do not buy or sell
a physical commodity, like rice or wheat, but merely bet on price
movements ? has ballooned from US$5 billion in 2000 to US$175 billion to
2007 (15). The price behaviour of food over 2007 and the first three
months of 2008 is more or less explained by such speculation on food
products.

But the speculation and bidding in food stocks does not benefit small
and marginal farmers. The Economic Survey 2007-08 clearly stated that,
“Direct participation of farmers in the commodity futures market is
somewhat difficult at this stage as the large lot size, daily margining
and high membership fees ? work as a deterrent to farmers’ participation
in these Markets. Farmers can directly benefit from the futures market
if institutions are allowed to act as aggregators on behalf of the
farmers?. Though the government has put a ban on future trading of some
crops, it may be opened up anytime, therefore the government must
totally ban the futures trading of food commodities as demanded by the
citizens groups and left parties.

RETREATING FROM CAPITALIST ECONOMY
The UPA government under the leadership of Manmohan Singh seems to
concede the failure of the capitalist system (but it could be a gimmick
for the election, which is due in early 2009). The inflation also made
him realise the viability of the small farm essential for the survival
of millions of small and marginal farmers and to deal with the food
crisis. Recently the Prime Minister made a statement which is discordant
with the general pro-market reforms push, including promotion of
contract farming, that the UPA government has encouraged for the past
four years. At the Global Agro-Industries Forum, the Prime Minister said
that, “collectivization, corporatization and land consolidation through
land alienation are neither possible nor socially desirable, while
warning that rising food prices could hamper the country’s economic
growth?We cannot wish away the existence of economically unviable farms?
It is particularly worrisome that the new economics of biofuels is
encouraging a shift of land away from food crops?. (16) Even two of his
colleagues from the cabinet showed their concern on the capitalist
economic model when Mr. Kamal Nath (Union Commerce Minister) and Mr.
Sharad Pawar (Union Agriculture Minister), stated that if the need arose
they were ready to look at invoking the Nehru-era controls built within
existing commodity regulation laws. The last few months have witnessed
several steps where the UPA government have retreated from its
capitalist move and brought in government regulation to check inflation.
One can infer from this development that the UPA government headed by
Manmohan Singh (a former World Bank governor) has lost the confidence in
the neo-liberal trajectory in agricultural reforms.

SMALL-SCALE FARMERS HOLD THE KEY
Given the deepening of agrarian crisis which is causing hunger and
malnutrition in rural areas due to unprecedented decline in purchasing
power in the rural areas, the first priority of the government should be
to strengthen the agriculture sector by increasing public investment,
facilitating public control over inputs and market, strictly regulating
the corporate investment in agriculture as well as retreating from
neoliberal reforms in agriculture.

Since India is a land of small and marginal farmers, and over 650
million of its over one billion population are directly or indirectly
dependent on agriculture, there is urgent need to encourage and
strengthen biodiversity based small scale agriculture which are crucial
for the food security of the millions of Indians. Infact, it is the
small biodiverse farm, which has higher productivity than large
industrial farms. Large farmers and industrial farming has serious
limitations on increasing agricultural productivity. In the face of a
worsening worldwide food-price crisis, even the President of the
International Fund for Agricultural Development (IFAD), Mr. Lennart Båge
feel that small farmers are now essential to ensure food security, spur
economic growth and help mitigate climate change. He said that
smallholder farmers are a vital global asset, a key factor for increased
food production, economic growth and development, and mitigating climate
change. The 2 billion people in rural areas in the developing world can
be tremendously more productive. They can be part of the supply
response, feeding the world, and also very much a part of the climate
change agenda, both in terms of adaptation and mitigation. (17)

In India, small farm based on internal inputs are the only hope to deal
with the impending food crisis and can ensure food security and food
sovereignty to millions of people living off the farm. A food secure and
peaceful India is in the hands of her small farmers.

* Afsar Jafri is a senior associate with Focus on the Global South

NOTES
1. Retail prices shoot up in Delhi, The Financial Express; April 04,
2008;
http://www.financialexpress.com/news/Retail-prices-shoot-up-in-Delhi/292538/
#
2. Review of the Economy 2007-08, Prime Minister?s office
3. World Bank for radical farm policy changes, The Hindu Business Line,
December 20th, 2004;
http://www.thehindubusinessline.com/2004/12/20/stories/2004122000690200.htm
4. India blames World Bank, IMF for food, fuel crisis, May 22, 2008;
http://www.livemint.com/2008/05/22115241/India-blames-World-Bank-IMF-f.html
5. Farm suicides rising, most intense in 4 States by P. Sainath; The
Hindu, November 12 2007;
http://www.thehindu.com/2007/11/12/stories/2007111253911100.htm
6. Arjun Sengupta?s (National Commission for Enterprises in the
Unorganised Sector) Report said that 77 percent of the Indian population
or 836 million people survive on a per capita daily consumption of up to
Rs. 20 (in 2004-05). http://nceus.gov.in/Condition_of_workers_sep_2007.pdf
7. A US trade body funded by the federal government and US wheat producers
8. CVC squeezes Govt on wheat imports by Ashok B Sharma; Financial
Express, September 30 2007;
http://www.financialexpress.com/news/CVC-squeezes-Govt-on-wheat-imports/2228
55/
9. Delay in decision on wheat buy costs govt dear, again by Varun
Jaitly; Financial Express; September 10, 2007;
http://www.financialexpress.com/news/Delay-in-decision-on-wheat-buy-costs-go
vt-dear-again/215588/#
10. PDS is a rationing mechanism, entitles households to essential
commodities such as rice, wheat, sugar, kerosene and edible oil at
subsidized rates. The responsibility of operating them is shared by
Central and State governments.
11. Debate on price rise in the Rajya Sabha, the Parliament of India,
16th April 2008
12. Wheat purchases to double in 2008, The Economic Times, May 22, 2008;
http://www1.economictimes.indiatimes.com/News/Economy/Agriculture/Wheat_purc
hases_to_double_in_2008/articleshow/3063332.cms
13. ibid.
14. One crore = 10million
15. Making a killing from hunger: We need to overturn food policy, now!
GRAIN, April 2008
16. Corporate farming won’t help: PM, Times of India, April 11, 2008;
http://timesofindia.indiatimes.com/India/Corporate_farming_wont_help_PM/arti
cleshow/2942627.cms
17. IFAD head on food crisis by Tim Nater, May 07, 2008;
http://www.donorplatform.org/content/view/190/157/1/0/

*********************************************

PRICE HIKES HIT THE POOR, EVEN IN THAILAND
by Jacques-chai Chomthongdi*

When it comes to rice Thailand sees itself as a major player in the
world. Nine to ten million metric tons of milled rice leaves Thai ports
each year, accounting for almost 30 per cent of the world trade in rice.
This puts Thailand as the number one rice exporter, followed by Vietnam
and the United States with 5 and 3.5 million metric tons respectively in
2007/2008. When the rice price in the world market started shooting up
between the end of 2007 and the beginning of 2008, the Thai government
was in a celebratory mood, with the expectation of yielding more
popularity among rural constituencies. The rosy picture was, however,
short lived. Soaring domestic prices directly hurt the urban population,
particularly the poor. Also, there was an increasing skepticism of how
much farmers are really gaining from this phenomenon.

There is a public relations effort from the government and agribusiness
to let the public believe that the farmers are benefiting significantly.
Thus, there is little need for government interventions. After decades
of misery, they say, this is the time when the small-scale rural
producers have the opportunity to liberate themselves from the vicious
circle of debt and poverty altogether.

It is true that the average farm-gate price of paddy jumped to around
14,000 baht per ton in April 2008, from 7,000 baht a year ago. Still,
does this mean that Thai farmers got richer by a 100 percent? A closer
look at the situation suggests otherwise. Eighty four percent of rice
production in Thailand is located in the rain-fed areas where farmers
can only cultivate one crop a year. Most of these farmers had already
sold their produces by late 2007, prior to the major increase in price.
Therefore, majority of the farmers have gained nothing from the current
price hike. The rest are those who farm in the irrigated areas
concentrated around the central plain where two to three crops a year is
possible. They have been receiving high prices for their produce which
has been sold during the first four months of this year. Nonetheless, it
does not mean that they all suddenly became wealthier. Far from it: at
best, the increase in their income has been marginal and this is because
the cost of production has also risen tremendously. On average, the cost
of production has increased by almost 100 percent (land rent is up 220
%, labour 60 %, seeds 110 %, fertilizer 150 %, pesticide 100 %, and so
on). The scary scenario ahead is if the price of rice decreases in the
next harvesting season but the cost of production does not. In this
case, farmers will be facing even more debt and will run the risk of
losing their remaining land, since they have invested — at a very high
cost — in both the irrigated and rain-fed areas.

So if the farmers are not making windfall profits, then who is? There
are three other main players in the domestic rice business: millers,
local distributors, and exporters. Recent investigation reveals that the
average miller has been able to increase their return per ton from 400
to 1200 baht, or by 200 %, while operation costs almost have not changed
during the last five months compare to the increase in their returns.
This figure does not take into account that millers have the capacity to
stock rice, which means that a large proportion of the rice in their
silo was procured at a much lower price. As for the major local
distributors, limit information is available. However, given their
capacity to store rice, and the normal advance procurement practice, it
is certain that they too are reaping a huge profit from their recent
operations.

Regarding the exporters, they do not traditionally stock the rice. They
only acquire it after sealing the export order. This limited their
ability to speculate in the first few weeks of rising prices, and some
of them even lost money. However, after a short period of adjustment,
most exporters are now benefiting as well, from an average margin of two
per cent per ton of rice they export to around seven per cent presently.
If we take into account the fact that price per ton has also increased,
we could easily see that large chunk of the gain has landed in the
exporter hands as well.

While the businesses are busying dividing the cake, the urban poor are
struggling to find affordable rice — let alone cake — to feed
themselves. They have seen the price of their main food jump threefold
in the last five months, while their income has not changed. This
automatically means less food and more suffering. This is also true for
most of the farmers who have sold all their produce, and now have to buy
rice to eat at a higher price.

The private sector and mainstream economists are singing the same song
of ?letting the market mechanism do the work?. Thus far, there is almost
no government intervention to ease the situation. The only thing that
the government has done up until now was to use a small part of the 2.1
million tons of the reserve stock to sell to the people at a lower
price. This scheme was not only very late (May 9), but also ineffective
since most of the urban poor could not access the rice because of its
limited quantity or they could not get to where the rice was being
distributed.

The major concern that both the private sector and the officials at the
Ministry of Commerce have in common is not the unfair structure of the
market nor the people?s hunger, but the fear of loosing international
rice clients. The worst scenario for them is the change in policy in
importing countries, towards more self-sufficiency in rice. Hence, there
is a strong pressure on the government as a whole to not send any
“unfriendly” signal and to continue facilitating the export of rice.

* Jacques-chai Chomthongdi is a research associate with Focus on the
Global South.

*********************************************

PHILIPPINES: SUPPLY CRUNCH ROCKS WEAK AGRICULTURE SECTOR
Mary Ann Manahan*

In various parts of the country, poor Filipinos are lining up for rice,
sending out signals that a rice crisis is unfolding in the country. They
line up specifically for the subsidized rice sold by the National Food
Authority (NFA), the Philippine agency responsible for ensuring food
security and the stability in the supply and price of rice in the
country. The long lines were triggered by soaring rice prices, which
increased by up to 32 percent this month from the year-ago wholesale and
retail levels.

The higher prices are due partly to the global crunch in rice supply.
According to the United Nations Food and Agriculture Organization, rice
stocks have dipped to their lowest level in 25 years. The most
optimistic estimates say that global rice supply could slide to 70
million tons, less than half the 150 million-ton inventory in 2000. As a
result, global rice prices have surged to historic levels in 20 years,
trading in recent months at US $500-700 per ton compared to the US$300
per ton in the year 2000. The rise in prices has been particularly
marked since the start of the year. The Philippines, for example, bought
rice at US$474.40 per ton in January. By March, this price has increased
by 43 percent to US$678.39 per ton.

Various reasons have been blamed for the dwindling global supply and
soaring of prices: increases in the cost of oil, transport and
fertilizer; rice hoarding; climate change; and the high demand for
bio-fuel stock that results in the shrinking of areas planted to rice.
Local experts say that the rice crisis is more than just a result of a
global phenomenon. According to the Philippine Rice Research Institute
and the International Rice Research Institute, failure to achieve rice
self-sufficiency is due to the Philippines’ geography and booming
population. From 60 million in 1990, the country’s population has
increased to 90 million in 2008. National daily consumption has reached
33,000 metric tons, which is a 14 percent increase from two years ago.
This amounts to a per capita consumption of as much as 134 kilos or 2.7
sacks of rice per year.

Based on government figures, rice production has been growing steadily.
In 2008, the Philippines is forecast to produce around 17 million metric
tons, almost double the production in 1990. However, according to the
NFA, the registered growth in palay (paddy or unhusked rice) production
is not enough to meet the combined effects of an increase in demand and
the need to maintain the required buffer stock by July 1. To contain a
surge in rice prices, the country needs to import up to 2.1 million
metric tons, one of the largest rice importations in the country’s
history, to be able to maintain its two-month inventory, which has
thinned by 20 percent in the first quarter this year.

NGOs and farmers groups offer alternative explanations for the crisis.
According to Centro Saka, Inc., an NGO that works on rural issues, the
Philippines’ capacity to supply its rice requirements has continued to
weaken even as the demand for rice has not increased significantly. It
says that the gap between rice supply and demand has hovered at about
one million metric tons in the last five years. To cover the deficit,
rice importation has steadily increased from 0.7 million metric tons in
1997 to 1.8 million metric tons in 2007. This over-reliance on imports
weakens the country’s food security and makes it vulnerable to global
supply fluctuations such as the one currently being experienced. Land
use conversion of rice lands to residential and commercial uses has also
been identified as a reason for the crisis. Over the past 20 years, the
country has lost nearly half of its irrigated land to urban development.
Many claim that at the heart of problem is government’s neglect of
agriculture over the past two decades and its incoherent food security
policy.

These days, civil society watchdogs and rural development advocates are
busy urging government to re-prioritize the agriculture sector and
address the root causes of the rice crisis. Meanwhile it remains to be
seen how effective the Philippine government’s immediate response to the
crisis is.
It has so far committed to funnel additional 43.7 billion pesos to the
rice sector to ensure “abundant, affordable, and accessible” food
supply, bulk of which is expected to be spent on rice imports.

* Mary Ann Manahan is a research associate with Focus on the Global South.

*********************************************

FOOD CRISIS SYMPTOM OF DUBIOUS LIBERALISATION
Aileen Kwa*

GENEVA, May 12 (IPS) – The high food prices that have sparked riots in
many parts of the developing world — from Indonesia, India and
Bangladesh to Cameroon, Cote d’Ivoire and Haiti — should come as no
surprise. These are only the latest in a series of events many
developing countries have suffered as a result of opening their borders
and neglecting domestic agriculture.

A large number of developing countries have conscientiously implemented
World Bank and International Monetary Fund (IMF) conditions and World
Trade Organisation (WTO) commitments. They have applied the given
structural adjustment policies — and have seen the damaging
consequences to their domestic agricultural sector.

The consequence has been the certain erosion of their capacity to
produce their own food.

In the era of stronger state control in the 1970s and even the early
1980s, domestic food markets in the developing world were often in the
hands of state marketing boards and cooperatives. Marketing boards would
guarantee floor prices, and provide fertilisers and seeds. They also
controlled import volumes, redistributed food where there were
production shortfalls, and purchased commodities from cooperatives.

These marketing boards were not always run in the best possible way;
there were many instances of corruption or inefficiency, but they did
fulfill certain critical functions. Farmers were provided a market to
sell their produce to, which meant they had a livelihood. Prices were
stable even though they were often lower than what farmers would have liked.

As a result of these policies, many developing countries were either net
food exporters, or at least were nearly food self-sufficient.

All that has changed over the last 20 years. Investment support to
farmers was done away with. Small farmers were told to produce for the
international market, and their markets were opened to producers from
outside. Rather than supporting staple crops, government support went to
the export sector. Since all would specialise in the products where they
had ‘comparative advantage’, gains were supposed to accrue all round.

But rather than producing winners, millions of the poorest subsistence
farmers were knocked out of their own markets. Imports took over what
was previously produced by local people. Over the last 20 years, the
production capacity in many countries has severely diminished.

The Philippines has been one prime example of such policies. “During the
60s and 70s, we were self-sufficient,” Jowen Berber of Centro Saka, an
NGO working on agrarian issues with farmers, told IPS. “That was the
time that the government was heavily investing in rice — irrigation,
infrastructure, marketing support and production support such as credits
and inputs. But when the government stopped those incentives and
subsidies, rice production slowly decreased.”

Berber said “the acreage of irrigated land has also been falling because
the government has not been maintaining irrigation facilities. We also
have a very high level of post- harvest losses in rice — up to 35
percent because our post-harvest facilities are very old.”

Instead of supporting farmers with guaranteed prices as before, Berber
said “the government now intervenes to buy less than 1 percent of the
domestic rice that is produced. They are buying more imported rice than
our own local rice.”

A study on import surges by David Pingpoh and Joean Senahoun,
commissioned by the UN’s Food and Agriculture Organisation (FAO) in
2006, noted that the Cameroon government support to the rice sector was
removed in 1994 through implementation of IMF and World Bank policies.
The fertiliser market was privatised. Rice yields of poor farmers
dropped as fertilisers became unaffordable. Tariffs were liberalised,
and annual rice imports doubled from 152,000 tonnes to 301,000 tonnes
between 1999 and 2004.

This opening rendered the country vulnerable to the policies of other
countries. At the time, India was de-stocking its rice surplus, and rice
imports from India increased from 7,900 tonnes in 2001 to 60,300 tonnes
in 2002. As a result of this import surge, rice farmers were hard hit,
and many left the sector. Land for rice cultivation dropped 31.2 percent
between 1999 and 2004.

According to the FAO, Cote d’Ivoire also saw imports flooding in when
the market was opened up. As a result of implementing commitments at the
WTO, Cote d’Ivoire removed import restrictions on key agricultural
goods, particularly rice. Duty on all agricultural products was set at a
maximum of 15 percent, except for 25 tariff lines.

As a result, rice imports increased at an annual rate of 6 percent from
470,000 tonnes to 715,000 tonnes between 1997 and 2004. Imports were
mainly from Thailand, China and India. Domestic production dropped 40
percent over this period.

In Nepal, the civil society organisation ActionAid documents that rice
import surges came in 1994, 1996 and 2000, with imports increasing by
175 percent, 55 percent and 800 percent respectively. From 24,500 tonnes
imported in 1999, by the year 2000 imports had hit 195,000 tonnes. The
porous borders between Nepal and India, and the Nepal-India Trade Treaty
were widely seen as the cause of these surges. In certain areas of
Nepal, domestic prices fell by nearly 20 percent. The southern belt
bordering India saw a multitude of rice plants and rice mills shutting down.

Today, in the latest twist of events, food prices have increased due to
global shortfalls. Food production has been redirected towards biofuel
production. Drought in Australia has contributed to shortages on the
world market. Speculators playing on commodity markets have further
increased prices.

Up to 37 countries have been gripped by protests and riots. In Cameroon,
seven people were killed in the unrest in February. Food riots also took
hold of Abidjan in the Cote d’Ivoire in March this year.

At meetings in Berne in Switzerland to address the global food crisis,
UN Secretary- General Ban Ki-Moon, World Bank president Robert Zollick
and WTO director-general Pascal Lamy again made a plea for more free
trade the panacea. But farmers remain unconvinced that more of the same
policies that have contributed to the last two decades of destruction of
agriculture can help.

Reacting to the push by the WTO leadership, the World Bank and the UN to
stitch up the Doha Round so that further liberalisation can assist in
resolving the food crisis, Henri Saragih, international coordinator of
the global network of peasant farmers La Via Campesina writes,
“Protecting food has become a crime under free trade rules.
Protectionism has become a dirty word. Meanwhile, countries have become
addicted to cheap food imports, and now that prices are shooting up,
hunger is raising its ugly head.”

* Aileen Kwa is a Geneva-based policy analyst, presently on leave from
Focus on the Global South. This article was first published by IPS, 12
May 2008, http://www.ipsnews.net/news.asp?idnews=42325

*********************************************

THE TIME HAS COME FOR LA VIA CAMPESINA AND FOOD SOVEREIGNTY
Peter Rosset*

Around the world it seems more and more that the time has come for La
Via Campesina (http://www.viacampesina.org). The global alliance of
peasant and family farm organizations has spent the past decade
perfecting an alternative proposal for how to structure a country’s food
system, called Food Sovereignty. It was clear at the World Forum on Food
Sovereignty held last year in Mali, that this proposal has been gaining
ground with other social movements, including those of indigenous
peoples, women, consumers, environmentalists, some trade unions, and
others. Though when it comes to governments and international agencies,
it had until recently been met with mostly deaf ears. But now things
have changed. The global crisis of rising food prices, which has already
led to food riots in diverse parts of Asia, Africa and the Americas, is
making everybody sit up and take note of this issue.

But, what are the causes of the extreme food price hikes? There are both
long term and short causes. Among the former, the cumulative effect of
three decades of neoliberal budget-cutting, privatization and free trade
agreements stands out. In most countries around the world, national food
production capacity has been systematically dismantled and replaced by a
growing capacity to produce agroexports, stimulated by enormous
government subsidies to agribusiness, using taxpayer money.

It is peasants and families farmers who feed the peoples of the world,
by and large. Large agribusiness producers in most any country have an
export “vocation.” But policy decisiones have stripped the former of
minimum price guarantees, parastatal marketing boards, credit, technical
assistance, and above all, markets for their produce. Local and national
food markets were first inundated with cheap imports, and now, when
transnational corporations (TNCs) have captured the bulk of the market
share, the prices of the food imports on which countries now depend have
been drastically jacked up.

Meanwhile the World Bank and the IMF have forced governments to sell off
their public sector grain reserves. The result is that we now face one
of the tightest margins in recent history between food reserves and
demand, which generates both rising prices and greater market
volatility. In other words, many countries no longer have either
sufficient food reserves or sufficient productive capacity. They now
depend on imports, whose prices are skyrocketing. Another long term
cause of the crisis, though of lesser importance, has been changing
patterns of food consumption in some parts of the world, like increased
preference for meat and poultry products.

Among the short term causes of the crisis, by far the most important has
been the relatively sudden entry of speculative financial capital into
food markets. Hedge, index and risk funds have invested heavily in the
futures markets for commodities like grains and other food products.
With the collapse of the home mortgage market in the USA, their already
desperate search for new avenues of investment led them to discover
these markets for futures contracts. Attracted by high price volatility
in any market, since they take their profits on both price rises and
price drops, they bet like gamblers in a casino. Gambling, in this case,
with the food of ordinary people. These funds have already injected an
additional 70 billion dollars of extra investment into commodities,
inflating a price bubble that has pushed the cost of basic foodstuffs
beyond the reach of of the poor in country after country. And when the
bubble inevitably bursts, it will wipe out millions of food producers
throughout the world.

Another important short term factor is the agrofuel boom. Agrofuel crops
compete for planting area with food crops and cattle pasture. In the
Philippines, for example, the government has signed agreements that
commit an area to be planted to agrofuels that is equivalent to fully
half of the area planted to rice, the mainstay of the country’s diet. We
really ought to label feeding automobiles instead of people as a crime
against humanity.

The major global price increases in the costs of chemical inputs for
conventional farming, as a direct result of the high price of petroleum,
is also a major short term causal factor. Other factors of recent impact
include droughts and other climate events in a number of regions, and a
conspiracy involving the CIA to destabilize certain governments not
well-liked by Washington. In Venezuela, Bolivia and Argentina, the
private sector and the TNCs are working hard to export food items sorely
needed by the local population, or otherwise prevent them from reaching
market, as a way to delegitimize the leaders of those countries.

Faced with this global panorama, and all of its implications, there is
really just one alternative proposal that is up to the challenge. Under
the Food Sovereignty paradigm, social movements and a growing number of
progressive and semi-progressive governments propose that we re-regulate
the food commodity markets that were de-regulated under neoliberalism.
And regulate them better than before they were deregulated, with genuine
supply management, making it possible to set prices that are fair to
both farmers and consumers alike.

That necessarily means a return to protection of the national food
production of nations, both against the dumping of artificially cheap
food that undercuts local farmers, and against the artificially
expensive food imports that we face today. It means rebuilding the
national grain reserves and parastatal marketing boards, in new and
improved versions that actively include farmer organizations as owners
and administrators of public reserves. That is a key step toward taking
our food system back from the TNCs that hoard food stocks to drive
prices up.

Countries urgently need to stimulate the recovery of their national food
producing capacity, specifically that capacity located in the peasant
and family farm sectors. That means public sector budgets, floor prices,
credit and other forms of support, and genuine agrarian reform. Land
reform is urgently needed in many countries to rebuild the peasant and
family farm sectors, whose vocation is growing food for people, since
the largest farms and agribusinesses seem to only produce for cars and
for export. And many countries need to implement export controls, as a
number of governments have done in recent days, to stop the forced
exportation of food desperately needed by their own populations.

Finally, we must change dominant technological practices in farming,
toward an agriculture based on agroecological principles, that is
sustainable, and that is based on respect for and is in equilibrium with
nature, local cultures, and traditional farming knowledge. It has been
scientifically demonstrated that ecological farming systems can be more
productive, can better resist drought and other manifestations of
climate change, and are more economically sustainable because they use
less fossil fuel. We can no longer afford the luxury of food whose price
is linked to the price of petroleum, much less whose industrial
monoculture production model — with pesticides and GMOs — damages the
future productive capacity of our soils.

The time has truly arrived for La Via Campesina and for Food
Sovereignty. There is no other real solution to feeding the world, and
it is up to each and every one of us to join mobilizations to force the
changes in national and international public policy that are so urgently
needed.