FOOD CRISIS: ‘The greatest demonstration of the historical failure of the capitalist model’

Ian Angus, April 28, Socialist Voice

“If the government cannot lower the cost of living it simply has to leave. If the police and UN troops want to shoot at us, that’s OK, because in the end, if we are not killed by bullets, we’ll die of hunger.” — A demonstrator in Port-au-Prince, Haiti

In Haiti, where most people get 22% fewer calories than the minimum needed for good health, some are staving off their hunger pangs by eating “mud biscuits” made by mixing clay and water with a bit of vegetable oil and salt.[1]

Meanwhile, in Canada, the federal government is currently paying $225 for each pig killed in a mass cull of breeding swine, as part of a plan to reduce hog production. Hog farmers, squeezed by low hog prices and high feed costs, have responded so enthusiastically that the kill will likely use up all the allocated funds before the program ends in September.

Some of the slaughtered hogs may be given to local Food Banks, but most will be destroyed or made into pet food. None will go to Haiti.

This is the brutal world of capitalist agriculture — a world where some people destroy food because prices are too low, and others literally eat dirt because food prices are too high.

Record prices for staple foods

We are in the midst of an unprecedented worldwide food price inflation that has driven prices to their highest levels in decades. The increases affect most kinds of food, but in particular the most important staples — wheat, corn, and rice.

The UN Food and Agriculture Organization says that between March 2007 and March 2008 prices of cereals increased 88%, oils and fats 106%, and dairy 48%. The FAO food price index as a whole rose 57% in one year — and most of the increase occurred in the past few months.

Another source, the World Bank, says that that in the 36 months ending February 2008, global wheat prices rose 181% and overall global food prices increased by 83%. The Bank expects most food prices to remain well above 2004 levels until at least 2015.

The most popular grade of Thailand rice sold for $198 a tonne five years ago and $323 a tonne a year ago. On April 24, the price hit $1,000.

Increases are even greater on local markets — in Haiti, the market price of a 50 kilo bag of rice doubled in one week at the end of March.

These increases are catastrophic for the 2.6 billion people around the world who live on less than US$2 a day and spend 60% to 80% of their incomes on food. Hundreds of millions cannot afford to eat.

This month, the hungry fought back.

Taking to the streets

In Haiti, on April 3, demonstrators in the southern city of Les Cayes built barricades, stopped trucks carrying rice and distributed the food, and tried to burn a United Nations compound. The protests quickly spread to the capital, Port-au-Prince, where thousands marched on the presidential palace, chanting “We are hungry!” Many called for the withdrawal of UN troops and the return of Jean-Bertrand Aristide, the exiled president whose government was overthrown by foreign powers in 2004.

President René Préval, who initially said nothing could be done, has announced a 16% cut in the wholesale price of rice. This is at best a stop-gap measure, since the reduction is for one month only, and retailers are not obligated to cut their prices.

The actions in Haiti paralleled similar protests by hungry people in more than twenty other countries.

• In Burkino Faso, a two-day general strike by unions and shopkeepers demanded “significant and effective” reductions in the price of rice and other staple foods.
• In Bangladesh, over 20,000 workers from textile factories in Fatullah went on strike to demand lower prices and higher wages. They hurled bricks and stones at police, who fired tear gas into the crowd.
• The Egyptian government sent thousands of troops into the Mahalla textile complex in the Nile Delta, to prevent a general strike demanding higher wages, an independent union, and lower prices. Two people were killed and over 600 have been jailed.
• In Abidjan, Côte d’Ivoire, police used tear gas against women who had set up barricades, burned tires and closed major roads. Thousands marched to the President’s home, chanting “We are hungry,” and “Life is too expensive, you are killing us.”
• In Pakistan and Thailand, armed soldiers have been deployed to prevent the poor from seizing food from fields and warehouses.

Similar protests have taken place in Cambodia, Cameroon, Ethiopia, Honduras, Indonesia, Madagascar, Mauritania, Niger, Peru, Philippines, Senegal, Thailand, Uzbekistan, and Zambia. On April 2, the president of the World Bank told a meeting in Washington that there are 33 countries where price hikes could cause social unrest.

A Senior Editor of Time magazine warned:

“The idea of the starving masses driven by their desperation to take to the streets and overthrow the ancien regime has seemed impossibly quaint since capitalism triumphed so decisively in the Cold War…. And yet, the headlines of the past month suggest that skyrocketing food prices are threatening the stability of a growing number of governments around the world. …. when circumstances render it impossible to feed their hungry children, normally passive citizens can very quickly become militants with nothing to lose.”[2]

What’s Driving Food Inflation?

Since the 1970s, food production has become increasingly globalized and concentrated. A handful of countries dominate the global trade in staple foods. 80% of wheat exports come from six exporters, as does 85% of rice. Three countries produce 70% of exported corn. This leaves the world’s poorest countries, the ones that must import food to survive, at the mercy of economic trends and policies in those few exporting companies. When the global food trade system stops delivering, it’s the poor who pay the price.

For several years, the global trade in staple foods has been heading towards a crisis. Four related trends have slowed production growth and pushed prices up.

The End of the Green Revolution: In the 1960s and 1970s, in an effort to counter peasant discontent in south and southeast Asia, the U.S. poured money and technical support into agricultural development in India and other countries. The “green revolution” — new seeds, fertilizers, pesticides, agricultural techniques and infrastructure — led to spectacular increases in food production, particularly rice. Yield per hectare continued expanding until the 1990s.

Today, it’s not fashionable for governments to help poor people grow food for other poor people, because “the market” is supposed to take care of all problems. The Economist reports that “spending on farming as a share of total public spending in developing countries fell by half between 1980 and 2004.”[3] Subsidies and R&D money have dried up, and production growth has stalled.

As a result, in seven of the past eight years the world consumed more grain than it produced, which means that rice was being removed from the inventories that governments and dealers normally hold as insurance against bad harvests. World grain stocks are now at their lowest point ever, leaving very little cushion for bad times.

Climate Change: Scientists say that climate change could cut food production in parts of the world by 50% in the next 12 years. But that isn’t just a matter for the future:

• Australia is normally the world’s second-largest exporter of grain, but a savage multi-year drought has reduced the wheat crop by 60% and rice production has been completely wiped out.
• In Bangladesh in November, one of the strongest cyclones in decades wiped out a million tonnes of rice and severely damaged the wheat crop, making the huge country even more dependent on imported food.

Other examples abound. It’s clear that the global climate crisis is already here, and it is affecting food.

Agrofuels: It is now official policy in the U.S., Canada and Europe to convert food into fuel. U.S. vehicles burn enough corn to cover the entire import needs of the poorest 82 countries.[4]

Ethanol and biodiesel are very heavily subsidized, which means, inevitably, that crops like corn (maize) are being diverted out of the food chain and into gas tanks, and that new agricultural investment worldwide is being directed towards palm, soy, canola and other oil-producing plants. This increases the prices of agrofuel crops directly, and indirectly boosts the price of other grains by encouraging growers to switch to agrofuel.

As Canadian hog producers have found, it also drives up the cost of producing meat, since corn is the main ingredient in North American animal feed.

Oil Prices: The price of food is linked to the price of oil because food can be made into a substitute for oil. But rising oil prices also affect the cost of producing food. Fertilizer and pesticides are made from petroleum and natural gas. Gas and diesel fuel are used in planting, harvesting and shipping.[5]

It’s been estimated that 80% of the costs of growing corn are fossil fuel costs — so it is no accident that food prices rise when oil prices rise.

* * *

By the end of 2007, reduced investment in the third world, rising oil prices, and climate change meant that production growth was slowing and prices were rising. Good harvests and strong export growth might have staved off a crisis — but that isn’t what happened. The trigger was rice, the staple food of three billion people.

Early this year, India announced that it was suspending most rice exports in order to rebuild its reserves. A few weeks later, Vietnam, whose rice crop was hit by a major insect infestation during the harvest, announced a four-month suspension of exports to ensure that enough would be available for its domestic market.

India and Vietnam together normally account for 30% of all rice exports, so their announcements were enough to push the already tight global rice market over the edge. Rice buyers immediately started buying up available stocks, hoarding whatever rice they could get in the expectation of future price increases, and bidding up the price for future crops. Prices soared. By mid-April, news reports described “panic buying” of rice futures on the Chicago Board of Trade, and there were rice shortages even on supermarket shelves in Canada and the U.S.

Why the rebellion?

There have been food price spikes before. Indeed, if we take inflation into account, global prices for staple foods were higher in the 1970s than they are today. So why has this inflationary explosion provoked mass protests around the world?

The answer is that since the 1970s the richest countries in the world, aided by the international agencies they control, have systematically undermined the poorest countries’ ability to feed their populations and protect themselves in a crisis like this.

Haiti is a powerful and appalling example.

Rice has been grown in Haiti for centuries, and until twenty years ago Haitian farmers produced about 170,000 tonnes of rice a year, enough to cover 95% of domestic consumption. Rice farmers received no government subsidies, but, as in every other rice-producing country at the time, their access to local markets was protected by import tariffs.

In 1995, as a condition of providing a desperately needed loan, the International Monetary Fund required Haiti to cut its tariff on imported rice from 35% to 3%, the lowest in the Caribbean. The result was a massive influx of U.S. rice that sold for half the price of Haitian-grown rice. Thousands of rice farmers lost their lands and livelihoods, and today three-quarters of the rice eaten in Haiti comes from the U.S.[6]

U.S. rice didn’t take over the Haitian market because it tastes better, or because U.S. rice growers are more efficient. It won out because rice exports are heavily subsidized by the U.S. government. In 2003, U.S. rice growers received $1.7 billion in government subsidies, an average of $232 per hectare of rice grown.[7] That money, most of which went to a handful of very large landowners and agribusiness corporations, allowed U.S. exporters to sell rice at 30% to 50% below their real production costs.

In short, Haiti was forced to abandon government protection of domestic agriculture — and the U.S. then used its government protection schemes to take over the market.

There have been many variations on this theme, with rich countries of the north imposing “liberalization” policies on poor and debt-ridden southern countries and then taking advantage of that liberalization to capture the market. Government subsidies account for 30% of farm revenue in the world’s 30 richest countries, a total of US$280 billion a year,[8] an unbeatable advantage in a “free” market where the rich write the rules.

The global food trade game is rigged, and the poor have been left with reduced crops and no protections.

In addition, for several decades the World Bank and International Monetary Fund have refused to advance loans to poor countries unless they agree to “Structural Adjustment Programs” (SAP) that require the loan recipients to devalue their currencies, cut taxes, privatize utilities, and reduce or eliminate support programs for farmers.

All this was done with the promise that the market would produce economic growth and prosperity — instead, poverty increased and support for agriculture was eliminated.

“The investment in improved agricultural input packages and extension support tapered and eventually disappeared in most rural areas of Africa under SAP. Concern for boosting smallholders’ productivity was abandoned. Not only were governments rolled back, foreign aid to agriculture dwindled. World Bank funding for agriculture itself declined markedly from 32% of total lending in 1976-8 to 11.7% in 1997-9.”[9]

During previous waves of food price inflation, the poor often had at least some access to food they grew themselves, or to food that was grown locally and available at locally set prices. Today, in many countries in Africa, Asia and Latin America, that’s just not possible. Global markets now determine local prices — and often the only food available must be imported from far away.

* * *

Food is not just another commodity — it is absolutely essential for human survival. The very least that humanity should expect from any government or social system is that it try to prevent starvation — and above all that it not promote policies that deny food to hungry people.

That’s why Venezuelan president Hugo Chavez was absolutely correct on April 24, to describe the food crisis as “the greatest demonstration of the historical failure of the capitalist model.”

What needs to be done to end this crisis, and to ensure that doesn’t happen again?
Part Two of this article will examine those questions.

Ian Angus is the editor of Climate and Capitalism

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Footnotes

[1] Kevin Pina. “Mud Cookie Economics in Haiti.” Haiti Action Network, Feb. 10, 2008. http://www.haitiaction.net/News/HIP/2_10_8/2_10_8.html

[2] Tony Karon. “How Hunger Could Topple Regimes.” Time, April 11, 2008. http://www.time.com/time/world/article/0,8599,1730107,00.html

[3] “The New Face of Hunger.” The Economist, April 19, 2008.

[4] Mark Lynas. “How the Rich Starved the World.” New Statesman, April 17, 2008. http://www.newstatesman.com/200804170025

[5] Dale Allen Pfeiffer. Eating Fossil Fuels. New Society Publishers, Gabriola Island BC, 2006. p. 1

[6] Oxfam International Briefing Paper, April 2005. “Kicking Down the Door.” http://www.oxfam.org/en/files/bp72_rice.pdf

[7] Ibid.

[8] OECD Background Note: Agricultural Policy and Trade Reform. http://www.oecd.org/dataoecd/52/23/36896656.pdf

[9] Kjell Havnevik, Deborah Bryceson, Lars-Erik Birgegård, Prosper Matondi & Atakilte Beyene. “African Agriculture and the World Bank: Development or Impoverishment?” Links International Journal of Socialist Renewal, http://www.links.org.au/node/328

Chávez Increases Corn Prices, Announces Shift From Oil to Food in Venezuela

James Suggett, April 27th, Venezuelanalysis.com

Mérida, April 26, 2008 (venezuelanalysis.com)-- The president of Venezuela, Hugo Chávez, announced Thursday that the regulated prices of corn and sorghum will be raised by 30% and that a new Socialist Agricultural Development Fund (FONDAS) has been launched to promote national food production.

“The day will arrive when, just like we send petroleum to other countries, we will be able to do the same with corn, because severe hunger continues to grow [worldwide],” the president stated.

Venezuela produced 2.2 million tons of corn last year, which represents a 300% increase in national corn production since 1999, Chávez declared. He recounted that corn production had fallen in the decade prior to his election from 1.2 million tons in 1988 to 980,000 tons in 1998.

Nicolás Constatino, the president of the Venezuelan Corn Flour Industries Association, which has made several appeals for an increase in the regulated price of corn, said the new adjusted price should actually be 25% higher than it is, and that the price of corn flour should now be increased by 29% to maintain equilibrium, if the country is to satisfy its growing internal demand in 2009.

Chávez assured that in addition to increased prices, corn producers will be offered a per-kilo subsidy, low interest rates on credits, and certified seeds with the help of the new 26 hectare (64 acre) “socialist” genetic technology center in Barinas state, from which Thursday’s announcements were made.

Also, Venezuela will continue to receive tractors and other agricultural technology from Argentina and plans are underway to build a tractor factory with assistance from Iran, Chávez mentioned, emphasizing his gratitude toward these nations for their cooperation in Venezuela’s efforts to achieve food security.

The head of state also referred to the United Nations’ call for increased world food production to help alleviate the food crisis that has spurred riots and protests in 33 nations. “The FAO (Food and Agriculture Organization) called on all the countries in the world to produce more food, and in this we are already moving forward,” Chávez boasted.

He highlighted that general food production in Venezuela has risen by 2.3% annually during his presidential term, compared to .9% during the decade prior. This is good, but not good enough, because producing enough for national consumption plus exports “is the ideal and we are going to achieve it,” the president said.

However, the president of the National Federation of Cattle Producers (FEDENAGAS), Genaro Méndez, said the government “presents statistics that do not correspond to reality.”

According to Méndez, the dairy industry in the country is at a “standstill,” and beef production decreased by 100,000 tons last year, in contrast to government figures. “I ask that the national government tell the truth to the producers in the country,” Méndez said.

But Vice President Ramón Carrizalez assured in an interview that the government has boosted its research efforts on the entire food supply chain, and now has an accurate assessment of 80% of the national situation.

Carrizalez said this is part of the “permanent” process of “Revision, Rectification, and Re-advance,” the “three Rs” which have characterized the period following the electoral defeat of the constitutional reform proposal last year.

With regard to food, the government “has had to make changes because we realized we were wrong in some things… we did not eliminate the bureaucratic obstacles like we believed… we are permanently self-criticizing and correcting, but what I can for sure guarantee is that we have advanced.”

According to Carrizalez, the government does not want to isolate the private sector, but rather has “been in a process of frank conversations” with private businesses. The private sector has been right in some cases, prompting the government to improve the situation by lifting price controls on certain products and reducing obstacles to imports, Carrizalez recounted.

“There exists a serious private sector that wants to resolve problems, that wants to converse with us. We do not ask that they come politically in our direction, no, what we want is a nationalist attitude. With them, we want to work,” the Vice President told Panorama newspaper.

The government’s goal is to have a 3 month reserve supply of food by the end of this year, Carrizalez said. He insisted that the situation in Venezuela be understood within the context of the global food crisis, which has caused world food reserves to drop to a 30-year low, according to the director of the World Food Program Josette Sheeran.

President Chávez said Thursday that the method for achieving its goals is “socialism,” which is “the future.” He pointed out that the government has nationalized large, idle estates and turned them into Socialist Production Units (UPS) “with their own economic model” based on “social property, which is not private property, it is for everyone.”

Now, it is the workers’ responsibility to transform production from capitalist to socialist, the president said. He called for the creation of a “National Socialist Farmers Front” of agricultural workers, who “should possess a conscience of social duty and exercise this for the collective benefit.”

Reflecting on the future development of Venezuela, Chávez stressed that “we should move away from the oil-based production model. The future of the country is in the land, in the agricultural project, not in petroleum. Food production is the most important.”

ALBA Summit in Venezuela Responds to World Food Crisis and Bolivian Crisis

James Suggett, April 24th, Venezuelanalysis.com

Mérida, April 24, 2008 (venezuelanalysis.com)-- Venezuelan President Hugo Chávez convened an extraordinary meeting of member nations of the Bolivarian Alternative for the Americas (ALBA) in Caracas early Wednesday morning to discuss the world food crisis and the political crisis in eastern Bolivia.

At the meeting, Nicaraguan President Daniel Ortega, Bolivian President Evo Morales, Cuban Vice President Carlos Lage, and Chávez signed a series of accords to promote mutual agricultural development, create a joint food distribution network, and create a $100 million ALBA food security fund.

“The food crisis is the greatest demonstration of the historical failure of the capitalist model,” President Chávez declared.

Highlighting the most recent report by the United Nations World Food Program which called the food crisis a “silent Tsunami” and demanded an internationally coordinated response, Chávez said, “ALBA announces its willingness to assume responsibility, ALBA responds immediately… here we are.”

Cuban Vice President Carlos Lage commented that the crisis is part of an “unjust international economic order” in which “the logic is profit and not the satisfaction of peoples` needs.”

Lage further denounced the fact that the United States spends $500 billion per year on the Iraq War while the U.N. had to plea last month for $500 million donations in order to meet its emergency food quotas.

Social unrest has burgeoned in over thirty countries following an 80% increase in world food prices over the last three years, according to the World Bank. U.S. President George W. Bush authorized $200 million in global emergency food aid April 14th, while Venezuela, which has faced food shortages recently, sent 364 tons of meat, chicken, ham, milk, lentils, olive oil, and vegetables to its neighbor Haiti, which has experienced violent riots over rising food costs.

President Morales affirmed Wednesday that “it is the responsibility of presidents to act in concert to guarantee the food security of our peoples.”

Morales also criticized the diversion of farmland for the production of biofuels, which is widely recognized to have contributed to rising food prices, in a speech at the inauguration of the United Nations Permanent Forum on Indigenous Issues in New York Monday.

“If we do not bring an end to the capitalist system, it will be impossible to save the Earth,” Morales concluded.

The agricultural development agreement signed by ALBA nations Wednesday will focus on rice, corn, oil for human consumption, beans, beef, and milk, and the improvement of watering systems. To avoid price speculation by private intermediaries, the heads of state agreed to create a public food distribution network with regulated prices. To fund these projects, the presidents agreed to create a $100 million fund in the Bank of ALBA, which is still in formation.

The four leaders also signed a joint statement Wednesday, expressing solidarity with Bolivia, where there is a secessionist movement led by elite landowners in the natural resource-rich lowland Bolivian provinces of Santa Cruz, Tarija, Beni, and Pando.

ALBA countries pledged “unrestricted support for the process of sovereign and democratic changes” in Bolivia, and harshly denounced the separatist movement, calling it a “frank violation of the constitution and Bolivian laws.”

The declaration was read publicly by Vice President Lage and advocated open dialogue to solve the crisis in Bolivia. It rejected foreign interference, but at the same time called on the international community to “act quickly and decisively in solidarity with the people and the government of Bolivia to consolidate political, economic, and social stability in the region.”

Chávez made clear his suspicion that the “empire wants to halt South American integration and they have chosen, now, Bolivia as a target [because] they do not want the grand fatherland of Latin America and the Caribbean to be born.”

In February it was revealed that the U.S. Embassy in Bolivia had pressured Peace Corps volunteers and Fulbright scholars to spy on the activity of Cubans and Venezuelans working in Bolivia. A report by Bolivia-based independent journalist Ben Dangl the same month revealed evidence that the U.S. is channeling funds from the U.S. Agency for International Development (USAID) to the secessionist groups.

In New York Monday, Morales said the separatist referendum planned for May 4th was “a bridge point for the Empire here in Bolivia disguised by the euphemism of autonomy.”

Morales also asked for international support to end what he called “slavery” in Bolivia, following recent denunciations by sugar cane laborers on large estates in the Santa Cruz province that over 8,000 children work in the fields without pay.

Chávez, whose administration has redistributed over 2 million hectares (4.94 million acres) of mostly state owned land and some from large estates and increased government financing for agricultural production by 728% over the past three years, proposed Wednesday that Bolivian agricultural development be a priority of ALBA, “with the permission and the pardon of Nicaragua, which is also on the priority list.”

He also said ALBA countries are lucky to have responded so quickly to the present food crisis, but are now “obligated to amplify, make more dynamic and profound” these regional food security initiatives.

ALBA is a fair trade block created by Cuba and Venezuela in 2005 as an alternative to the Free Trade Agreement for the Americas (FTAA) promoted by the U.S. government. Since then, Bolivia, Nicaragua, and Dominica have joined the block.

World's new crisis: soaring food prices

Lesley Wroughton, Washington, and Jewel Topsfield, April 15, The Age

THE World Bank has issued an urgent call to rich nations to help stem rising food prices, warning that social unrest in poor countries is spreading and that 100 million people are at risk of being plunged deeper into poverty.

"We have to put our money where our mouth is now, so that we can put food into hungry mouths. It is as stark as that," said World Bank president Robert Zoellick, as he called for more contributions to the $500 million World Food Program.

The plea, issued after a meeting of aid officials in Washington, follows a dramatic surge in world prices for staple foods — rice, for example, has shot up by 75% in just two months — and resulting food-related riots in Haiti, Indonesia, the Philippines and Cameroon in the past week.

World leaders were quick to respond to Mr Zoellick's plea, with Australian Prime Minister Kevin Rudd among those pledging to put world food security on their political agendas.

Mr Rudd said his world tour, from which he returned at the weekend, had changed his vision for Australia's global agenda. "One of the things that I discussed with various world leaders was (that) we have an unfolding food crisis around the world," Mr Rudd told ABC.

"We had 10 major sets of food riots across the world. So if you want something which should be close to our global agenda, therefore our national agenda, (it is) how do we contribute to better food security around the world."

But a pledge by British Prime Minister Gordon Brown to raise the issue at the next G8 summit of world leaders failed to impress Mr Zoellick. "Frankly speaking, that G8 meeting is in June and we cannot wait," he said, after the meeting involving the IMF and the World Bank's Development Committee. "We estimate that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty."

Anger over food prices led to last week's riots in Haiti, in which at least five people were killed and the country's prime minister was ousted.

Developing countries claim that rich countries, in their rush to tackle global warming, are helping to drive up food prices by encouraging the use of crops to produce biofuels rather than to feed people. Most of the rise in global corn production from 2004 to 2007 went to biofuels in the United States.

According to the 2008 World Development Report, more than 240 kilograms of corn — enough to feed one person for a year — is required to produce 100 litres of ethanol, enough to fill the tank of a sports utility vehicle.

Other contributing factors to rising food prices are the high price of oil (which increases costs of food production and distribution), population growth in Asia and drought in wheat-producing countries including Australia and Kazakhstan.

The price of wheat has jumped 120% in a year, resulting in the price of bread doubling in many poor countries.

The World Bank has warned that food prices will remain elevated this year and next year and will probably stay above 2004 levels until 2015. "We estimate that the effect of this food crisis on poverty reduction worldwide is in the order of seven lost years," Mr Zoellick said.

He said that almost half of $500 million that the World Food Program recently requested in additional pledges for food aid had been committed, but the May 1 deadline for raising the money would not be met.

The parliamentary secretary for international development assistance, Bob McMullan, said yesterday Australia was one of the largest donors through the World Food Program, giving $61.7 million last year.

"We have responded positively when the World Food Program asked us to do a little more in Afghanistan and Zimbabwe and we will look sympathetically at this most recent approach," Mr McMullan told ABC.

National Farmers Federation chief executive Ben Fargher said that despite the impact of the drought over the past five years, Australia was well positioned to respond to the world food crisis. "If countries overseas are looking for food security, one of the best things they could do is reduce barriers to the export of our produce to them," he said.

He said Australia also needed to have the world's best research and development policies to get more crop per drop, and improved rail and road infrastructure to ensure produce can reach overseas markets as efficiently as possible.

World food security will be discussed at a session on Australia's future security and prosperity at this weekend's 2020 Summit. Panel member Alan Dupont, director of the Centre for International Security Studies at the University of Sydney, said a key role for Australia could be to raise global awareness about the links between climate change and the food crisis.

He said Australia could also help developing nations affected by food shortages with technological solutions — such as the greater productivity of hybrid grains — and it could lead the way in the creation of strategic stockpiles of food.

With REUTERS

Chavez Announces Project to Combat Food Shortages in Venezuela

Chris Carlson, January 21, Venezuelanalysis.com

Venezuelan President Hugo Chavez focused on the persistent shortages in the nation's supply of milk and meat products during his Sunday TV and radio show Aló Presidente yesterday. The president inaugurated a "socialist" milk processing plant, as well as an agro-industrial complex with the goal of increasing national production and solving food shortages in the country.

"We have to raise national production of meat and milk," said Chavez during the show. "We are going to transform Venezuela into a true superpower in food production."

The show was aired Sunday from a rural town near the Colombian border in the western state of Zulia where the Chavez government plans to install a "mega-project" for the production of milk and other products. The pilot program is meant as a solution to persistent food shortages that have affected the country since last year.

The president began the show by awarding land titles to local farmers, emphasizing the damage that concentrated land ownership does to national production, and insisting that the government carry forward with land reform policies.

He also announced a new program of low-cost credits to small producers as a way to increase investment in the agricultural sector.

"I have approved an extraordinary amount for the agricultural sector," said Chavez. "We are going to increase short-term credit, with low interest, and we are going to raise food production in Venezuela."

President Chavez also announced the creation of a cattle-producing complex in the region that will provide inputs to a "socialist" milk-processing plant inaugurated nearby.

The milk plant, which Chavez claims to be one of the largest in Latin America with a capacity of 1 million liters of milk per day, was bought by the Venezuelan government from the Italian multinational Parmalat for BsF. 800 million (US$ 372 million) after the company abandoned it.

Chavez said the plant is now operating, but producing only 60 thousand liters per day, which is 6 percent of its capacity. The Venezuelan government hopes the plant will be producing 400 thousand liters per day by next month, and 800 thousands liters per day by 2009.

The Venezuelan president explained the reasons for the shortages of milk and beef products that the country has experienced over the last year. Chavez referred to a chart showing how national milk production has remained relatively equal in recent years, whereas national consumption has exploded in the last two years. He insisted that it is the same situation with beef, forcing the country to import large amounts of milk and beef.

Chavez explained that world milk consumption had also grown by 20 percent in the last 10 years, in part due to China's increased consumption of milk, whereas milk production has only grown by 1 percent, causing world-wide shortages.

The Venezuelan government has made the claim that these shortages, as well as government price controls, have led to speculation on the part of large dairy producers who sell their production to producers of cheese and other goods in order to avoid the price controls.

In response, Chavez threatened to expropriate dairy farms that refuse to sell their production, or who sell it abroad. At the same time, he announced a 40 percent increase in the price of milk to help milk producers.

"I am aware that the price of milk is coming up short. That's why I am willing to elevate it a little to benefit all the primary producers," he said, but he issued a warning to large milk companies.

"I am going to warn the large milk-processing companies: Any producer that doesn't sell their milk to the nation will be treated as a traitor," he said.

But ultimately the government strategy is to increase national production through the construction of these "socialist" milk-processing plants, along with cattle-producing zones in the surrounding areas to supply them. The milk plants are placed under the management and control of the local communal councils in the surrounding communities, with support from the national government in the form of credit and technical assistance.

The strategy also includes a continuation of turning unproductive land over to small producers for the production of crops or livestock. The president of the National Land Institute announced yesterday that the government distributed some 50,000 hectares (123,000 acres) in the last year and that they would continue with this in 2008.

"This year the expropriation of land will be projected to the development and production of cattle-producing farms around these milk-processing plants," he said.

Chavez assured that the nation's supply of cattle had already increased from 10 million head to 12 million head, and that by next year this number would reach 16 million. He assured that Venezuela would become a cattle "superpower" in the near future.

"We want to strengthen national production so we are fully supplied by February of 2009," he said.

Biofuel boom costs Indonesians dear

Step Vaessen, January 19, Al Jazeera

Indonesia is struggling with a potential food crisis, because of rapidly increasing prices of one of its staple food items.

The cost of soya bean has doubled on the world market in recent months, making imports of the commodity increasingly expensive.

The main cause of the price rise in Indonesia is shifting production in the US.

Biofuels phenomenon

A US energy bill signed into law last September, encouraged a massive increase in the production of biofuels like ethanol.

Soya bean and corn, once used mostly for food, are now being converted into fuel.

That means soaring prices for Indonesia's "food of the poor".

Take the case of Tukino. His family has been running a home factory for the last 34 years, making bean curd, one of Indonesia's most popular dishes.

Bean curd is a staple of Indonesian dietBut never before has soya bean been so expensive.

The price has doubled during the past few weeks.

Analysts say this is because US farmers are replacing the crop in order to grow corn for biofuel instead.

Tukino says: "We are really suffering from this. We are sweating here everyday just to make ends meet.

"I am trying to run a business but if this situation continues a lot of people have to be laid off."

Bean-curd factories like the one run by Tukino's family went on strike for three days to protest against the price increase.

But after consumers began to complain, they decided to operate again.

Nutritious and cheap

Bean curd has kept many poor Indonesians healthy for a very long time.

It is very nutritious and it used to be very cheap, but now Indonesia's favourite food is becoming very expensive and hard to get. And this is already creating unrest.

To calm down sentiments, bean curd and tempeh, another popular soya bean dish, are being sold again on the market, much to the relief of many Indonesians.

But while the price is still the same, the sellers have made the portions much smaller.

One resident of Jakarta said: "My children don't want to eat anything when there is no tempeh or bean curd. They simply don't feel well if I don't serve it to them.

"Normally I could buy it at a food stall, but there hasn't been enough in the market for quite a while."

Farmers' view

The Indonesian Farmers Union says the country should become self-sufficient again and start growing soya bean as it used to do in the past.

Henry Saragih, from the Indonesian Farmers Union, says: "This is a basic need which is now very hard to get.

"This is not only turning in to a social crisis, but this could also cause hunger and malnutrition."

The government admits that it should have worked harder to achieve self-sufficiency.

Sutarto Alimoeso, an agriculture ministry official in charge of food crops, told Al Jazeera: "This is an international problem, we cannot stop free trade.

"But we should indeed have protected our farmers more. There is not a single country that doesn't protect its own farmers. We should have been braver."

For the time being the Indonesian government has decided to control the price of soya bean by asking the state food company to buy stock overseas.

This could prevent a deepening food crisis in the country for now.

Still, in the long term, other measures may have to be found.