Source:
IBASE
Adhemar Mineiro*
Tue Jun 03 2008
The increase in the international food prices is an easily verifiable fact in recent times. As usual, the Organisation for Economic Cooperation and Development (OECD), the World Bank, the International Monetary Fund (IMF) and especially the World Trade Organization (WTO) came out with its old and permanent recipe: the solution to the problem is more liberalisation. More of the same medicine. But, is this not exactly the medicine that is complicating the international arena of food supply and is raising the prices?
The increase in the international food prices is an easily verifiable fact in recent times. Only a brief comparison to use any of them, soy bran, which is used to feed animals, rose 36% from January 2007 to April 2008 -from 225.10 dollars per ton to 306 dollars per ton-, refined sugar rose 16% over the same period -from 316.60 dollars per ton to 366.90 dollars. The wheat rose from 512.50 dollars per bushel to 862.50 in the same period, so it rose 68%.
In Brazil, food-exporting country - and therefore, a producer of surplus food on the international scene - the increases have already been reflected in the inflation rates since recent months.
As usual, the Organization for Economic Cooperation and Development (OECD), the World Bank, the International Monetary Fund (IMF) and especially the World Trade Organization (WTO) came out with its old and permanent recipe: the solution to the problem is more liberalization. More of the same medicine.
But, is this not exactly the medicine that is complicating the international arena of food supply and is raising the prices? After all, the main diagnosis points to a recent speculative movement, the international crisis and the low value of the U.S. dollar, which is raising the price of all mineral commodities and the majority of the agricultural commodities on the international scene, as speculators now are seeking so-called "real assets", compared with the turbulence of the papers value. Are these speculative movements not reflecting possibilities opened up by the financial liberalisation?
Also, the changing of major agricultural products which should ensure supplies of food stocks in each country, transactions in goods in the volatile international market, is putting heavy pressure on prices. These are now tied not to regulate minimum and maximum prices of domestic markets, but sharp fluctuations in the international market, which can destroy small producers -thus affecting millions of farmers, particularly world family farmers- raising prices quickly, causing starvation and misery to the world.
The trade liberalisation limits (and much!) the ability of several countries to implement domestic agricultural policies and expands the capacity of big multinationals involved in the marketing of commodities, to control prices, circuits of production and consumption at the international level. Thus, extending the incentives (called "market"...) for the production of certain products have become more profitable in the international market, affecting many times the production -in general of the small agriculture, but not only- of food supply for the domestic market.
The expansion of soybean production for export in the MERCOSUR countries, taking advantage of international prices, is an example as well as the potential damage that the expanding production of agrofuels have on food crops in most of the countries.
That process, while expanded the international market for agricultural commodities, transformed to most developing countries in net importers of food and, therefore, dependent on the operation of that troubled international market for agricultural products.
The enlarged liberalisation, now a concrete proposal in attempts to end the Doha Round of the WTO -a negotiation process under way to expand the liberalisation of international trade- only aggravates the problem, further limiting the capacity of national responses to the tragedy of shortages and rising food prices. That is without taking into account the perverse effects of such proceedings on the environment and impacts on the issue of global warming.
The solution to the crisis seems to be exactly coming from the opposite direction, by giving the security and food sovereignty to countries, with the simultaneity of low prices for consumers and prices at producers to ensure a production of family farming production of food as a fundamental part of a strategy for developing countries. That allows to manage the power that now is exercised by big multinationals in the control of circuits of production and marketing, and to stabilize prices. To regulate the financial market so as to prevent speculation, in particular on the so-called "pockets of goods" with food prices.
In other words, less rather than more financial and trade liberalization, as opposed to what international financial institutions advocate in favour of great financial and commercial interests. But the battle, political and media, is going to be tough against players accustomed to political and financial power.
* Economist of the Brazilian Network for the Integration of the Peoples (REBRIP)
Related Information:
* World Bank and IMF emergency loans: a cure or a curse for the food crisis?, by Eurodad
* How to manufacture a global food crisis: lessons from the World Bank, IMF, and WTO, by Walden Bello (Focus on the Global South)
* Seven reasons why the Doha Round will not solve the food crisis, by Trade Observatory
* Amid food riots and shaken governments IFIs scramble to develop a coherent response, by Bank Information Center
* An explosive global crisis: financial instability, food riots, global warming, by Trade Observatory
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