Senior Indian ministers have mistakenly attributed the current rise in food prices to the poor consuming more because ‘the economy is growing’.
This fallacy arises when one is blind to both history and the present.
A few days after agriculture minister Sharad Pawar blamed the South Indians for eating more chapatis causing wheat shortage, commerce minister Kamal Nath on Friday said increased food consumption by poor people is a challenge before the government. “We have great supply-side challenges in India at the moment with 15 million people moving from having one meal a day to two meals a day,” Nath said on the the sidelines of a conference in Singapore. (source, via anindianmuslim)
[To be fair, Sharad Pawar has had an afterthought, though he still does not hit the bull's eye:
Pawar said that agriculture was globally faced with serious challenges from factors like climate change, natural calamities and crop failure, diversion of agriculture land for bio fuels and increasing prices of food grain. (source)]
The production this year is estimated to about 227m tons, which is little less than the the current consumption.
It is certainly not a supply side problem, contrary to the minister’s assertions.
Since the food riots of the 1970s, the country, especially its middle classes, have not witnessed a large scale famine or a crisis. However, historically, some of the biggest famines were caused during an earlier phase of globalization- it was then more bluntly called colonization.
In neither case the reason was the insufficiency of food grains. On the contrary, both then as now, the reasons were linked to the vagaries of the world market, ‘free market’ only in name and controlled by financial interests in reality. During the 18th and 19th centuries, for example:
One third of the population of the then province of Bengal, which includes today’s Bangladesh, West Bengal, Orissa, Bihar and South Assam, were wiped out in the famine of 1770, immediately after Bengal was occupied by the British East India Company, due to their inhuman tax system. According to author Mike Davis, during the famine of 1876, “the newly constructed railroads, lauded as institutional safeguards against famine, were instead used by merchants to ship grain inventories from outlying drought stricken districts to central depots for hoarding…In Madras city, overwhelmed by 100,000 drought refugees, famished peasants dropped dead in front of the troops guarding pyramids of imported rice.”
Interestingly, “these famines took place at the very same time that annual grain exports from India were increasing.” (source).
Does history teach us anything? Is there anything in common with the present, almost sudden food crisis?
In the 18th and 19th centuries India suffered terribly as millions starved to death, its countless tons of grain were exported to England because the mother country could afford higher prices impoverished Indians couldn’t.
The situation is similar today though the immediate triggers are different. The 19th century crises was caused because of the de- industrialization of India, forcing a movement from the town to the countryside and increasing the pressure on land At the same time there was a dismantling of its traditional grain reserve system. Finally, the focus of crops shifted to growing “cash” crops that were exported to the global market.
There certainly is no crisis because of the production, or its possibilities, in not being able to cater to demand. It is not a question of supply versus surging demand. Certainly, demand has increased over the years- though not because, as Kamal Nath would like us to believe “because the poor are eating more”.
It is partly due to the increasing demand from the rising middle classes in Asia (FP edit), and also wastage in the developed world. The structural reforms unleashed over last two decades have led to a general agricultural crisis (impacting food grain production as well):
Between 1996 and 2001, prices of all primary products (cotton, jute, food grains and sugar) fell by 40 to 60 per cent and farmers who had contracted private debts in particular, became insolvent. The syndrome of hopelessly-indebted farmers committing suicides in Andhra Pradesh and Punjab started in 1998 and rapidly spread to other areas where cultivation of cash and export crop was predominant. The crash in pepper, coffee and tea prices came a few years later after 1998 and farmer suicides in Kerala and insolvency of tea estates in West Bengal date from around 2002.
Most recently, rising fuel costs that have shot up to $117 from $50 three years ago, have turned many in the developed world towards bio fuels, which means that instead of grains feeding human stomachs they now feed the cars and vehicles in the rich world.
More immediate is the role of finance speculation in futures trading (which means that future products are purchased in advance), because finance capital has to invest where the returns are the highest and in light of the fuel crises means that bio fuels are promising speculations.
Commodity speculation spread long ago from standard products like oil and gold to anything edible and available for trade on the Chicago Futures Exchange. These days there are futures contracts for everything from wheat to oranges to pork bellies. The futures market is a traditional tool for farmers to sell their harvests ahead of time. In a futures contract, quantities, prices and delivery dates are fixed, sometimes even before crops have been planted. Futures contracts allow farmers and grain wholesalers a measure of protection against adverse weather conditions and excessive price fluctuations. They can also help a farmer plan how much to plant for a given year.
But now speculators are taking advantage of this mechanism. They can buy futures contracts for wheat, for example, at a low price, betting that the price will go up. If the price of the grain rises by the agreed delivery date, they profit.
Some experts now believe these investors have taken over the market, buying futures at unprecedented levels and driving up short-term prices. Since last August, this mechanism has led to a doubling in the price of rice — including the 500,000 tons that the Philippine government plans to buy in early May to address its own shortage. (source)
If railroads were responsible for moving foodgrains from areas of surplus to be sent to the ports for shipping to England instead of to areas of famine, computer networks today provide a lightening speed strike for finance capital to move funds from one sector to another, one country to another, creating sudden imbalances. The rich can afford to pay more for food and so that is where the the direction of flow is.
As Woody Allen commented in one of his movies, “the universe is one big restaurant”, in which everything from stars to the lowly organisms in the food chain on this lonely, and at the same time boisterous planet is busy devouring each other, and are thereby linked to each other. One cannot explain the food crisis without looking at whole picture. The food crisis is linked to the fuel crisis which is linked to the war in Iraq. It is also linked to the sub- prime crisis in the United States and the need for finance to grow and bring increased returns to its investors, which at best constitute not more than 15% of the population in any country, whether in the developed world or the so called ‘emerging world’ or the ‘developing’ world (no one seems to use the phrase ‘under- developed’ nowadays, though- even Haiti is referred to as a developing country).
To cut a long story short, it is not the increased food consumption of the poor, but the cycle of production and the fleeting moods of finance capital and the production and exchange cycle that it increasingly determines and that now flows faster than the sun traverses the world each day, that lies behind the crisis.
In the current context of food availability, one of the more fundamental contradictions of capitalism is coming to the fore- when it starts consuming its own potential consumers, when it is not able to sustain their bare minimum existence.
Much of the media, especially television, focuses on single issue of the day, one day it is Tibet, another Iraq, another day it is rising fuel costs and yet another it is food riots now in Haiti and then in another place. Those like the Dalit intellectual Chandrabhan Prasad too err when they stretch the identity issue too far and start looking at globalization and even the British rule as beneficial for Dalits, most of whom are at the receiving end of globalization, whether during the British mis- rule or the contemporary wave of globalization.