a few months ago, we were being told that this is
a period of stark, unprecedented and unfolding food
crisis, with looming shortages and huge global imbalances
between demand and supply. Everyone who matters -
from officials in international organisations to leaders
of rich and poor countries - warned us of the terrible
social, political and nutritional consequences of
doing nothing, of the millions who would go hungry
and the riots that would occur if the imbalances persisted
But now the whole problem has disappeared from the
international radar, relegated to the inside pages
of newspapers and perfunctory afterthoughts in politicians'
speeches. So what happened? Was it not such a problem,
No, the ''silent tsunami'' has simply been overwhelmed
in public awareness by the much noisier tsunami in
the world of international finance, with the giant
sucking sounds of possible bank collapses and enormous
bail-outs grabbing all the attention. Yet the global
food crisis is far from over, and is even likely to
intensify in the near future.
One reason why many analysts decided that the food
crisis may not be so intense is the global decline
in crop prices that began sometime in the middle of
last year. For about two years before that, commodity
prices, including both food and non-food crops, had
been increasing, and in the first few months of 2008
they soared. But in early June last year the prices
of both oil and food crops fell, so that they are
now lower than they were even a year ago.
When food prices were rising, there was much talk
of the shifts in demand that were causing this trend.
President Bush joined those who decided that this
reflected the increased demand from China and India
as their per capita incomes grew. This was a ludicrous
argument because food consumption has actually declined
in both countries. Both economies have shown even
sharper declines in per capita food intake despite
the continued presence of widespread hunger, because
of increased income inequalities within these countries.
In any case, that argument about more food demand
from China and India quickly collapsed along with
the fall in global prices. Now it is more than evident
that the wild swings that have been observed in food
and several commodity markets over this year have
been the result of speculative forces, rather than
any real changes in global demand and supply.
But despite this volatility and the recent price decline,
the food crisis remains. And it does indeed reflect
patterns of demand and supply - but not the ones that
have been talked about. The basic problem now is not
even one of absolute shortage so much as the inability
to pay for food, and this problem will get worse for
many developing countries and their poorer citizens.
Three problems now dominate the global food scenario.
First, there is a crisis of cultivation, especially
in the developing world. This is the result of two
decades of policy neglect: falling public investment
in agricultural research, extension and support; aggressive
trade liberalisation that exposed southern farmers
to heavily subsidised marketing by northern agribusinesses;
financial liberalisation that reduced cultivators'
access to credit and made them prey to speculative
forces that also affected prices. As a result, cultivation
costs have increased even in years when crop prices
are falling, and cultivation is becoming unviable
in many countries.
Second, this has been associated with a depression
in wages in developing countries, which means that
mass purchasing power did not increase even when the
economies were growing. So demand for food has not
gone up, simply because the poor do not have the incomes
to pay for it.
Third, there has been an increasing concentration
of firms operating in global agriculture, with a few
large agribusinesses coming to dominate both input
and output markets. These companies are also the ones
who benefit from government subsidies promoting ethanol,
which divert land meant for food to the paradoxically
more energy-intensive production of fuel for cars.
This concentration is reflected in recent food-price
trends: while world prices have fallen sharply in
the past four months, retail prices of food in most
developing countries have not fallen.
Unfortunately, each of these negative processes is
likely to intensify. The financial crisis will reduce
the ability of developing country governments to increase
much-needed investment in agriculture or enlarge the
distribution of affordable food. It will adversely
affect wage incomes, reducing purchasing power further.
And it will add to pressures for concentration in
industry, including agribusiness.
In the middle of last year, we had a global outcry
about the perilous state of billions of people in
developing countries whose governments could not afford
to provide enough food for them and who could not
themselves earn enough to buy food at prevailing prices.
These problems are now worse, but the global outcry
is all about the multinational banks that are under
threat. And several multiples of the money that could
not be found to provide food for the hungry are quickly
being delivered to bail out irresponsible finance.