Africa: market lords, more than a war, behind the global food crisis
MADRID – As grain exports continue to steadily flow to world markets since Turkey-brokered July 2022 agreement between Russia and Ukraine to resume shipments of grain and fertilizer from both countries, the Food prices continue to soar everywhere. How come?
The most convenient answer from establishment politicians and media is that it is about the Russian invasion of Ukraine last February.
A small number of companies wield great influence in the global industrial food system, fueled by mergers and acquisitions of each other to form giant mega-corporations, which allow for greater horizontal and vertical concentration, as well as a influence on national and global policy-making and governance
Another argument they use is that it was Russia that halted its gas and oil exports, omitting the fact that it was the sanctions imposed by the United States that drastically reduced this flow to mainly European markets. , causing ever-increasing costs for energy, food transportation, etc.
However, these answers clearly ignore other structural causes: the shocking speculations of the dominant markets.
“It is true that the Russian invasion of Ukraine has disrupted world markets and prices are skyrocketing. But it also tells us that the markets are part of the problem,” warned Michael Fakhri, the rapporteur last April. UN Special Report on the Right to Food, 2022.
In his report to the UN Security Council, the Special Rapporteur said that hunger and starvation, like conflict, are always the result of “political failures”.
Specifically, says Michael Fakhri, “markets amplify shocks, not absorb them… food prices are skyrocketing not because of a supply and demand problem as such; it is because of price speculation in commodity futures markets”.
The current food crisis is caused by “international failures”, he said, while making two points by way of conclusion:
– For more than two years, citizens and civil society organizations around the world have been sounding the alarm about the food crisis. For more than two years, they have called for a coordinated international response to the food crisis.
– And yet Member States have refused to mobilize Rome-based agencies and other UN organizations to respond to the food crisis in a coordinated way.
According to Michael Fakhri, some Member States and civil society organizations tried to have a resolution adopted by the CFS last October so that it would be the place for coordinating global policies around the food crisis.
“And yet some powerful countries – some members of the P5 [the five permanent, veto-holder prowers]- actively blocked this initiative. This has undermined the world’s ability to respond to the food crisis. »
Meanwhile, in a November 7, 2022 Focus on the Global South file, Shalmali Guttal warned that a perfect storm was brewing in the global food system, pushing food prices to record highs and increasing hunger.
“As international institutions struggle to respond, some governments have resorted to knee-jerk ‘food nationalism’ by imposing export bans to preserve their own food supplies and stabilize prices…”.
In its dossier, researchers from Focus on the Global South write about various aspects of the current crisis, its causes and its impact on Asian countries.
Companies are fueling the crisis
These include regional analyses, case studies from Sri Lanka, the Philippines and India, “the role of business in fueling the crisis and the flawed responses of international institutions such as the World Trade Organization (WTO), Bretton Woods institutions and United Nations agencies. “
The recently released State of Food Insecurity and Nutrition in the World 2022 (SOFI 2022) report presents a sobering picture of the failure of global efforts to end hunger, malnutrition and insecurity. eating. According to SOFI 21, “Even before the Covid-19 pandemic hit in 2020, levels of hunger around the world were extremely high.”
Market concentration and speculation
In their recent analysis: A food crisis not of their making, CP Chandrasekhar and Jayati Ghosh, said:
Governments and multilateral and international agencies overall attribute the lion’s share of responsibility for the current global food crisis to global supply shortages resulting from the war on Ukraine, ignoring the lingering effects in low-income countries. low and intermediate of “the market forces of concentration and speculation, globally determined macroeconomic processes and the collapse of livelihood opportunities affecting these countries in the post-Covid world”.
Market-dominated global food system
At the heart of recurring food price volatility, food crises, and entrenched hunger and food insecurity are “the market structures, regulations, and trade and financial agreements that underpin a global industrial food system. dominated by corporations and allow market concentration and financial speculation in commodity markets. .”
Furthermore, analysis by the International Panel of Experts on Sustainable Food Systems (IPES-Food) indicates that the kind of “excessive speculation” seen in 2007-2008 that triggered soaring food prices may be back.
“Multilevel market concentration and financial speculation in commodity markets have played a central role in past and present food crises and presently pose a serious threat to the realization of the right to food.”
Furthermore, a historical review of food crises over the past 50 years by Professor Jennifer Clapp shows that the global industrial food system has been made more prone to price volatility and more susceptible to crises due to three interrelated manifestations of concentration of companies:
– First, the global industrial food system relies on a small number of staple grains produced using highly industrialized agricultural methods, making the system vulnerable to events that affect only a handful of crops and on the rise industrial agricultural input costs.
– Second, a small number of countries specialize in the production of staple grains for export, on which many other countries depend, including many of the poorest and most food-insecure countries.
– And third, global grain trade is dominated by a small number of firms in highly financialized and volatile commodity markets (IPES-Food 2022; FAO 2022; OECD and FAO 2020).”
On this subject, Jennifer Clapp, Professor and Canada Research Chair, School of Environment, Resources and Sustainability, explains that “a small number of companies exert a big influence on the industrial food system. world, fueled by mergers and acquisitions of each other to form giant mega-corporations, which allow greater horizontal and vertical concentration, as well as influence in policy-making and governance at national and global levels .”
According to Clapp, “four grain trading companies – Archer-Daniels Midland, Bunge, Cargill and Dreyfus, referred to as ‘ABCD’ – control 70-90% of the grain trade”.
As “cross-sector value chain managers”, these grain trading giants are able to compile large amounts of market data, but are not required to disclose such information and may hold inventory for up to that the prices reach peaks, explains the expert.
“And in each of the three global food crises studied, financial speculation has caused sharp price increases, making food inaccessible to hundreds of millions of people.”