Hunger for profits fuels starvation

In about two weeks, a Plenary Meeting of the General Assembly of the United Nations will be held in New York to review progress in reaching the Milennium Development Goals (MDGs).

It was in September 2000 that over one hundred and fifty world leaders, ranging from Presidents to Prime Ministers and Crown Princes, had gathered at the United Nations Headquarters and marked the beginning of the new Millenium by agreeing the eight objectives now up for review between September 22 and 25.

The very first listed MDG is “to eradicate extreme poverty and hunger.” By 2015, the aim was to halve the proportion of people whose income is less then U$1 a day, achieve full and productive employment and decent work for all, including women and young people, and halve the proportion of people who suffer from hunger.

How optimistic should we be, however, that world capitalism – the economic system relied on to realise the goals – can deliver? The UN itself is not too sure as a report outlines, “The MDGs are achievable, but there is clearly an urgent need to address challenges, acknowledge failures and come together to overcome the obstacles to their achievement. This will require the embrace of pioneering ideas and political will . . .”

However, a recent article in the well known German magazine, Der Spiegel, speaks of food insecurity in the United States, where 50 million Americans temporarily do not have enough to eat. One in eight adults and one in four children live on subsidised food aid. If this is the situation in the world’s premier capitalist economy, what hope for adequately feeding the world?

What hope indeed, when in 2007 and 2008, there were “food riots” in some 30 countries across the globe – popular movements against soaring food prices? In a Briefing Paper, “Hunger on the Rise”, the UN Food and Agriculture Organization (FAO) states that “these tumultuous developments added 75 million people to the ranks of the hungry and drove an estimated 125 million into extreme poverty”.

The reality is that hunger for substantial profits on the part of powerful corporate commodity traders who control food production and distribution, and determine prices in significant areas of the world food markets, takes precedence over the elimination of the physical hunger of hundreds of millions of human beings.

Speculation by financial investors is rife in commodities and commodity future markets giving rise to food price increases. Speculators are active in the wheat, coffee, rice and soya trade with wheat prices having risen by 17% since April and soya prices by 12%.

Armajaro, a London based Hedge Fund operator which specialises in trading coffee and cocoa, recently bought €1 billion worth of cocoa beans giving them control over 7% of the world´s cocoa harvest,A equivalent to the yearly demand of a country the size of Germany. This year’s harvest in the Ivory Coast has been bad. Cocoa prices have reached a 33 year high and Armajaro is looking forward to making a major killing.

The Guardian reports that last year alone, the investment bank Goldman Sachs made more than U$5bn in profits from commodity trading. This is the same Goldman Sachs that made a fortune on the misfortune of poor Americans in the sub-prime mortgage market, speculation on which plunged the world into recession in 2008.

The same neo-liberal mania that gave rise to the financial collapse has had a devastating effect on poor countries. In the 1980s and 1990s, the International Monetary Fund (IMF) and the World Bank imposed so called structural adjustment programmes forced them to cut or eliminate fertilizer subsidies, decontrol prices, lift tariffs and to privatise their economies. This favoured big agro-multinationals but threatened food sovereignty of local populations.

Production for local needs has been displaced by production of certain goods for export and there is a tendency toward a very homogenous (non-diversified) agriculture. This has led to an absurd situation whereby many former net exporting countries have become net importers and consequently more vulnerable to the volatility of commodity prices on the world market. The stimulation of ethanol and bio fuel production has assisted in this.

The United Nations Conference on Trade and Development (UNCTAD) states that “market liberalization and privatization in the commodity sector have not resulted in greater stability of international commodity prices. There is widespread dissatisfaction with the outcomes of unregulated financial and commodity markets, which fail to transmit reliable price signals for commodity producers.”

To resolve world hunger, the simplest “pioneering idea” would be to produce food to feed people, not to enrich speculators and corporate elites. Remove the speculators and bring big agro-businesses into public ownership and democratic control. Assist small producers with sustainable technology and guaranteed prices and step up action to prevent further climate change which is also jeopardising food security.