Washing Down the Food Crisis with Corporate-Trade Kool-Aid

By Elizabeth Palmberg 7-10-2008

Kool-Aid ManIt's clear that one cause of the current food crisis is that poorer countries have been pressured into dismantling their food policies, leaving peasant farmers and eaters alike to bear all the risks of the extremely volatile world market. This has left corporations free to ship factory-farmed food to those countries, peasants free to migrate to urban slums, and corporately-dominated economic markets free to ignore those starving.

And we should blame ourselves, not the corporations. Expecting a corporation to give affordable loans to farmers, look out for the urban poor, and cut carbon emissions - unless those are the most profitable things it can do, which they aren't - is like expecting your kitchen stove to go out and join the Missionaries of Charity. (The difference is that, if your stove were a corporation, it would hire lobbyists to make sure that federal policies heavily favored stoves over toasters and George Foreman grills).

But many of the powers that be refuse to admit that our current trade model is a problem; so some are demanding that we respond to the crisis by drinking more corporate-trade Kool-Aid (by extending reach of the WTO, for example). In a move that clearly shows they are lost to common sense, such arguments often blame the food crisis on the only significant farm policy left on the planet: rich-country subsidies for food crops. For example, a story last week announced that U.N. head Ban Ki-moon had asked the world to respond to the crisis by "cut[ting] agricultural subsidies, particularly in developed countries."

Now, there are lots of reasons why U.S. farm subsidies, which push the export-driven factory-farming model, are broken and need to be radically reworked. (And, of course, subsidies for ethanol production, which converts food to fuel, really do drive up the price of food and are a huge problem).

But the crisis is that food prices have become way too high. Subsidies to food crops inherently lower food prices. You do the math.

I believe the underlying argument is that subsidies have dampened "market signals"--i.e., rising prices--that would otherwise have caused farmers to gradually increase production. But, as you may have noticed at the gas pump, some key farm inputs, like fuel and fossil-fuel-based fertilizer, have been anything but gradual in their price rise. On top of genuine supply and demand spikes, there's the still-more-volatile behavior of financial speculators.

And, on a more basic level, farmers often are unable to respond to price increases. In particular, small farmers in the global South don't have access to affordable loans, supplies, or marketing they would need to grow more.

Why? Because poor countries have dismantled most of their food policies as trade agreements decimated the government policy toolbox, and IMF pressure forced many governments to slash their farm investment. Now, there are belated calls for governments in the Global South to invest in farming once again. Amen to that.

Elizabeth Palmberg is an assistant editor of Sojourners.

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