Communist Party of Australia


The Guardian

Current Issue

PDF Archive

Web Archive

Pete's Corner


Press Fund


About Us

Why you should ...

CPA introduction

Contact Us

facebook, twitter

Major Issues





Climate Change



What's On






Books, T-shirts, CDs/DVDs, Badges, Misc


Issue #1507      29 June 2011

G20 turns back on the world’s hungry

Last week’s meeting of G20* agriculture ministers in Istanbul turned its back on the estimated one billion chronically malnourished around the world. The poorest, least developed nations such as on the African continent where around 30 percent of the population do not have enough to eat had no voice. Food prices have surpassed the peak reached during the height of the 2007-08 “global food crisis” and remain extremely volatile. Yet the G20 ministers focused on market mechanisms to reduce investment risks for the private sector that are the result of financial speculation in food prices. Their focus was on managing risks rather than stopping the financial speculation that plays havoc with food prices.

The ministers rejected concrete measures proposed by the UN’s Food and Agricultural Organisation (FAO) to actually address the food crisis and work towards sustainable food security. That was not the aim of their meeting. Instead they threw it back to the governments of the poorest nations to pull themselves out of poverty while expecting them to surrender their food and economic sovereignty to the powerful global, monopoly corporations and financial institutions.

The agricultural commodity markets want greater transparency and predictability in prices. The financial markets want free reign. Western governments are seeking some means of addressing food emergencies that could result in political unrest as seen recently in North Africa and the Middle East.

Crisis building

The present food crisis is not due to an absolute shortage of food, although in coming years if production trends are not changed it will also become an important factor. The underlying cause behind the crisis is the system of capitalism, the constant drive for profits by the all powerful financial conglomerates and the agri-businesses and global seed monopolies. This takes a number of forms.

Millions are malnourished because they are poor, because they do not have access to food, they do not have the means to purchase food at current inflated prices.

Control over food is being shifted from local communities and governments to the agribusinesses and financial institutions.

The seed monopolies like Monsanto and Cargill are impoverishing farmers as they become hooked onto expensive seeds and the fertilisers that are required for the seeds to deliver crops. Instead of keeping seeds from one year to the next, they are forced to buy expensive patented seeds every year. This is at the expense of traditional and more sustainable methods of farming that have been developed over centuries that are ecologically sound and already adapted to climatic conditions.

Bill Gates and David Rockefeller, two of the world’s richest and most powerful men, have invested heavily in the seed business. Gate’s Foundation’s “New Green Revolution for Africa” is using its philanthropy to hook farmers on genetically modified seeds, fertilisers and high tech farming inputs which they cannot afford.

“The net result of these activities limits farmers’ choices. Farmers are being told what to grow, how to grow, and where to sell,” write Travis M English and Philip L Bereano (Third World Resurgence, Issue 240-41, Aug-Sept 2010).

“A specific model is being powerfully promoted that demands the use of new seeds, chemical inputs, and mechanisation, and fosters reliance on production for export markets instead of for hungry Africans,” English and Bereano note.

Over the past two to three decades developing countries have been forced by such agencies as the International Monetary Fund (IMF) to lift trade barriers (quotas, tariffs), price controls and government subsidies in developing countries. Dumping of heavily subsidised produce at below cost by industrialised countries has destroyed local agriculture, impoverished millions of farmers and turned food exporting countries into net food importers with no controls over prices. Needless to say, the leading Western offenders have not removed their barriers, and continue to subsidise their farm exports to the tune of billions of dollars.

The 4th UN Conference on the Least Developed Countries held in Istanbul on May 9-13, heard the voices of those not given a seat at the G20 table. Camille Chalmers of the Haitian Platform for an Alternative Development noted that Haiti used to produce 98 percent of its grains, but was now a net-importing country. It imports more than 83 percent of its annual rice from the US. (Third World Resurgence, Issue 249, May 2011) One of the few exceptions to this trend is socialist Vietnam which has turned around an import dependency for rice to become not only self-sufficient but an exporter.

Farmers in some countries are being driven off their lands in the name of “development” or for takeover by the big agri-businesses. In addition millions of acres have been converted into crops for biofuels, instead of crops to feed their people. Around 40 percent of the US corn crop now goes to petrol tanks, which explains why the US strongly opposed any rejection of biofuels in the G20 communiqué. Countries such as Brazil have also been enticed to replace food crops with biofuel crops while millions of their people go hungry.

The rate of increase in food production has declined, and water depletion, climate change, diversion of food crops to biofuels are all contributing factors to the present crisis and if not reversed will result in an absolute shortage of food and a deepening of the present crisis.

Gambling with lives

But the largest contributing factor is the rampant, unregulated, speculation on food prices through such means as derivatives by hedge funds and other financial institutions. This has seen prices soar and become extremely volatile, bearing no relation to the real costs of production and distribution or supply and demand. They do however have catastrophic consequences for the poor around the world.

A study by the now defunct Lehman Brothers in 2008 found that the volume of speculative trading in food commodity prices had risen by 1,900 percent between 2003 and March 2008.

The power of the monopolies over food markets is illustrated by the purchase of US$1 billion in futures contracts (a form of gambling on prices) by London-based hedge fund Armajaro in July 2010 for 241,000 tonnes of cocoa – seven percent of the world’s annual output. In effect one man controlled all the cocoa in warehouses across Europe. Even more sinister is that hedge funds do not have the capital base to guarantee their positions if prices go the wrong way.

G20 head in the sand

So what did the G20 ministers come up with to halt the speculation and growing monopoly domination of agriculture? Nothing.

“We agree that managing the risk and mitigating the adverse impact of excessive food price volatility in developed and developing countries would provide an important contribution to longer term agricultural development and strengthen global food security,” the G20 communiqué stated.

“We recognise the importance of targeted safety nets, to mitigate the impact of excessive food price volatility, and the importance of a specific focus on nutrition in safety nets.”

That is exactly what the meeting was about: managing and mitigating risks – for investors, seed companies and agribusinesses. There was nothing on eliminating risks or ensuring that the one billion chronically malnourished have access to a sustainable food supply or to prevent their numbers swelling.

For the poor of the world, all it could offer was to “support the development of a proposal for a targeted emergency humanitarian food reserves system to complement existing regional and national food reserves”. No doubt this would be used during emergencies where, for example, food riots are threatening political stability. Apparently the present situation is not an emergency!

The G20 placed a great deal of the responsibility on the poor and their governments to bail themselves out: “We support increased country-led efforts to provide vulnerable households (including producers’ households), communities and governments with an effective, market-based risk management tool-box that reduces household and community vulnerability to economic and climatic shocks.”

“Market-based risk management tool-boxes” will not feed the one billion mouths, let alone meet future demands of growing populations and climate change! The G20 even suggest agricultural insurance products and the involvement of the World Bank “to facilitate commodity hedging by governments”. They expect the government to gamble on food prices too. More profits for the financial institutions.

People need food not financial market-based instruments!

Under the dishonest heading “Financial regulation”, the G20 promote ongoing deregulation of markets with calls for more transparency: “We recognise that appropriately regulated and transparent agriculture financial markets are indeed key for well-functioning physical markets. These markets facilitate price discovery and allow for market participants to hedge their exposure to price risks.”

Transparency no replacement for food

They propose a new Agricultural Market Information System (AMIS), under the auspices of the FAO but with no extra funding for the FAO. “We emphasise that AMIS will enable financial actors and market regulators to be better informed of the fundamentals of physical markets.” Provision of information by the private sector would be voluntary!

The G20 ministers made no attempt to halt speculation in food prices. Their communiqué seeks transparency instead of controls over the speculative trading – governments set up the mechanisms and the private sector which is the culprit can expose their speculative trade and positions on a voluntary basis! This will change nothing.

The G20 statement emphasises the need for pubic-private partnerships on investments. It speaks in terms of “the need to increase agricultural production and productivity on a sustainable basis,” but promotes this through such organisations as the Consultative Group on International Agricultural Research (CGIAR) and the International Rice Research Institute (IRRI). Both these organisations have close links with Bill Gates’ Foundation and Monsanto and are pushing unsustainable and unaffordable GM crops.

The seed monopolies, along with the financial institutions, are the key forces behind the failure of Western governments to take strong measures to ban speculation in food prices, and provide them with the necessary assistance to enable them to pursue sustainable farming practices. Without recognition of the role of government in controlling prices, imports and exports and investments, the poorer nations of the world cannot achieve food security or economic sovereignty.

Climate change is already impacting on third world food production. The industrialised nations also have an obligation to reduce greenhouse gas emissions and provide financial and technological assistance to developing countries in accordance with their commitments under the Kyoto Protocol.

* The G20 is a grouping of finance ministers and central banks from 19 of the richest nations in the world and the European Union, with China, India and Brazil being the only developing country participants. The action plan of the agricultural ministers will be presented to the G20 meeting of finance ministers and central bankers in November for adoption.  

Next article – Editorial – Gillard 12 months on

Back to index page

Go to What's On Go to Shop at CPA Go to Australian Marxist Review Go to Join the CPA Go to Subscribe to the Guardian Go to the CPA Maritime Branch website Go to the Resources section of our web site Go to the PDF of the Hot Earth booklet go to the World Federation of Trade Unions web site go to the Solidnet  web site Go to Find out more about the CPA