The Guardian • Issue #2066

Capitalism’s Global Food Crisis

Rice farmer.

Photo: Sorapong Chaipanya – (CC0).

The world is suffering from a dire food crisis. On 20 July India, the world’s leading rice exporter, supplying 40 per cent of the global rice trade, banned the export of non-basmati rice. The grain export agreement, the Black Sea Grain Initiative (BSGI) between Russia, Ukraine, Turkey and the United Nations (UN), has expired and Russia has attacked grain storage facilities in Ukraine. To make matters worse, the El Niño weather pattern has produced climate-related crop failures, with major floods and heatwaves in Southern Europe, North Africa, the USA and Asia, and major droughts in South America and Africa.

The Stanford University Center on Food Security and the Environment, has found that over the past 40 years “a third of the world’s high quality food-producing land” has been destroyed by drought, pollution, and soil erosion due to agriculture intensive ploughing and chemical fertilisers. These combined effects have destroyed the production of key agricultural commodities around the world, revealing the inherent weaknesses of the global agricultural system. The Capitalist system of monoculture agriculture, relying on a few plant species, and the global grain trade controlled by five corporations, has aggravated the global food crisis forcing up prices.

These higher international food prices will lead to further food riots and famines in developing countries, warns the Food and Agriculture Organization (FAO). The World Bank has announced a US$12 billion fund to help alleviate the international food crisis, created by the high prices of wheat, oil, flour, and other staples.

Last year, major food shortages occurred in Sub-Saharan Africa, Iran, Sri Lanka, Sudan and Iraq. Significant floods and heatwaves destroyed key crops in the Americas and Europe. Droughts hit Spain and Portugal, which lost up to 80 per cent of crops in some areas. Eighty-two million East Africans and 42 million West Africans face acute food insecurity. Last year more than 8 million Somalis were in urgent need of food assistance. In other areas locust plagues, droughts, and fires have laid waste to food production areas.

These food crises are accentuated by the lack of competition in the international agricultural food trade forcing up prices. Nearly 90 per cent of the world’s grain trade is done through five traders, the ABCD group of companies: Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus. They also trade in coffee, sugar, cocoa, oilseeds, and biofuels. In 2023 Bunge and Viterra agreed to a US$34 billion merger, dramatically reducing competition.

Competition was further decreased with major global agribusinesses merging or being purchased. ChemChina purchased Syngenta, Bayer acquired Monsanto, and Nutrien purchased Landmark and Rural Co.

The United States produces 40 per cent of the world’s maize, followed by Europe, Argentina, Brazil and China. As well as human food consumption, maize is used as an animal feed and in biofuels. Maize is not a natural feed for cattle and pigs. It is used to fatten the livestock animal before sale, to fetch higher prices. Forty per cent of the corn grown in the US is used for ethanol fuel, which makes up 10 per cent of the motor vehicle gasoline produced and consumed.

Wheat is the major grain crop traded around the world, with global wheat prices continuing to be high this year. The bulk (80 per cent) of the world’s wheat is grown in North America, Argentina, Europe, China, India, Australia, and North Africa. The world’s major wheat exporting countries are China, India, Russia, USA, France, Ukraine, and Australia. Australia is expected to sell a record 13.7 per cent of global wheat exports this year.

Russia is the world’s top wheat exporter. From a record production of 92 million tons this year, Russia is exporting 45 million tons, primarily to the Middle East, North Africa, and Central Asia. Due to the ongoing war with Russia, Ukraine’s area under wheat is down significantly. Production is forecast at only 17.5 million tons, and its wheat exports are down 40 per cent to 10.5 million tons. The BSGI grain deal had helped Ukraine export 16.8 million tons of wheat last year, with 39 per cent transported through Eastern Europe, because of ease of shipment and the increase in regional demand owing to the drought.

India announced that it would stop exporting non-basmati white rice, 25 per cent of India’s rice exports, effective immediately. Parboiled rice (partially boiled) and basmati rice, are still allowed to be exported. Rice prices increased after devastating floods in Pakistan, which tightened global supply, said Joseph Glauber, senior research fellow at the International Food Policy Research Institute. The International Food Policy Research Institute said, “the ban is the latest blow to the global rice market,” forcing higher global prices and increased food insecurity.

Global rice supplies will worsen, said  ASEAN economist Eve Barre. US rice farmers, struggling with the drought, have planted soybeans and corn which require less water. The US supplies 70 per cent of its domestic rice market and imports arborio, jasmine, and basmati rice.

North America has experienced droughts over the past three years. In South America, Chile has had a food crisis since 2020. In 2021, Argentina banned all meat exports to curb food price inflation. In Uruguay the drought is so bad the reservoir level for the capital, Montevideo, has fallen to 2 per cent. Germany is planning to ban biofuels produced from food crops by 2030. To ensure its long-term food security, last year China acquired 50 per cent of the world’s supply of wheat, 60 per cent of its rice, and 69 per cent of corn stockpiles. In the face of all this, Australia continues to make climate change worse through increased fossil fuel production.

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