The Price of Rice

Hilary Aked questions why people are hungry in a world of plenty

“When I was young, rice was 500 rupiahs per litre, then it rose to 700,” says Mrs Suri, a 50-year-old widow with seven children. “The most expensive was 1,500 (about 8p) during the financial crisis in 1998. I never imagined it would climb to 5,300 rupiahs.” The price of rice has risen by over 50% in the last six months There is more than enough food for everyone in the world

Different people give many different reasons for current global food crisis, but certain facts cannot be disputed: 14 million people in East Africa alone are on the brink of a humanitarian disaster and in developing countries around the world 862 million people are having to cope with persistent malnutrition. However there is more than enough food in the world. Even with the booming global population there is technically more food available per person than there ever has been. The real problem is allocation of the world’s resources. The right to adequate food may be enshrined in international law but the dramatic rise in the price of staple foods means that the world’s poor, accustomed to living hand-to-mouth, are now being pushed over the edge. The market is dictating that millions are to suffer because they lack ‘buying power’; soon they may be deemed essentially ‘too poor to live’.

It is true that there are a complex array of causes, but certain interested parties prefer to stress catalytic rather than fundamental underlying causes. Yes, climate change has played a role, with droughts in Australia and Morocco reducing wheat yields and pushing up prices. But people in developed countries have a ‘buffer zone’ and can afford to ride out these changes despite feeling the pinch. It is the very poorest for whom these market fluctuations are disastrous: those in developing countries which are net importers of food, who spend around 60% of their total income on food. The price of rice, the staple food of 3 billion people - half the world’s population - rose to record levels this year and those for whom grinding poverty is a daily reality were introduced to a new level of degradation. The protests and food riots which have occurred across the global South, in Haiti, Indonesia, Burkina Faso, Egypt, Senegal, Mauritania, the Philippines and elsewhere, have a meaning. Protesters recognised that natural disasters are only ever the trigger factors of these problems and that the failure is human; political and economic factors have conspired to destroy lives. For empowered democratic governments it should be remarkably easy to solve food shortage or allocation problems, but the collapse of the Doha round talks confirms that the governments in developing countries have recognised that they are being deprived of this power.

The neoliberal agenda pushed for the past three decades by the IMF and World Bank has weakened the ability of developing countries to be self-sufficient. So-called “structural adjustment programmes” imposed by the World Bank and IMF scrapped mechanisms for regulating markets and directed investment away domestic agriculture. Simultaneously however, the developed nations have maintained protectionist economic policies such as the EU’s Common Agricultural Policy. Haiti is often cited as a case in point, a victim of these double standards. Virtually self-sufficient in 1995 in terms of rice production, following the intervention of the IMF it slashed tariffs on imports and reduced support for local agriculture. Consequently, the market was flooded by cheaper rice from the USA, which subsidises its producers, undercutting the local farmers – the country is now dependent on imports for 80% of its rice, therefore very vulnerable to price rises. While the hypocrisy of extolling free trade for others yet maintaining protectionist policies at home is quite clear, the powerful American-owned agribusiness like Cargill and Bunge who rake in huge profits whilst poor farmers go bust are naturally aggressive defenders of the status quo.

Developed nations’ governments have another charge of irresponsibility to answer for. An indirect influence of climate change, increased biofuel production effectively acts as a tax on food, forcing up the prices by diverting agricultural land away from food production into more profitable fuel production. Both the US and the EU have set targets for renewable fuel usage and developing countries are competing to meet the needs of fuel guzzling developed countries. Ignoring the need to drastically adjust consumption and stalling on investing in more effective alternatives to fossil fuels, the US and EU are in this way making poor people pay the price of emissions reductions which we are responsible for. Approximately 30% of the recent price rises in food can be accounted for by biofuels, and Oxfam has called for a freeze on biofuel targets to prevent the situation worsening.

A sustained period of high prices is expected however, because we are not dealing simply with supply and demand. That’s why the EU's response to the food crisis, encouraging greater production, will not solve underlying issues in the long term. The interdependency of markets, for example the rising ‘input’ prices (the oil prices pushing up cost of fertilisers, energy and transportation) are one important reason that small farmers are not able to benefit from food price rises as we might expect. To find real solutions we must first stop swallowing myths and distortions fed us by various sources, and face the real issues. Are the emerging economies of China and India expected to apologise that more of their citizens can finally afford to eat decent meals? Is Gordon Brown’s suggestion at Japan’s G8 summit that we all eat up our left-overs going to make a real difference? Will the combined power of advertising and the internet solve the problem if enough of us play vocabulary games on freerice.com? You know the answer. Come September the UN summit on the Millennium Development Goals will be forced to concede that the target of halving the world’s hungry by 2015 is very unlikely to be achieved. If we want to give ourselves a fighting chance, we know what we have to do: we need fairer trade first and foremost, and must stop neglecting the calls for environmentally sound agriculture which preserves vital ecosystems. We must rely less on the market model and allow more government involvement, specifically promoting investment in sustainable agricultural policies. The Head of the UN’s Food & Agriculture Organisation, Jacques Diouf declared that “a level playing field for trade” is the fundamental long-term solution. Africa, the poorest continent on the planet, was not even represented in the inner circle of at the WTO’s Doha Round this year, a sign of the reluctance to correct the inequitable trade rules that keep people poor. But trade-distorting agricultural subsidies that support Northern elites, and accompanying protectionist measures in OECD countries must end. The period of chronic under-investment in sustainable agriculture in developing countries is surely well past its expiry date and the balance of power must shift away from big agri-businesses to small farmers.

Although speculators moving away from the collapsed housing bubble have traded and profited in it as such - in the process exacerbating an already volatile situation - food is not just a commodity like any other. It is a necessity, a basic human right and a prerequisite above all else. That people in the 21st century cannot eat because they are too poor to buy food is an indictment of the current system and makes a mockery of everything we claim to stand for.