Free-Market Food Follies
Soaring food prices sparked riots in Haiti in April that left six dead and drove the prime minister from office. The World Bank reports that 33 countries currently face social unrest because of food and fuel prices. PHOTO: aljazeera.net
For anyone who understands the current food crisis, it is hard to listen to the head of the World Bank, Robert Zoellick, without gagging.
Recently, Zoellick waxed apocalyptic about the consequences of the global surge in prices, arguing that free trade had become a humanitarian necessity to ensure that poor people had enough to eat. The current wave of food riots has already claimed the prime minister of Haiti, and there have been protests around the world, from Mexico to Egypt to India.
The reason for the price rise is a perfect storm of high oil prices, an increasing demand for meat in developing countries, poor harvests, population growth, financial speculation and bio-fuels. But prices have fluctuated before. The reason we’re seeing such misery as a result of this particular spike has everything to do with Zoellick and his friends.
Before he replaced Paul Wolfowitz at the World Bank, Zoellick was the U.S. trade representative at the World Trade Organization (WTO). While there, he won a reputation as a tough and guileful negotiator, savvy with details and pushy with the neoconservative economic agenda: a technocrat with a knuckleduster.
His mission was to accelerate two decades of trade liberalization in key strategic commodities for the United States, among them, agriculture. Practically, this meant the removal of developing countries’ ability to stockpile grain (food mountains interfere with the market), to create tariff barriers (ditto), and to support farmers (they ought to be able to compete on their own). This Zoellick did often, and enthusiastically.
Without agricultural support policies, though, there’s no buffer between the price shocks and the bellies of the poorest people on earth. No option to support sustainable smaller-scale farmers, because they’ve been driven off their land by cheap European Union and U.S. imports. No option to dip into grain reserves because they’ve been sold off to service debt. No way of increasing the income of the poorest, because social programs have been cut to the bone.
The reason that today’s price increases hurt the poor so much is that all protection from price shocks has been flayed away by organizations such as the International Monetary Fund (IMF), the WTO and the World Bank.
Even the World Bank’s own Independent Evaluation Group admits that the bank has been doing a poor job in agriculture. Part of the bank’s vision was to clear away the government agricultural clutter so that the private sector could come in to make agriculture efficient. But, as the Independent Evaluation Group delicately puts it, “in most reforming countries, the private sector did not step in to fill the vacuum when the public sector withdrew.” After the liberalization of agriculture, the invisible hand was nowhere to be seen.
But governments weren’t allowed to return to the business of supporting agriculture. Trade liberalization agreements and World Bank loan conditions, such as those promoted by Zoellick, have made food sovereignty impossible.
This is why, when we see Dominique Strauss-Kahn of the IMF wailing about food prices, or Zoellick using the crisis to argue with breathless urgency for more liberalization, the only reasonable response is nausea.
This article originally appeared in The Guardian (U.K.), guardian.co.uk.