Vol.5 No.8, 19 April 2005

The Staff of Life: Where the Market Fails

By Margaret Legum

The usual justification for the untrammelled market economy is that it is efficient: it brings consumers the cheapest and the best at the lowest cost. Suggestions of interference with the market are met with claims that this would reduce efficiency in terms of resource use.

So how's this for efficiency in serving consumers? The effect of the global market in food is that while 840 million people are chronically hungry every single day of their lives, some farmers are paid to stop planting staple crops, others go out of business, and millions of tonnes of grain are kept off the market.

Specifically in South Africa, banks have asked farmers to cut maize planting by half this year, offering to pay for the cost of letting land lie fallow and paying off workers. (Agriculture provides about a million jobs and homes.) At one point Grain SA was quoted as saying 'the good news' is that we might have a bad harvest this year: it turned out we had a disappointingly good year.

We store 5.23 million tons of maize, because that is the surplus over the 7 million tonnes we consume? Is this surplus because we have all eaten our fill of maize? No, it is because we cannot afford as a nation to buy more than that; but people die of AIDS well before their time, children's mental and physical growth is stunted by malnutrition, while hunger, insecurity and crime characterise the lives of perhaps half of all South Africans in this land of plenty.

Wheat and soya are in the same parlous state, with surpluses coinciding with desperate need. And the price of bread goes up, making the difference for some between just managing and not managing - between feeding your child and throwing him out to fend for himself.

And farmers are buried in debt: some R31bn of it in SA. Some of them die of debt: worldwide farming has one of the highest suicide rates.

Current mainstream economics describes itself as the study of scarcity - the efficient allocation of scarce resources. Could that be why they propose policy paradigms that lead humanity from abundance to scarcity? Where the planet provides enough seed in one fruit to plant a field, they support the market in allowing private companies, in the interests of future sales, to modify that fruit with 'terminator technology' to prevent its reproduction. Where the climate gives good harvests, they support the destruction of food if people cannot pay the market price.

A new paradigm is needed - in which the market is accepted as useful but not sacrosanct. Agriculture is a good place to start. We have all noticed that rich countries subsidize their agriculture. That is because they know it is the only way to ensure a steady supply of people's basic need for food.

Weather, currency variation, pest infestation and soil condition are all unpredictable; and add to the normal uncertainties with which industrial business people cope: together they make agriculture impossible without predictable pricing.

Only the WTO, which essentially serves large trading corporations, assumes agriculture can be treated in the same way as traders in terms of price response. Governments know better. Privately, an EU Minister is quoted as saying: 'If I cut subsidies I am going to get in trouble with voters. Why on earth would I do that?' So we live in a fool's paradise if we think our plight will be helped by others' ending subsidies.

We need to give our own farmers, and their workers, predictable prices and jobs. And to protect them from others' subsidised goods, by putting tariffs on imported produce, equivalent to the subsidy. We need a system that slaps those tariffs on immediately the foreign subsidy is identified, rather than getting into lengthy negotiations over what is legitimate. Put Pravin Gordham of SARS onto developing a system for rapid response.

Until everyone has access to an income, we need to subsidise food to people who cannot buy it.

If neither the world's consumers nor its farmers are doing well out of agriculture, who is benefiting? It is our old friends the multinational corporations and supermarkets. Mergers, acquisitions and interlinking have reduced their number to about five groups that control most of the world's staple food economy from supplying seed to buying produce, to processing and selling. Since they are virtual monopolies they have a strong influence over prices. They are exceptionally profitable.

The consolidation of these multilayered companies squeezes out small business at every stage. Monocrop agribusiness, heavily chemical based, is privileged by their dominance. It provides few jobs than the smaller, mixed and organic farming that it displaces. There is a common perception that large operations mean more jobs. The opposite is usually true.

That kind of massive food operation also produces and multiplies disease from food on a large scale. And it pollutes the air by flying food around in search of bigger margins.

'The giver of food is the giver of life' says an Indian sacred text. You may think that sentimental - even if literally true. But perhaps we should ask what a successful economy should do. Should it put food security first - or last? Globalising food production puts it last.

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