Monday, May 26, 2008

manufacturing a food crisis

The Nation, by way of, explores the food crisis in Mexico and the Phillipines. One never has to read far before finding the usual suspects: International Monetary Fund, World Bank, and neoliberal economic policies wreaking bloody havoc.

When tens of thousands of people staged demonstrations in Mexico last year to protest a 60 percent increase in the price of tortillas, many analysts pointed to biofuel as the culprit. Because of U.S. government subsidies, American farmers were devoting more and more acreage to corn for ethanol than for food, which sparked a steep rise in corn prices. The diversion of corn from tortillas to biofuel was certainly one cause of skyrocketing prices, though speculation on biofuel demand by transnational middlemen may have played a bigger role. However, an intriguing question escaped many observers: how on earth did Mexicans, who live in the land where corn was domesticated, become dependent on U.S. imports in the first place?

The Mexican food crisis cannot be fully understood without taking into account the fact that in the years preceding the tortilla crisis, the homeland of corn had been converted to a corn-importing economy by "free market" policies promoted by the International Monetary Fund (IMF), the World Bank and Washington. The process began with the early 1980s debt crisis. One of the two largest developing-country debtors, Mexico was forced to beg for money from the Bank and IMF to service its debt to international commercial banks. The quid pro quo for a multibillion-dollar bailout was what a member of the World Bank executive board described as "unprecedented thoroughgoing interventionism" designed to eliminate high tariffs, state regulations and government support institutions, which neoliberal doctrine identified as barriers to economic efficiency.

There is no justification for this continuing effort to institute policies that practically guarantee an impoverished citizenry, the privatization and wholesaling to foreign entities of a nation's wealth, crushing debt, spiraling interest payments, and loss of independence and autonomy.

The classic definition of insanity proffered by Alcoholics Anonymous et al is doing the same thing again and again, expecting a different result. Since the Chicago school economists first began fucking around in South America, the results have been predictable and bloody and destructive, yet the same theories are repeatedly put into practice, despite having proven disastrous around the globe.

Of course they've not been disastrous for everyone. Huge multinational corporations have benefited greatly. They've been immensely enriched on the backs of the world's poor, so depending upon one's point of view, what I consider a disaster may not be so: I think starvation and death due to economic terrorism is a disaster. You?

There are heartening developments in South America and I'm hopeful that they'll continue. One bright spot is the South American Union agreed upon last Friday in a meeting of national leaders, with further talks now about a single currency for the region. It's a tenuous start and likely to falter, but the effort was based on the sound premises that there must be an alternative to American hegemony and that nations should band together to avoid falling victim to thuggish institutions like the IMF and the World Bank.

Whether it will fall apart if Venezuela's Hugo Chavez fails to win reelection remains to be seen; certainly his anti-American stance has been a driving force behind the general move of South American nations to fight US domination and that stance, too, has been the fuel for US efforts to derail his presidency. Chavez is feisty, but in a head to head battle, Chavez v. CIA, the CIA will likely be the ultimate victor.

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Blogger BigAssBelle said...

Comment moderation is off. Don't be a dickhead.

May 27, 2008 8:20 AM  
Anonymous Anonymous said...

I don't understand , though, how any of this caused tortilla prices to soar? Why didn't the Mexican farmers just grow more corn?

May 27, 2008 12:45 PM  
Blogger BigAssBelle said...

Unilateral liberalization of agricultural trade pushed by the IMF and World Bank contributed to the destabilization of peasant producers.

This blow to peasant agriculture was followed by an even larger one in 1994, when the North American Free Trade Agreement went into effect. Although NAFTA had a fifteen-year phaseout of tariff protection for agricultural products, including corn, highly subsidized U.S. corn quickly flooded in, reducing prices by half and plunging the corn sector into chronic crisis. Largely as a result of this agreement, Mexico's status as a net food importer has now been firmly established.

With the shutting down of the state marketing agency for corn, distribution of U.S. corn imports and Mexican grain has come to be monopolized by a few transnational traders, like U.S.-owned Cargill and partly U.S.-owned Maseca, operating on both sides of the border.

it's the same old shit, anonymous . . . neoliberal economic policies and the devastating effects of NAFTA FOR THE LITTLE PEOPLE. NAFTA is good for huge multinationals, that's all. neoliberal economic policies are the same.

May 27, 2008 2:22 PM  
Blogger Dusty said...

Grow more corn...are you serious?

In January, import tariffs on apples, wheat, sorghum, rice, soy and many other farm products will drop to zero, from between 1 percent and 2 percent now, in the second phase of trade liberalization between NAFTA members Canada, Mexico and the United States.

Chicken and pork imports will see tariffs lowered more drastically, from as high as 49 percent in the case of poultry.

Four other products, including powdered milk, corn and beans will get five more years of protection before tariffs go to zero in 2008.

This IS 2008 right?

May 27, 2008 3:45 PM  
Blogger Therese Dawe said...

Corn syrup is the devil and has been added to almost every single food in America that is packaged or served in a restaurant. The marketing of Kettle Corn as something good is really just popcorn with sugar in it! McDonalds has breakfast sandwiches that aren't just breakfast bisquits, they have added more corn syrup. The new term "diabesity" is, I believe, linked in many ways to the Western diet being overtaken by the addition of corn syrup to foods. It's almost like you have to follow the money trail to see who is getting rich from all of this sugar infusion, because all of the foods that it's been added to were fine without it. It's cleary akin to the tobacco companies adding stronger nicotine to cigarettes. (yes, they say it isn't so) WHAT EVER! When people start to look at the packaging and decide that the only healthy foods are the ones you cook yourself without added sugars, then perhaps the market for corn and corn syrup will decline a teensy bit.

May 27, 2008 10:28 PM  
Blogger Dusty said...

Yo is a report by CEPR about NAFTA and the World Banks bs report about how great NAFTA has been for Mexico's economy:

A short blurb for ya:

Getting Mexico to Grow with NAFTA: The World Bank's Analysis

October 2004, Mark Weisbrot, David Rosnick, and Dean Baker

Ten years after NAFTA went into effect, the World Bank reported that Mexico's economic growth improved under the treaty. This paper explores how the World Bank reached those conclusions and their subsequent revisions and shows that its methodology, when applied correctly, does not show that NAFTA increased Mexico's growth.

May 28, 2008 2:09 AM  
Anonymous Tater said...

So glad you are getting your heart and mind behind these subjects you have chosen to discuss. I am thoroughly enjoying the read, and learning some points of fact I had only suspected up to now. I appreciate the efforts you are making here, and just wanted you to know that your efforts are not falling on deaf ears. Love you.

May 28, 2008 4:33 AM  
Blogger Bad American said...

Whoa people that was one royal smackdown!

Remember - starvation and want are for the little people. Profits are for those who count - Bush's 'have mores.'

Great job as always Lynette.

May 28, 2008 7:50 AM  
Anonymous Anonymous said...

I'm still confused, though. Corn became cheaper.. .and that's bad? Isn't cheaper food good? It means lower-income families can afford more food.

May 28, 2008 11:44 AM  
Blogger BigAssBelle said...

you're deliberately being obtuse, anonymous. yes, corn becomes cheaper because it is subsidized for the countries who are now able to send corn to mexico.

as a result of the cheaper corn coming in ~ cheaper only because it is subsidized ~ mexican farmers have lost their land, lost their businesses, etc. because they cannot compete on a drastically unleveled playing field.

now that the small farmers are out of business and mexico is dependent on imports, here comes the price increase.

this is precisely the same plan of attack utilized by wal-mart, borders, starbucks, every multinational corporation.

first, flood the area with artificially cheap goods against which previous providers cannot compete. ARTIFICIALLY CHEAP. once the former providers are run out of business, raise the price. and raise it. and raise it.

competition is eliminated in this "free market," which is not free at all. it's government subsidized economic terrorism.

finally, "it means lower income families can afford more food."

no it doesn't. it means that now people are starving worldwide because of these brutal practices.

May 28, 2008 12:04 PM  
Blogger enigma4ever said...

really good post...and the Rice and Corn Situations really need a turn around...too many effected and harmed by these bad policies...really well researched and that you presented good data and info to talk to people....

thank you...
( I tried to thank you for comment over at Sirens..)

May 28, 2008 8:50 PM  
Blogger Doralong said...

WEll done Lynette- it is a very complex scenario that far too many people are entirely clueless about. Never have so few controlled the destiny of so many.

Alarming, truly.

May 29, 2008 8:42 AM  
Anonymous Anonymous said...

But doesn't the company setting the price have to still keep it within a range that people cn afford? If they set it too high, no one will buy their product and they will be out of business. As far as I know it's not illegal for someone new to start growing corn or for someone to sell an alternative to corn in Mexico at a lower price if the current prices are too high. So I'm still confused as to how this is causing massive numbers of people to starve. I'm not being obtuse, I'm seriously trying to understand this and it just doesn't seem to add up to me based on what I've read so far.

May 29, 2008 12:20 PM  
Blogger BigAssBelle said...

As far as I know it's not illegal for someone new to start growing corn or for someone to sell an alternative to corn in Mexico at a lower price if the current prices are too high.

of course, that would make sense. but who? the small farms have been consolidated, just as in this country, into huge corporate enterprises. it's not a matter of buying an acre of land and plowing it up. even if that could be possible, you're looking at months, maybe a year, lag time for a single farmer to begin producing. for large scale food production, more like years.

just as in this country, people like me, like you, will continue to pay the prices that are charged, regardless of how high they go. i am financially blessed. not everyone is so fortunate. those who can't absorb a doubling, tripling food bill, will starve. end of story.

i don't think you have a vision of reality for most people in the world: most are poor; most subsist; most barely scrape by, and something like a 50% or 100% increase in the cost of basic foods is simply unaffordable.

most of us in this country don't live this way, but in mexico, in other countries even more devastated by the food crisis, people work to eat. virtually every penny goes to food, thus starvation when the price skyrockets.

May 29, 2008 12:29 PM  
Blogger Dusty said...

I'm sorry but are you really that naive Anon?

Businesses are there to make money right? Why would they keep their prices low on items which people need to buy to survive?

It doesn't match up with what you have read because you are reading articles that don't want you to know what the bottom line is. Its not rocket business as usual.

Take the World Bank and their loans to poor nations. Part of the requirements of those loans are that they have to buy the majority of their imported items from American companies..which then jack the prices way up, thereby making a killing off these nations. If you aren't buying this, try reading the book entitled: Confessions of an Economic Hitman.

May 29, 2008 12:31 PM  
Anonymous Anonymous said...

Dusty, I have to say, your condescending tone is really kind of rude. I'm trying to learn and you're using pejorative language against me. Please don't bother responding to me unless you will treat me with the same respect I give you.

bigassbelle, thank you for your answers. So, if the majority of Mexicans spend all of their money on food (is that really true?), I'm guessing that was the case both before and after the farm consolidations. (Were they forced consolidations? ) So in that respect, nothing's really changed. What I still don't get though, is why would the companies push prices up to a point at which people starve? They're not going to make more money from people starving to death. They're not going to make more money from people not being able to buy their product at all. So, again, I'm just sort of confused. I believe in the concept of supply and demand- as I think everybody does- and so it seems as though that's what's driving the prices. If it were just greedy corporations, then why does the price fluctuate at all? Why don't they just set it high and keep it there? Why do prices go up and down? There's obviously some law of economics at work, not just dictatorial price setting, I would think.

May 29, 2008 7:57 PM  
Blogger Dusty said...

Oh, did I hurt your last feeling? So sorry, your obtuse and frankly strange questions left me wondering as to whether you were being sarcastic Anony.

Sorry if I read you wrong, but I still have to wonder about what you read if you have no idea of what NAFTA and the World Bank have wrought on millions of poor people..not to mention the folks in the US.

May 29, 2008 8:07 PM  
Blogger MissLynette said...

I believe in the concept of supply and demand . . .

why? why do you believe in that? because we're told that's the way the allegedly free market operates?

i don't see any evidence of that. have you got some?

i didn't say that the majority of mexicans spend all of their money on food. i said that for the vast majority of the world's poor ~ and there are terribly poor people in mexico, of course ~ the bulk of their income does go to simply feeding themselves. subsistence. survival.

but again . . . supply & demand? why do you believe in that?

May 29, 2008 8:31 PM  
Anonymous Anonymous said...

Well, I guess I believe in supply and demand because that's what I've been taught, because every economist I've ever known, met or read has believed it (and it's hard for me to believe that someone with a phD in economics wouldn't have studied it more thoroughly than I could!) and because it makes sense. If demand for something goes up, price will go up. If demand for something falls, price will go down. It seems like common sense. The evidence seems to be there every day in every transaction. When taken to a lower scale, for example: let's say 1 item exists but 2 people want it. The item will go to whichever can pay more for it. If only 1 person wants it, the price will be lower. But if 2 people want it, the price will be higher because it will be whichever is willing to pay more for it. In my mind, the laws of supply and demand aren't even open for debate, really- even Soviet economists recognized that it existed, although they tried to control it (and that is open to debate, I suppose: how much it can be controlled). But, if there is evidence that supply and demand does not exist as a force, I'm very interested in hearing it. Also, I'm still curious: why do prices fluctuate? If prices are simply set by the corporation (and not by supply and demand) then why do they (prices) fluctuate at all? Why not set them at a certain price and then keep them there? And if we are going to call companies greedy for raising prices, should we then call them generous when they lower prices?

May 29, 2008 10:33 PM  
Blogger BigAssBelle said...

anonymous, it would be interesting to see how supply and demand would operate absent the false-created demand of advertising and market manipulation.

one example of a falsely created scarcity: when our krispy kreme donut store opened here, there were breathless accounts on the front page of the newspaper about how folks were so desperate for donuts, they were camping out days in advance in order to be first in line when the hot sign went on.

that "excitement" proved to be just another advertising tact, but the big deal enticed others to join in the on-site countdown for the newest donut joint.

is that demand? were people in tulsa really lacking donuts? i don't think so. and those who were allegedly waiting in line for the hot sign were actually doing so as paid emissaries of the corporation.

US demand for oil and gas went down in march but the price of gas went up.

US demand for commodity groceries ~ flour, sugar, grains ~ has gone down while the demand for prepared foods has gone up. yet commodity groceries are skyrocketing in the absence of any great demand for them.

June 01, 2008 7:02 PM  
Anonymous Anonymous said...

You're right in that demand can be created, but that doesn't in any way diminish the laws of supply and demand. There can definitely be a distinction between "need" demands (food and water to keep us alive) and "want" demands (donuts, ice cream, art, blogs, the internet...) But I'm not sure the distinction matters. I would hope we always live in times of enough peace and prosperity that there will be a demand for more than just needs (and who gets to define what is a need and what isn't, anyway?) As a lover of art, one of the industries that most requires a creation of demand, it would be a shame not to have it. So, while the distinction is made, I"m not sure it's relevant or really matters: people will always need, and they will always want. And that's a good thing- it allows a greater diversity of product, and thus a greater diversity of jobs.

I'm not sure where you are getting your statistics that US demand for oil and commodities has gone down? I find that very hard to believe, but please direct me to your source. Not that it matters much, because what really matters in this global economy is worldwide demand; and that has most certainly increased, particularly from China and India. And when more people demand something, as we know, the price will go up.

June 02, 2008 10:08 AM  
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