The Global Food Crisis…and the Ravenous System of Capitalism

Courtesy this site

As Josette Sheeran of the UN World Food Program put it last month, “We are seeing food on the shelves but people being unable to afford it.” That’s a situation in which people start to question the very property relations that stand between them and those sacks of rice and bags of beans piled up behind that storefront grill and the riot policemen in front of it.4

—Tony Karon, writer for, April 9, 2008

The beginning of April 2008 witnessed an explosion of “food riots” around the world.

In Haiti, thousands protested for days throughout the country. In the capital city of Port-au-Prince, people carried empty plates to signify their hunger and smashed windows, set buildings and cars on fire, looted shops looking for food, and tried to storm the presidential palace. UN Blue Helmets (MINUSTAH) shot and killed at least five Haitians and wounded many others. In Bangladesh, many workers earn only $25 a month and the price of rice has doubled over the past year. 20,000 textile workers took to the streets to demand higher wages and to protest rising food prices. Scores were injured when police used gunfire to disperse the crowds.

In Egypt, when workers protested food prices in the textile center of Mahalla al-Kobra, north of Cairo, security forces shot dead two people and hundreds were arrested. In Burkina Faso in West Africa, unions and shopkeepers went on strike for two days to demand a cut in the price of rice and other staples. In Phnom Penh, Cambodia—where the average income is 50 cents a day and the cost of a kilogram of rice has risen to $1—demonstrators marched on parliament to protest food price hikes. In the Ivory Coast, where food prices have soared by between 30 percent and 60 percent from one week to the next, thousands marched on the home of President Laurent Gbagbo, chanting “We are hungry” and “Life is too expensive, you are going to kill us.” Over a dozen protestors were injured when police attacked the crowd with tear gas and batons.

Demonstrations demanding food took place in many other places around the world, including Bolivia, Peru, Mexico, Indonesia, the Philippines, Pakistan, Uzbekistan, Thailand, Yemen, Ethiopia, and throughout most of sub-Saharan Africa.


We live in a capitalist system. That means that the production of the basic necessities—like food—is driven and shaped by one thing only: the maximizing of profit.

We live in an imperialist system. That means that a small handful of rich, imperialist countries dominate the rest of the planet, with the United States at the top of this global system. These imperialist powers dictate to the vast majority of oppressed nations what will be produced—and here too, the fundamental question that is considered is what will turn the maximum profit.

The specific causes of the current global food crisis are rooted inthe further development of a “capitalist world agriculture” and the deepening integration of oppressed countries into the workings of this imperialist-dominated global food system.

Four main factors—all flowing from this system—are behind the current food crisis. They are: the further industrialization of agriculture; the restructuring of agriculture in the oppressed nations to better serve the imperialists; the use of corn and other agricultural crops to make fuel instead of food; and financial speculation.

1. Industrialization of agriculture. On a world scale, agriculture has become more large-scale. It has become more reliant on modern technology. And from the engineering of seed to the super-marketing of food, it is driven by profit.

Industrialized world agriculture relies more on energy resources, especially oil. It is geared toward serving the world market and the export of food. It also involves “out-sourcing” of food production to Third World countries, taking advantage of cheap land and cheap labor.

And at the center of this transformation is the integration of crop and livestock production into large-scale (and often transnational) agrofood complexes. It involves the promotion of commercial agricultural exports—or “cash crops.” And it relies on a global system of transporting food—with many Third World countries importing and exporting huge quantities of food to and from distant parts of the planet.

In a different system—in a socialist society—making sure that people had enough food would be the first priority in agricultural production. Instead, today the agricultures of oppressed nations are geared to producing food for export. And these countries, in turn, rely increasingly on the world market for basic food supplies.

This industrialization of agriculture has been taking place under the baton of large agribusiness corporations based in the imperialist countries. This has meant that, increasingly, subsistence farming (farming based on producing staples like corn, beans, etc.) has been overrun and swallowed up by imperialist-controlled agribusiness. And this has also meant that some traditional small-scale peasant production has been transformed and integrated as contract farming to serve big agribusiness.

The further industrialization of agriculture profoundly affects what food is grown, where it is grown, where it ends up, and at what price it is sold. And it means that the production of food in the Third World is highly vulnerable to sudden and dramatic changes in the world market. For example, many Third World countries in the 1980s and 1990s shifted into coffee production to take advantage of high world coffee prices. But they wound up competing with each other and some, when coffee prices plummeted, suffered dire economic consequences.

To a large extent, people in poor Third World countries are not eating food grown locally. But instead you have this totally irrational situation where basic food staples that hundreds of millions of people in poor countries need to survive are transported and imported from thousands of miles away. And here the fact that world agriculture now requires great amounts of energy resources comes into play.

For example, a major factor in the current food crisis is the continuing rise in the cost of oil. This means that transportation costs—for example the cost of getting rice grown in Thailand to Mexico—have gone way up. And this has contributed to the rise in the price of rice. The rising price of oil also affects the cost of other things used to produce food, like fertilizers and pesticides, which contain oil products. So the rising cost of oil has contributed to skyrocketing prices of food imported into poor countries. And this means that many more poor people cannot afford the food they need.

2. Restructuring of agriculture in the Third World. Over the last 20 years or so, poor countries around the world, in Asia, Africa, and Latin America, have been subjected to Structural Adjustment Programs imposed by the International Monetary Fund (IMF) and the World Bank. These programs require that Third World governments must meet strict conditions to get new loans or to obtain lower interest rates on existing loans. Both the IMF and World Bank are controlled by the imperialist powers, especially the United States. And this restructuring creates more favorable conditions for imperialist trade and investment.

These structural adjustment programs have forced Third World governments to open up markets, land, and other resources to imperialist agribusiness, including food exporters. And they have hurt the mass of peasant producers. They force governments to cut subsidies to small farmers and support programs in rural areas, and to emphasize high-value export agriculture (like asparagus or exotic flowers). This, too, draws resources away from traditional and subsistence agriculture. The small peasant farmers who have been steered into export crops become victims to fluctuations in world prices. And these IMF and World Bank programs and policies have pressured these Third World governments to cut food subsidies and social services for people in the cities.

This restructuring of agricultural production in the Third World has been going on over the last few decades. But the continuation of this, and the continuing effects of this, are clearly factors in the current food crisis.

In El Salvador, on farms that once grew large amounts of coffee for export, malnutrition is spreading. These growers have been unable to compete in the world coffee market and have lost income and livelihoods. At the same time, because of the rise in food prices, they now need twice the money to buy the same amount of food they could purchase a year ago. And this means the amount of food they get has been cut in half.5

The World Trade Organization (WTO) Agreement on Agriculture and the North American Free Trade Agreement (NAFTA) have slashed agricultural tariffs in the Third World, further opening up markets for the global agribusiness industry. At the same time, the U.S. government subsidizes farmers in the U.S.—which makes it possible for U.S. food exports to be more competitive in the world market. As a result of NAFTA, 1.3 million Mexicans were forced off their land because they could no longer survive by farming.6 Many of these dispossessed peasants have been forced to emigrate to the cities and across the border to the U.S. in search of work.

In other words, as a matter of conscious Western imperialist foreign policy, poor countries—some of which had been largely self sufficient in food—have been turned into food importing countries.

This is the hellish dynamic: Third World countries have been forced to shift much of their food production away from subsistence crops to high value exports. They have been pressured to open up their markets to cheap food imports. As a result, local food production for domestic consumption has been undercut. Now these countries are caught in a vise: The price of imported food has gone way up at the same time that the ability to produce food for local consumption has been eroded. And so we have the phenomenon of millions of ruined peasants and farmers, no longer able to live off the land, flooding into the slums and shantytowns of the cities.

3. Production of biofuels. The production of biofuels from sugar-rich crops like corn, wheat, and sugar cane has become a booming and very profitable industry. And this means that land previously used for the production of food for human consumption is now being used for non-food agriculture.

The use of grains and other agricultural products to produce biofuels like ethanol and biodiesel is a major factor triggering food shortages and a major surge in grain prices. And this has hit poor countries with devastating force, since they depend so much on the world market for grains and other food needs.

The IMF has estimated that production of corn for ethanol in the U.S. accounted for at least half the rise in world corn demand in each of the past three years. This led to a rise in corn prices and feed prices. And the price of other crops rose as well—like the price of soy beans, as farmers switched their fields to corn.

A 2007 Foreign Affairs article pointed out:“The enormous volume of corn required by the ethanol industry is sending shock waves through the food system. (The United States accounts for some 40 percent of the world’s total corn production and over half of all corn exports.) In March 2007, corn futures rose to over $4.38 a bushel, the highest level in ten years. Wheat and rice prices have also surged to decade highs, because even as those grains are increasingly being used as substitutes for corn, farmers are planting more acres with corn and fewer acres with other crops.”7

The production of biofuels is extremely destructive to the environment. For example, it is predicted that by 2020 in Indonesia, “palm oil plantations for bio-diesel (will continue to be) the primary cause of forest loss (in a) country with one of the highest deforestation rates in the world.”8

4. Financial speculation in agricultural commodities. Speculators buy, sell, and hoard current supplies of food. And there are also speculators who wheel and deal in future supplies of food—in “commodity futures” markets. This involves buying contracts for the delivery and sale of food that has not yet been produced. Speculators buy at a low price, betting the price will go up—betting that when the agreed upon delivery date arrives, they will make a profit.

It has been estimated that hundreds of billions of dollars have flowed into the futures sector as a whole within the last five years, much of it for agricultural commodities. And speculators, buying futures at unprecedented levels, have contributed to the rise in food prices, particularly rice.

One researcher recently explained how the biofuels boom has exacerbated speculation and high prices: “Seeing the volatility in the market and knowing that grain reserves were depleted, the grain traders started withholding supply in hopes of higher prices, playing off currency differentials, and shifting production and investments in search of greater returns…. Investors started hedging their bets, buying grain futures, and driving up prices even more.”9

As we can see, speculators are doing nothing less than playing a high-stakes game of financial roulette with the daily food supply of the world’s poorest people.


There is no reason that food must be produced and exchanged in this way—other than the fact that the system of capitalism demands this, and enforces it through its armed might and political power.

So here we are in the 21st century facing skyrocketing food prices and food shortages. And now people in poor countries around the world are taking to the streets to demand something as basic as a loaf of bread and a bowl of rice.

Hundreds of millions of poor people around the world who were already malnourished now face the threat of starvation. All this is not only criminal but totally unnecessary. The basis exists, in human knowledge, technology, and resources, to solve the food needs of humanity. But what stands in the way of this is a world economic system of capitalism driven by profit.

Unless and until this system is abolished through revolution, and is replaced by a new socialist system, there will continue to be massive hunger and starvation… and some people will continue to be forced to eat “mud cookies” and drink pesticide out of horrific desperation… in what could—and should—be a world of shared abundance for everybody.


1 Herald Bulletin, April 25, 2008[back]

2 “PC’s farm bonanza fails to save dying farmers,” March 14, 2008, Reuters[back]

3 “How Biofuels Could Starve the Poor,” by C. Ford Runge and Benjamin Senauer, Foreign Affairs, May/June 2007[back]

4 “A ‘Revolutionary’ Moment in Egypt?” by Tony Karon, April 9, 2008 at[back]

5 LA Times, “A ‘perfect storm’ hitting globe’s hungry,” April 1, 2008[back]

6 Stuffed and Starved, by Raj Patel, Melville House Publishing, 2008[back]

7 “How Biofuels Could Starve the Poor,” by C. Ford Runge and Benjamin Senauer, Foreign Affairs, May/June 2007[back]

8 “Food First Backgrounder: Biofuels—Myths of the Agro-fuels Transition,” posted July 6, 2007 by Eric Holt-Giménez, Ph.D., Executive Director, Food First/Institute for Food and Development Policy,[back]

9 Gretchen Gordon, “The Food Crisis: Global Markets and Deregulation Strike Again,” April 18, 2008[back]


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Filed under Aid, Development, Inequality, Poverty

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