Hunger collides with oil prices

The world has recently witnessed large-scale and violent protests that are not driven by political and religious issues but by hunger and despair. If the international community does not react quickly and in a coordinated way, today’s sporadic outbreaks may turn out to be the first salvoes in an era of violence and social regression in many parts of the world. The merciless lynching of immigrants that has broken out in South Africa shows what happens when the delicate balance between various groups in society is tested by hunger and poverty: The weaker turn on the even weaker. In April, the UN’s Food and Agricultural Organization (FAO) noted that in the previous month alone, food protests erupted in Egypt, Cameroon, Ivory Coast, Senegal, Burkina Faso, Indonesia, Madagascar and Haiti. On May 5, two people were killed in a similar protest in Somalia. In many of these countries the price of basic foodstuffs has doubled over the past year. The FAO estimates that 37 countries are facing such a crisis. Henri Josserand of FAO’s Global Information and Early Warning System, notes, «Food represents about 10-20 percent of consumer spending in industrialized nations, but as much as 60-80 percent in developing countries, many of which are net food importers.» And there seems to be no solution in sight, despite the fact that a bumper harvest is expected this year. «Food is no longer the cheap commodity that it once was. Rising food prices are bound to worsen the already unacceptable level of food deprivation suffered by 854 million people,» FAO Assistant Director-General Hafez Ghanem said in a news release on Friday. «We are facing the risk that the number of hungry will increase by many more millions of people.» Robert B. Zoellick, president of the World Bank, warned last month, «Based on a very rough analysis, we estimate that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty.» Reiterating his call for a «New Deal for Global Food Policy,» Zoellick argued that the question was not only related to short-term needs. «This is ensuring that future generations don’t pay a price too,» he said. The price paid this year by the poorest countries for food imports is expected to rise a further 40 percent over 2007. But over the past year, the price of oil, too, has doubled. Which means that at a time when people who were used to relatively cheap food have begun to go hungry, they are also finding it increasingly difficult to warm their homes. If they are farmers, they are having to pay more to buy fertilizers and to use their tractors and other machinery. Many governments have already begun to take action in an effort to safeguard their food supply and maintain social order: some which prohibited food imports now allow them, while others which were exporters have banned exports, leading to an ever-tighter international food supply and, as a consequence, even higher prices. Indicative of the concern over the crisis is the fact that Saudi Arabia, which should be reveling in its fuel revenues, is subsidizing the domestic price of rice and at the same time buying up farms in Thailand, Brazil, Ukraine, Egypt and Sudan to ensure supplies. The poorer countries cannot do the same. This food crisis differs from those we have seen before as it is not limited to specific areas because of specific problems. The problem is global and is the result of many factors. Whereas overall production is good, there is a problem with cereals because of smaller harvests in Europe and Australia in 2006 and 2007. Other factors include increased consumption in developing economies, an increase in production of biofuels (which are subsidized) and changes in the subsidy system in many countries (which results in smaller surpluses). Another serious concern is that of speculation, in which «bets» drive prices higher. European Central Bank Governor Jean-Claude Trichet said recently that all the world’s economies face the threat of food inflation. He noted that speculation was just one aspect of the problem, along with rises in the prices of oil, metals and other commodities (as if speculation would be absent there). Whatever the reasons, the international community and global organizations are faced with an unprecedented and extremely dangerous situation. They will have to act immediately if they are to prevent further desperation and the terrible explosion that this will bring.