GFC2 : the global food and financial crises
DOI link for GFC2 : the global food and financial crises
GFC2 : the global food and financial crises book
Introduction During 2007 and 2008, peaking a few months before the collapse of Lehman Brothers confirmed the existence of a global financial crisis, the price of food – in particular the staple food grains of wheat, corn and rice – rose steeply enough to create a “global food crisis”. Consequently, after some years hovering around 820-850 million, the Food and Agriculture Organization (FAO) estimated that by early 2009 the number of hungry people went past the one billion mark (Blas, 2009). Since these price peaks, prices have dropped but remain relatively high, especially in many poor countries (Demeke et al., 2008), and the FAO predicts they will remain at high levels for some years to come, with concomitant increases in hunger and poverty for millions of people around the world. Yet despite the dire consequences of this global food crisis, the World Food Programme reported a significant drop in food aid donations from national governments in 2009 (Vidal, 2009), and there has been relatively little attention given to the issue from heads of state or the world media since the global financial crisis arose. In fact, by the second half of 2008, the food crisis appeared to be largely displaced from the central concerns of the most powerful states by the global financial crisis. This paper compares the global level responses to the two crises, and argues that they should be thought of, and responded to, in a complementary rather than competitive way. A complementary approach is also consistent with the fact that it is not easy to disentangle the way the food crisis has interacted with the global financial crisis and consequent economic downturn, although the increase in numbers of people suffering from malnutrition began in conjunction with increasing food prices in 2007, and well before the global financial crisis. The recessions prompted by the global financial crisis are having effects in conjunction with elevated food prices. For example, the number of food insecure people in the
United States has also hit record levels in this context; amongst Americans, according to a late 2009 report by the U.S. Department of Agriculture (USDA), “more than 16 per cent – or 49 million people – sometimes ran short of nutritious food, compared with 12 per cent the year before” (Goldstein, 2009). The chapter is structured in three sections. Section One is a necessarily brief consideration of the factors contributing to the global food crisis. While these are multifarious and complex, of particular interest are the different levels of market failure that have operated to magnify and exacerbate problems with food supply in many parts of the world. In the second section, the global political responses to the financial and food crises are compared. While the United Nations has been sidelined by the Group of Eight (G8) and Group of Twenty (G20) in the response to the global financial crisis, it has remained important to the global food crisis response. This pattern of response is linked to the scant regard of the most powerful states for the UN as a central coordinating and legitimating institution for global governance, as well as the relatively low priority given by them to the food crisis, and continuing resistance to meaningful reform of food and agricultural markets at the global level. In the concluding section I argue that the coincident crises have created some potential for effective change by combining the responses to them into a coherent program of institutional renovation of sufficient breadth to encompass both agricultural and financial markets. However, powerful agricultural market actors, interlinked with state interests and free market norms they work so hard to construct as identical to their own, will be extremely resistant to change, even in the face of likely repeated food crises and consequent human suffering – in ways that echo the problems of financial market reform. The food sovereignty movement acting as a counter to transnational corporations and Western states remains marginal, with little high level political impact. This is emphasized by their continuing focus on attempting to influence global governance through the UN Yet, as a number of contributors to this volume show, the UN is effectively sidelined when it comes to many areas of economic coordination, with organizations such as the G20, the International Monetary Fund (IMF ) and the World Bank playing much more prominent roles despite their less democratic character. Nevertheless, increasing political instability is likely to increase the chances of a change to this situation. Moreover, the growth in power and presence within the G20 of less wealthy nations with large, food insecure populations, may help create the political space for more effective reform efforts.