HSBC’s Karen Ward, a senior economist at the bank, said that rapidly rising food prices were occurring at a time of “very, very low wage growth”. In fact, living standards have fallen in the UK by more than 10 per cent, according to the Bank of England’s chief Mervyn King, as inflation outstrips wages. They are predicted to fall even further.
Ward was no lone voice. A recent report, The Future of Food and Farming, commissioned by the UK government, said that the recent food price spikes, like the one in 2007-08, may well become more common in the future, sparking unrest and riots.
And how right they were, rising food prices was one of major factors in the revolutions in Egypt and Tunisia and ongoing disturbances in world.
UK food inflation up
This week the OECD released a report that showed food prices were increasing faster in the UK than in any other top seven economies (G7) in the world. Food inflation in the UK is running at 6.3 per cent while it is 2.1 per cent in the rest of the G7 countries.
In fact, in only four of the top 34 economies in the world were food prices rising faster than in the UK.
Even these figures tend to downplay the impact on the working class of rising food and fuel prices. Food and fuel are staple goods that make up a bigger proportion of workers’ shopping than they do for the rich.
Part of the rise in the UK is due to the dominance of a few multinationals in the food and petrol industries. For all the “buy one get one free” offers, the stranglehold of a few firms on customers means that they dictate prices.
It also reflects a lack of will or power on the part of government to do anything about it. This week, manufacturers reported continuing increases in the cost of materials but were still able to be “confident they can pass on quite a lot of the increase in commodity prices” (Bloomberg).
Rising food prices as a global phenomenon
But the UK is only one country out of many facing food inflation. Globally, food prices have now risen for the eighth consecutive month and are at 2008 levels (the last year they reached record highs), says the UN’s Food and Agricultural Organisation (FAO). The FAO’s basket of agricultural goods is now at a higher level than at any time since prices were first monitored in 1990. The UN is predicting prices will remain this high for the rest of the year.
Cereals in particularly are becoming more expensive; export prices have gone up 70% in the past year and this being transmitted into national rates of food inflation, such as Kyrgyzstan (54%), Bangladesh (45%), Sri Lanka (31%), Pakistan (16%).
This directly affects things such as the price of bread but also meat, as livestock is raised on cereals. Other big price increases have occurred for sugar, cooking oils and coffee.
The World Bank identifies one major cause as being recent droughts and crop failures, for example in Russia, Australia and China.
The FAO added in a report last December that sharp food price rises “are likely to re-occur more frequently and with greater intensity in the decades to come due to climate change”. It pointed to the lack of investment in measures to safeguard agriculture from the effects of climate change. For example, the Copenhagen climate summit in 2009 pledged $30 billion to help agriculture – but by the end of last year, only $2 billion had actually been paid in and a meagre $700 million of that disbursed to farmers.
The Future of Food and Farming report also identified the degradation of the environment and soil: “Without change, the global food system will continue to degrade the environment and compromise the world’s capacity to produce food in the future, as well as contributing to climate change and the destruction of biodiversity.”
Karl Marx analysed capitalist agriculture in the 19th century and identified the very conditions that are now become widespread:
“Moreover, all progress in capitalist agriculture is a progress in the art, not only of robbing the workers, but of robbing the soil; all progress in increasing the fertility of the soil for a given time is a progress towards ruining the more long-lasting sources of that fertility…Capitalist production, therefore, only develops the techniques and the degree of combination of the social process of production by simultaneously undermining the original sources of all wealth – the soil and the workers.”
The way in which agriculture is organised is degrading the earth and leading to food inflation. The effect is instability in supply and more social unrest, riots and revolutions as prices rocket.
Socialism and agriculture
Rising prices represent real misery for millions of people. The FAO estimates that there are 925 million people in the world facing acute hunger, and the number of people who die from malnutrition has not fallen since the Make Poverty History campaign in 2005 – it is still one person every three and half seconds, as seen in the advertisement showing celebrities clicking their fingers. Most of the dead are children under the age of five.
Even in developed countries such as the UK, rising food prices on top of falling wages and the slashing of services means misery for millions of people as they can ill-afford the basic necessities of life.
There is enough land, workers and technology to provide food for everyone. But agriculture needs to be planned by the producers. We need the socialisation of industry, banks and agriculture under the control and ownership of workers and peasants so that they can plan the world’s economy based on need not profit.
