Food price surges and the economy’s natural limits

This is the first of two linked posts. The second one is here.

Food prices surged to record highs twice in the past five years – in 2007-08, before the financial meltdown, and again in 2010-11. There seem to be several sets of causes: (i) long-term increases in costs, caused by dearer oil (for transport) and gas (for making fertiliser),  relative shortages of land and water, and a slowdown in productivity improvements; (ii) the frenetic increase of financial activity around agricultural commodities markets, and the speculation it generates; and (iii) legacies of corporate agriculture’s dominance and the subjugation of the global south. After the 2007-08 price surge, world yields of basic foodstuffs hit records in 2008 and 2009, which helped to refill warehouses – but, despite this, a series of bad weather events in 2010 sent wheat and coarse grains prices spiralling upwards, already-thin stocks ran down, and in February 2011, the index of international food commodity prices kept by the UN Food and Agriculture Organisation (FAO) hit a new record high. The FAO, in a report issued jointly with the Organisation for Economic Cooperation and Development (OECD, the “rich countries’ club), reckon that basic food prices will be significantly higher in the next decade than in the last decade.[1]

Much anger has been expressed by left-wing commentators, civil society organisations and even UN bodies about the damage done by financial speculation. During the price surges, it almost certainly made international prices more volatile and pushed them higher than they would have gone otherwise. But this article will focus on the more substantial, underlying causes of food prices rising over the long term – many of which stem from the way that the world food economy, lorded over by the corporations and industrial agriculture, is coming up against natural limits (reflected in oil prices, stagnating yield gains, etc).

Food price rises: caused by speculation, or fundamentals, or both?

 This is the second of two linked posts. The first one is here.

What has been driving food prices up? Left-wing commentators and campaign groups focus on speculation, a stark manifestation of how capital profits from poverty and suffering. I am 100% in favour of exposing the financial monsters, but I think soaring food prices are also driven by underlying changes (fuel prices, competition for land, problems with agricultural productivity). And these may indicate that the corporate industrial agriculture juggernaut is hitting up against natural limits – which is a big deal for the future of the people-nature relationship. That’s the subject of the first of two linked posts, here; this is the second one, and focuses on the connections, and differences, between those underlying issues and financial speculation.

Corporate barbarity in the age of ‘peak oil’

 The barbarity of multinational oil companies working in the Niger Delta in Nigeria defies description … but Platform, the London-based campaign group, keeps working at describing it anyway. Their latest report, Counting the Cost, published this month, shows how:

■ “Shell’s close relationship with the Nigerian military exposes the company to charges of complicity in the systematic killing and torture of local residents”.

Agrarian change, but not as we know it

The great upheaval in the way that hundreds of millions of labouring people in rural India live and work is not following the classic “village to factory” path, and old assumptions about that process need to be rethought. That is the point I took from a lucid and informative article, Resurrecting Scholarship on Agrarian Transformations,  by Alpa Shah and Barbara Harriss-White. It was published in Economic & Political Weekly, a great place for getting a sense of what India’s left-wing economists, sociologists, environmentalists and the rest are discussing.

Shah and Harriss-White, summarising the conclusions of some recent academic seminars on agrarian transformation, say that the structure of agrarian property in India has been transformed: old “semi-feudal”