Food Crisis – disaster in the making

Shafey Danish Many years ago I read a disturbing story by the Australian writer and philosopher Peter Carey. The story was situated in a nameless dystopia apparently far in the future where groups, one small another large, both ignorant, both violent, clash over resources. The tale would be another familiar one of war and peace, except for the fact that the small group was framed in terms in which we describe our business houses. They held meetings, talked of revamps, effected quick drastic changes, and worked on their PR. The other, larger group, were of the sort that we meet in ancient history in clashes between forces of civilization (say the Romans) and barbarians. But here too they were framed in disturbingly familiar terms. The terms by which we know our slum dwellers, our deprived, our suicidal countryside. Consuming for a million The story clearly hinted at a future where the gulf between two sections of our society, the haves and the have-nots, would become so large that it would be well nigh unbridgeable. Such clashes, it was implied, would occur because a sliver of the population would use up the resources meant for the entire planet. Now, how is that possible? Isn’t the concept of wealth merely notional? That is to say that a wealthy man like Mr Warren Buffet may possess billions, but the actual assets that these billions imply, office buildings, companies, farms etc, are used by others. They cannot possible eat as much as millions of others, or use as much fuel as millions of others. Can they? He or she will use only that much of wealth as he can personally use, the rest will be left for the world. So where is the problem even if they do possess billions? Well, the problem exists in the danger that this sliver of extremely rich people will find ways to spend the world’s resources in such a manner that there really will be nothing left for the rest of the world. They may, for example, decide that they wanted to buy up all the available grain and use if to make fuel for their cars. Or they may decide to spend the fuel available to fly to the moon for a sight seeing expedition. They may decide to use the available energy to cool the desert sands or to build artificial islands. They may want to build huge sets and destroy them creatively just to have the pleasure of watching them destroyed. They may decide that driving is a cumbersome way of traveling and they would prefer to fly, and therefore everyone would go for helicopters and jets just as everyone goes for cars nowadays. The only problem is such luxury can only be achieved for a few, at the cost of using nearly all available resources of the world. This would leave more than 90% of the world population without anything to eat and without a place to live. They would, like in Peter Carey’s surreal story, live on garbage heaps. Such a change would not happen overnight. But if you look at the trend, you would see that it is already creeping in upon us. None of the examples cited above is the creation of my fancy – they are all already happening. The price of real estate is rising so fast and so much that only a small section is able to afford it. The middle class does not protest simply because it can buy it through loans, which makes it beholden almost for life, and achieving the kind of success that they could afford it is always within sight. Homes should be available so easily and cheaply that even the poorest of the people should be able to afford it. Having a shelter is a right fundamental to our being, more important that education and nearly as important as food. Rising realty prices are essentially putting this fundamental necessity out of our reach. Water, that life giving source has already become a marketable commodity instead of being available free (It is still available free, but it is not drinkable at least in big cities. It is in corporate interests to ensure that the government does not supply clean drinkable water, or makes it freely available. Or who would buy their mineral water?) There are signs of air becoming marketable in future. In some parts of Japan air (95% oxygen) is already being sold. Pure air is slowly becoming a rare thing, because of air pollution. How soon before we have to buy our air too? Food, the third most important thing after air and water, is already out of the reach for not just a small section of the population, but nearly 30% or 300 million Indians. People in Kalahandi feed themselves on mango seeds (you can imagine what it would do to their stomachs), farmers are committing suicides because, despite having fertile land, they are not able to meet the need of two square meals a day. The story of the catastrophe that has befallen places like Vidharbha is heart rending. It reveals a government that is inhuman in its apathy. Outside India, people in sub Saharan Africa are dying because of the lack of food (this when the developed world is considering turning a part of food crops into bio fuels). They are eating everything from mud to dead bodies, only to die from disease if not from hunger. This while the world watches and goes about its business of creating ‘development’. Now imagine a world in which all necessary things, food, water, shelter and air have been turned into commodities for sale, and the price is rising. Rapidly. What do you think would happen? Economic policies – Freefall It is in the context of such a question that the rise in food prices today becomes significant. The below poverty line people are already beyond affording decent food, would the rising food prices, (there was a more than 30% rise this year itself) put essential items beyond the reach of middle classes too? If you earn 10,000 in Delhi, you would be living in a barely livable room, and eating subsistence level food. Double that amount and you would still be struggling to maintain a decent standard of life. So who or what is responsible for this sad state of affairs? The single largest contributor to the present crisis is free market economic policy. Then of course comes the ballooning population. Natural calamities, like a recalcitrant monsoon too play their part. But let’s first discuss economic policy, as this is one aspect that can be controlled by us. The free market philosophy is in fact fundamentally opposed to anything that may be free. It has resulted in making dearer some of the things that could be had for very cheap or no price at all earlier. Like education. Like medical care. There was a time when these things were considered services to society and the payment demanded was in large measure, non monetary. Their payment was in the respect and honor society bestowed on them. The same philosophy worked for water also, with those who could afford it setting up piaou (water drinking place), digging water wells, bore wells, taps, etc. There was no attempt to commercialize this activity. Now when you try to commercialize any of the above mentioned things, their price will shoot up and out of the ceiling because they are so necessary to the society, that whatever their price maybe, people will have to pay up. The logic of too high prices acting as deterrent against goods and services will not work here. This then would result in a huge surge in the price of all other commodities because the other sections of the society will make the goods and services it renders to the society costlier to pay for this new expenditure. This would be one of the reasons for a surge in prices. The banking and finance sector plays a central role in our economy. It would not be an exaggeration to say that they are the driving force behind our current economic system. This fact is reflected in the importance they are given as well as in the revenues they generate. Ideally this should not be so. The banking sector does not do anything productive. It merely facilitates production by acting as a guarantor for an individual or a company. Paper money is just that, a guarantee slip that the bearer would be paid at a later stage. They should of course be paid for extending this facility. But the total payment can range to upwards of 100% over a 10 year period to over 100% over a 4 year period (for a company that borrows at 25% rate of interest), depending of who is taking the loan. For micro finance the rate of interest could be even higher. A company that wants to keep itself in business will essentially have to earn a profit higher than the rate of interest it has to pay on its borrowings. Imagine what rate of profit it entails. Bourses have become an integral part of our economic system today. The buying and selling of everything, from commodities to company shares to insurance to the shares of insurance go on without much regulation. What this essentially means is that a company can buy up scarce commodities from the market, wait till the price rises due to the induced scarcity, and then sell it at a higher price. This again drives up the price of the commodity. Traders building up huge inventories of oil was one of the reasons behind the oil shock last year, and one of the reasons behind rising food prices this year. Another very important part of our economic system is the culture of marketing and advertisement. In some things, for example films, marketing could make up half the cost of the film. Which means as much is spent on marketing the film as on producing it. The same logic applies to other products too, even though the proportion is not as high. Apart from creating distortions, in the sense that those who spend more on marketing, get big stars to endorse them, become better brands regardless of the quality of their product, this adds to the final cost of the product by 10%, or higher. Inflation or the price of goods, keeps rising also because of the simple fact the government keeps printing money to feed to the banks and keep the economic machinery well oiled. This increases the supply of money in the market, there is more money chasing the goods, and by simple demand-supply logic, the price of goods goes up. The problem with the free market philosophy is that it holds that the government ought not to interfere with the functioning of the economy (except to bail out companies that are too big to fail), even if some companies distort the market. Unless this system is repudiated, and the government actively intervenes to change these policies, the picture painted by Peter Carey may come true in not too distant a future.