Cracking Down on Speculation
How speculation on food commodities raises food prices in developing countries.
"Every five seconds a child under the age of ten dies of hunger. Right now global agriculture could easily feed twelve billion people, almost double the current world population."
Although it only came out recently, these lines from former UN Special Rapporteur for the Right to Food Jean Ziegler's new book have already been cited innumerable times.
"Betting on Famine: Why the World Still Goes Hungry" (New Press, New York) is the book's English title which will be published soon on the US market. The publishing house selected an even more provocative title for the German-speaking world: "We are letting them starve. Mass destruction in the Third World". "Mass destruction": a phrase that awakens associations with the Third Reich well beyond the German-speaking realm. An association chosen quite consciously, for in his book Ziegler in fact draws many parallels to the Nazi era. He sees the hunger problem of today as institutionally controlled much like the starvation tactics employed by the Nazis.
Ziegler criticises many international actors. The International Monetary Fund (IMF), the World Trade Organisation (WTO) and – with qualifications – the World Bank in particular are held up as collaborators in the precarious situation of thousands and thousands of people who suffer from hunger across the globe. He refers to them as the "three riders of the hunger Apocalypse". It should therefore come as no surprise that many people have felt affronted and that his book is the subject of some very heated discussion. We spoke to the great agitator.
Well, the book is entitled "We are letting them starve." The "we" here refers to all of us. All of us who know about this massacre and keep silent. But we are not the perpetrators. For the first time in the history of humankind, we are producing such excesses of food, enough to feed every last person on this earth. The problem lies not in food production, but in access to food. If there is an abundance of food, no one should be starving to death – and so a child who dies of hunger is a murdered child.
"For the first time in the history of humankind, we are producing such excesses of food, enough to feed every last person on this earth."
Depending on how hard they work, an adult human being needs between 2,700 and 3,000 calories. Infants need around 700, children around 1,600 calories. The World Health Organisation has set 2,200 calories as the minimum required by adults to survive. For good reason, since below this limit an adult cannot sufficiently maintain their vitality. A chronically inadequate diet causes severe physical and psychological damage. The drawn-out agony of death by starvation is particularly torturous.
They detail how a starving person loses their mental and motor skills at each successive stage. Malnutrition also leads to some very painful side effects, since the immune system pretty much collapses. And the consequences are even worse for young children who suffer lasting brain damage. In human beings, our brain cells are still developing up to age 5. If children are malnourished during this period of growth, the organic damage to their brains is irreparable.
"Ten transnational corporations control 85 per cent of the staple food sold globally, including pricing and transport costs such as silo storage and distribution."
The chains of causation that lead to this form of mass murder are complex. It is not about "good or bad"; we simply have a cannibalistic world order. But we can identify the perpetrators: 10 transnational corporations control 85% of the staple food sold globally, including pricing and transport costs such as silo storage and distribution. By food staples I mean maize, wheat and rice that together cover over 75% of global consumption. Every day these corporations make decisions about who eats and who lives, or who starves and who dies, if you want to look at it that way.
Please don't misunderstand me – this is not about them as the "evil people" and we are the "good ones". It is more about structural problems. Let's look at Peter Brabeck-Lemathe, the head of the largest food company in the world, Nestlé. He is a very decent person, by the way. But if he didn't drive the value of shareholder shares up every year, he would no longer be the boss within three months. The murderous mechanisms include gambling on the stock exchange on commodities derived from staple foods. After the financial crash in 2007/2008, hedge funds and large banks switched over to the commodity exchanges and the agricultural-commodities futures market in particular. And with these futures they are making – completely legal – astronomical profits. The price of maize alone rose 63% in one year; the price of a ton of wheat doubled; and a ton of rice went from 110 dollars to 1,200 dollars. This has had severe social consequences: according to World Bank estimations, of the around 7 billion people on this earth, 1.2 billion number among the "extremely poor" who have no more than 1.25 dollars a day at their disposal. If global prices for food staples explode, extremely poor mothers are no longer able to feed their children.
No commodities exchange exists in a lawless realm. As horrible as the fact may seem that commodity contracts are transformed into futures – autonomous bonds if you will – and are traded as such, this is all completely legal. The German Bundestag, for example, could easily regulate the stock exchange here. So what we need is a change in the laws that govern the stock exchange. The German Bundestag has all the power it needs to reform the German stock exchange laws.
Because there is no pressure on them to do so and citizens are not vehemently demanding regulation. Germany is Europe's most vital democracy. The average German citizen has the necessary weapon right in his or her hand; the means to pressure their representatives to end this type of speculation. So far though, German citizens have not used the power they have, unfortunately.
"Pressure can be generated in any vital democracy – people simply need to make use of their civil rights."
More like an opportunity, since we always have this option in a democracy. As a rule, pressure can be generated in any vital democracy – people simply need to make use of their civil rights.
One of the worst speculators is right here in Geneva: the Gaia World Agri Fund. In 2008 alone, this fund achieved an overall profit of 51.9 per cent on its investments. Right now Geneva is the global capital of the "tiger sharks". I included all the detailed figures in my book: the volume of commodities trading concluded in Geneva – including on many agricultural products and foods – amounted to 1.5 billion dollars in 2000, 12 billion in 2009 and 17 billion dollars in 2010.
Unfortunately yes. The Geneva authorities' position is simply incomprehensible to me. The lion's share of the speculators can do their work with no regulation or controls. But to be fair, we have to add the unfortunate fact that the financial sector is simply overwhelmingly powerful.
Of course it is not limited to speculators alone. The range of problems includes such deadly mechanisms as agricultural dumping, land grabbing, foreign debt and biofuels. The last of these can serve as a graphic illustration for us Europeans: the tank of a midsized car that runs on bioethanol holds 50 litres. It takes 358 kilograms of maize to make that required 50 litres of bioethanol. A child in Zambia or Mexico could live off those 358 kilograms of maize for an entire year.
At least with such "food versus fuel" conflicts the consumer can decide for him or herself whether to purchase a car that runs on biofuel and so has a real influence. What about the power of global organizations though? In your book you claim that neither the FAO (Food and Agricultural Organisation) nor the WFP (World Food Programme) have real acting power. Who do you see as stronger or perhaps the strongest global player in fighting hunger?
There isn't one! Not one of these organisations once formed and designed to fight hunger have been successful in any way.
"The IMF and the WTO are misanthropic organisations."
I am more than happy to repeat myself: the IMF and the WTO are misanthropic organisations. In 2000, Oxfam published a study that showed how every structural adjustment programme implemented by the IMF from 1990 to 2000 placed millions of people at the mercy of hunger.
That's not an assumption; it's a fact. The foreign debt of the 122 countries we refer to as the "Third World" is managed by no one lesser than the IMF. The poor debtor countries have to pay their debts to the lender banks and the IMF – and how do they come up with the necessary currency? They sell their raw materials! Not at the usual market price, of course, but for much less. How is a poor country to ever recover? Subsistence economies die out wherever the IMF is active. I could list a dozen other examples in which the IMF has made the situation of these countries worse rather than better.
"Indifference can be deadly."
It is probably just human nature that we are not willing to actively work to change conditions until they have reached our own front doorstep. Do you remember the "hunger riots" of 2008? They affected 37 countries. The steep rise in prices for staples foods had caused famine from Bombay to Cairo. Suddenly it was all over the headlines; suddenly images of starving people flashed across our TV screens, and not just in the lead up to Christmas. The sense of outrage and urgency was huge! And then, after a few weeks, as the media caravan moved on – what happened to all that outrage? Nothing. We all fell right back into our usual state of indifference. Out of sight, out of mind. But indifference can be deadly.
Why do you suppose that is? Because hunger has finally come to roost on our front stoop. This past spring, UNICEF published a study on children in Spain revealing that 2.2 million children in Spain suffer from chronic malnutrition! Now that the problem is also happening in Europe, I feel fairly confident that many countries will succeed in limiting and regulating speculation on food commodities. It would be wonderful if people in Europe would work towards helping the millions who die of hunger in the Third World, but they won't until the poorest of the poor begin starving to death in Europe. Though I still hold out hope for the formation of a conscious collective identity as described by Immanuel Kant: "The inhumanity that is being done to another destroys the humanity in me."
Che Guevara said: "Even the strongest walls can be destroyed by cracks." And I am optimistic. The first steps have been taken – many NGOs have started clever campaigns to sensitise the public to the problem, and many citizens are reacting. Look at the response to foodwatch's "The Hunger Makers" report that denounced the role of food speculators. Due to public outcry, some banks are withdrawing from such speculation.
"We have to break this cannibalistic world order – for no one else will. "
Despite its pessimistic title – my book is a book of hope. Guevara's cracks are there; it won't be long before they spawn a movement. Everyone who lives in a democracy, each of us without exception, has a responsibility here: There is no powerlessness in a democracy, no excuse for free citizens to do nothing. We can create the publicity we need to engender the necessary pressure, to force our ministers and representatives to effect changes. On every one of my book tours, readers ask: "What can I as an individual do? What can we do?" The population has the necessary will to implement radical structural reform; now it just needs to be articulated. Loudly. I am completely confident that the politicians who seriously get behind this mission will be elected. My greatest hope is for a new planetary civil society! And that is not a utopia; it is the near future. French author Georges Bernanos once wrote: "God has no hands other than our own." We have to break this cannibalistic world order – for no one else will.