How to manufacture a GLOBAL FOOD CRISIS: Lessons from the WORLD BANK

Saturday 24 May 2008, by Walden BELLO

(A shorter version of this piece appeared in the June 2, 2008, issue of
The Nation.)

When tens of thousands of people staged demonstrations in Mexico last
year to protest a sharp increase of over 60 per cent in the price of
tortilla, the flat unleavened bread that is Mexico’s staple, many
analysts pointed to biofuels as the culprit. Owing to US government
subsidies, turning corn into ethanol had become more profitable than
growing it for food consumption, prompting American farmers to devote
more and more of their acreage to it, in the process sparking off a
steep rise in corn prices.

The diversion of corn from tortillas to biofuel was certainly one of the
proximate causes of the skyrocketing prices, though speculation on
likely trends in biofuel demand by transnational middlemen may have
played a bigger role. (1) However, an intriguing question escaped many
observers: How on earth did Mexicans, who live in the land where corn
was first domesticated, become “dependent” on imports of US corn in the
first place?

ERODING THE MEXICAN COUNTRYSIDE
The Mexican food crisis cannot be fully understood without taking into
account the fact that in the years preceding the tortilla crisis, the
homeland of corn had been converted to a corn importing economy by free
market policies promoted by the International Monetary Fund (IMF), World
Bank, and Washington. The process began with the debt crisis of the
early eighties. One of the two biggest developing country debtors,
Mexico was forced to beg for money to service its debt to international
commercial banks from the World Bank and the IMF. The quid pro quo for
a multibillion dollar bailout package was what a member of the World
Bank executive board described as a program marked by “unprecedented
thoroughgoing interventionism” that was designed to pay off the amount
advanced by the Bank and the Fund while doing away simultaneously with
the high tariffs, state regulations, and government support institutions
that the ascendant neoliberal doctrine identified as the barriers to
economic efficiency. (2)

As a portion of total government expenditures, interest payments rose
from 19 per cent in 1982 to 57 per cent in 1988 while capital
expenditures dropped from an already low 19.3 per cent to 4.4 per cent.
(3) The contraction of government spending translated in the countryside
into a protracted process of dismantling a system of state credit,
government-subsidized agricultural inputs, price supports, state
marketing boards, and extension services. Contributing to the
destabilization of peasant producers were the effects of a program of
unilateral liberalization of agricultural trade.

This blow to peasant agriculture was followed by an even bigger one in
1994, when the North American Free Trade Agreement (NAFTA) went into
effect. Although NAFTA had a 15-year tariff phase-out of protection for
agricultural products including corn, highly subsidized US corn flooded
in, bringing prices down by half and plunging the corn sector into
chronic crisis. Today, largely as a result of this 14-year-old
agreement, Mexico’s status as a net food importer sourcing 40 per cent
of its food in foreign markets has been firmly established.

With the shutting down of the state marketing agency for corn,
distribution of both US corn imports and Mexican grain has come to be
monopolized by a few transnational traders such as the US-owned Cargill
and the partly US-owned Maseca operating on both sides of the border.
This has given them tremendous power to speculate on trade trends, so
that real movements in biofuel demand can be manipulated and magnified
many times over price-wise, as seems to have happened during the
tortilla price crisis. At the same time, monopoly control of domestic
trade has ensured that a rise in international corn prices does not
translate into significantly higher prices paid to small producers at
the local level. (For a comprehensive treatment on the role of
speculation by the transnational middlemen in the Tortilla Crisis, see
Ana de Ita, “Fourteen Years of NAFTA and the Tortilla Crisis,” America
Program, Center for International Policy, January 10, 2008;
http://americas.irc-online.org/am/4879.)

Yet, against all odds, three million farmers continue to grow corn, many
of them sustained in a money-losing operation by remittances from
relatives working in the United States. Year by year, however, it
becomes more and more difficult for these farmers to avoid the fate of
many of their fellow corn cultivators and the large numbers of
smallholders in sectors such as rice, beef, poultry, and pork who have
gone under owing to the advantages conferred on subsidized US producers
by NAFTA. According to a 2003 Carnegie Endowment report, imports of US
agricultural products threw at least 1.3 million farmers out of work,
many of whom found their way to the United States. (4)

What are the prospects of a change for the better? Not much, and not
least among the reasons is the fact that a state controlled by
neoliberals continues to systematically dismantle an agricultural
support system for peasant producers that was a key legacy of the
Mexican Revolution. As Food First Executive Director Eric Holt Gimenez
sees it, “It will take time and effort to recover smallholder capacity,
and there does not appear to be any political will for this—to say
nothing of the fact that NAFTA would have to be renegotiated.” (5)

CREATING A RISE CRISIS IN THE PHILIPPINES
That the current global food crisis stems mainly from the free-market
restructuring of agriculture in the developing world emerges more
clearly in the case of rice. Unlike corn, less than 10 per cent of rice
produced globally is traded. Moreover, there has been no diversion of
rice from food consumption to serving as a biofuel feedstock. Yet, this
year alone, prices nearly trebled from $380 in January to over $1000 in
April. Undoubtedly, the price inflation stems partly from speculation
by powerful cartels of wholesalers at a time of tightening supplies.
However, as in the case of Mexico and corn, the big puzzle is why a
number of rice-consuming countries that used to be self sufficient have
come to be severely dependent on imports.

The Philippines provides a grim example of how neoliberal economic
restructuring transforms a country from a net food exporter to a net
food importer. The country is now the world’s biggest importer of rice,
regularly sourcing 1-2 million tons of its annual rice requirements in
the international market. Manila’s desperate effort to secure rice
supplies at whatever price has become front page news, and pictures of
soldiers providing security for rice distribution in poor communities
have become emblematic of the global food crisis. Yet this was a country
that as late as 1993 was a net food exporter that had only
intermittently imported relatively small quantities of rice. What
happened to make this country slip into a greater and greater dependency
on rice and other agricultural imports?

The broad contours of the Philippine story parallel are similar to that
of Mexico. The dictator Ferdinand Marcos was guilty of many crimes and
misdeeds, including failure to follow through on land reform, but one
thing he could not be accused off was starving the agricultural sector
of government support. To head off peasant discontent, the regime
provided farmers with subsidized fertilizer and seeds, launched credit
schemes, and built rural infrastructure, with land under irrigation
rising from 500,000 hectares in the mid-sixties to 1.5 million in the
mid-eighties. Owing to these investments, the Philippines achieved self
sufficiency in rice for most of the Marcos period, though in its last
full year, 1985, it had to import over 500,000 tons. When Marcos fled
the country in 1986, however, it was reported that there were 900,000
metric tons of rice in government warehouses. (6)

Paradoxically, the next few years under the new democratic dispensation
saw government investment capacity gutted drastically. As in Mexico,
the World Bank and IMF, working on behalf of the country’s international
creditors, pressured the administration of President Corazon Aquino to
make repayment of the foreign debt of $21.5 billion the national
economic priority instead of development. Aquino acquiesced, though she
was collectively warned by the country’s top economists that the “search
for a recovery program that is consistent with a debt repayment schedule
determined by our creditors is a futile one and should therefore be
abandoned. (7)

In the critical period 1986-1993, an amount coming to some 8 to 10 per
cent of GDP left the Philippines yearly in debt service payments—roughly
the same proportion as in Mexico. To service a foreign debt that stood
at $21.5 billion in 1986, some $30 billion flowed out of the country
during the period. (8) This outflow was supported by a radical
restructuring of the national budget: interest payments as a percentage
of government expenditures rose from 7 per cent in 1980 to 28 per cent
in 1994; capital expenditures or investment plunged from 26 per cent to
16 per cent. (9) Debt servicing, in short, became the national budgetary
priority, and this was legally enshrined by an “automatic appropriations
law” that obligated the government to place payment of the debt falling
due ahead of all other obligations.

Among the items to be cut most sharply was spending on agriculture,
which fell by more than half, from 7.5 per cent of total government
spending in 1982 under Marcos to 3.3 per cent in 1988 under Aquino. (10)
The World Bank and its local acolytes were not worried, however, since
part of the purpose of the whole belt-tightening exercise was to get the
market and the private sector to march into the breach and energize the
countryside. But the country’s agricultural capacity quickly eroded.
The amount of cultivated land covered by irrigation stagnated at 1.3
million out of 4.7 million hectares. By the end of the nineties, only 17
per cent of the Philippines’ road network was paved, compared to 82 per
cent in Thailand, and 75 per cent in Malaysia. Crop yields across the
board were anemic, with the average yield in rice of 2.8 metric tons per
hectare way below yields in China and Vietnam, (11) where
interventionist governments took an active role in promoting rural
production. Already weak and riddled with loopholes, the post-Marcos
agrarian reform program shriveled, deprived of funding for support
services that had been the key to successful land reforms in Taiwan and
Korea.

What this discouraging panorama underlines is that as in Mexico, what
peasants were confronted with in the Philippines was the comprehensive
retreat of the state from being a provider of comprehensive support—a
role that their success in production had come to depend on.

As in the case of Mexico, the cutback in agricultural programs by IMF
and World Bank-imposed adjustment was followed by trade liberalization,
with the Philippines’ entry into the World Trade Organization (WTO) in
1995 playing the role that adherence to NAFTA played in Mexico.

Membership in the WTO required the Philippines to eliminate quotas on
all agricultural imports and allow a certain amount of each commodity to
enter at low tariff rates. While the country was allowed to maintain a
quota on rice imports, it was nevertheless required to admit the
equivalent of one per cent of domestic consumption in 1995 rising to 4
per cent in 2004. In fact, due to the gravely weakened state of rice
production owing to its being starved of state support, the government
imported more than it was obligated to under the WTO’s Agreement on
Agriculture in order to supply local needs. These imports, which rose
from 263,000 metric tons in 1995 to 2.1 million tons in 1998, had the
effect of depressing the price of rice, discouraging farmers and keeping
the growth in rice production at a rate far below those of the country’s
two top suppliers, Thailand and Vietnam. (12)

Entry into the WTO destabilized rice production, but it barreled through
the rest of Philippine agriculture like a super-typhoon. Corn farmers
in Mindanao, reported trade analyst Aileen Kwa, “have been wiped out.
It is not an uncommon sight to see farmers there leaving their corn to
rot in the fields as the domestic corn prices have dropped to levels [at
which] they have not been able to compete.” (13) Swamped by cheap corn
imports, a large part of it subsidized American grain, it was not
surprising that farmers would sharply reduce the land devoted to corn
from 3,149,300 hectares in 1993 to 2,510,300 hectares in 2000. (14) The
travails of corn were paralleled in other sectors: massive importation
of chicken parts nearly killed the chicken parts industry while surges
in imports destabilized the poultry, hog, and vegetable industries. (15)

During the campaign to ratify WTO membership in 1994, government
economists coached by their World Bank handlers promised that the losses
in corn and other traditional crops would be more than compensated by
the emergence of a new export industry specializing in the production of
so-called “high-value-added” crops such as cutflowers, asparagus,
broccoli, and snowpeas. This did not materialize. Neither did the
500,000 new agricultural jobs that was supposed to be created yearly by
the “magic” of the market; instead, employment in agriculture dropped
from 11.2 million people in 1994 to 10.8 million in 2001. (16)

The magic didn’t work. All that came from the one-two punch of
IMF-imposed adjustment and WTO-imposed trade liberalization were the
swift transformation of a largely self-sufficient agricultural economy
into one that was permanently import-dependent and the steady
marginalization of small farmers. It was a wrenching process, the pain
of which was captured by a Philippine government negotiator during one
of the sessions of the WTO’s Agricultural Committee in Geneva. “Our
agricultural sectors that are strategic to food and livelihood security
and rural employment,” he told the body, “have already been destabilized
as our small producers are being slaughtered by the gross unfairness of
the international trading environment. Even as I speak, our small
producers are being slaughtered in our own markets, [and] even the more
resilient and efficient are in distress.” (17)

THE GREAT TRANSFORMATION
The experience of Mexico and the Philippines was paralleled in one
country after another that was subjected to the fatal combination of
IMF-imposed structural adjustment and WTO-mandated trade liberalization.
A study of 14 countries by the Food and Agricultural Organization
(FAO) found that the levels of their food imports in 1995-98 exceeded
those in 1990-94. (18) This was not surprising since one of the main
goals of the WTO’s Agreement on Agriculture was to open up developing
country markets so they could absorb surplus production in the North.
As then US Agriculture Secretary John Block put it at the start of the
Uruguay Round of trade negotiations in 1986, “the idea that developing
countries should feed themselves is an anachronism from a bygone era.
They could better ensure their food security by relying on US
agricultural products, which are available, in most cases at lower
cost.” (19)

What Block did not say was that the lower cost of US products stemmed
from subsidies, and this became more massive with each passing year,
despite the fact that the WTO was supposed to phase out all forms of
subsidy. From $367 billion in 1995, the first year of the WTO, the
total amount of agricultural subsidies provided by developed country
governments rose to $388 billion in 2004. (20) Subsidies now account for
40 per cent of the value of agricultural production in the European
Union (EU) and 25 per cent in the United States. (21)

The apostles of the free market and the defenders of dumping may seem to
be at different ends of the policy spectrum. However, the effects on
developing countries of the policies they advocate are the same: the
globalization of capitalist industrial agriculture. The system to which
agriculture in developing countries is being integrated is one where
export-oriented production of meat and grain is undertaken in large
industrial farms such as those run by the Thai multinational CP; where
technology is continually upgraded by advances in genetic engineering
from firms like Monsanto; and where the elimination of tariff and
non-tariff barriers brings into being a profitable global agricultural
supermarket of elite and middle-class consumers serviced by
globe-spanning giant grain-trading corporations like the US-owned
Cargill and Archer Daniels Midland and transnational food retailers like
the British-owned Tesco and the French-owned Carrefour.

There is little room for the hundreds of millions of rural and urban
poor in this integrated global market. They are confined to giant
suburban favelas where they contend with prices that are often much
higher than the supermarket price of food or to rural reservations where
they are trapped in marginal agricultural activities and increasingly
vulnerable to hunger. Indeed, within the same country, famine in the
marginalized sector may coexist with prosperity in the globalized
sector—a situation that evokes Frances Moore Lappe and Joe Collins’
classic description of Ethiopia in the early eighties, where vast
acreages of prime land were producing cotton and sugar cane for export
while poor subsistence farmers were starving in adjacent areas. (22)

Small-scale peasant production stands in the way of this structural
transformation and has to go. What is taking place is not simply the
erosion of national food self-sufficiency or food security but what the
Oxford Africanist Deborah Bryceson calls “de-peasantization”—the
progressive phasing out of a mode of production to make the countryside
a more congenial site for intensive capital accumulation. (23) This
transformation is a traumatic one for hundreds of millions of people
throughout the world since peasant production is not simply an economic
activity. It is a way of life, a culture, which is one key reason why
in India, peasants displaced or marginalized by trade liberalization and
corporate agriculture have taken to committing suicide. In the state of
Andra Pradesh alone, farmers’ suicides rose from 233 in 1998 to 2,600 in
2002. (24) One estimate is that some 150,000 farmers in India have taken
their lives. (25) Severe economic distress linked to, among other
things, collapse of prices from trade liberalization and loss of control
over seeds to biotech firms like Monsanto, is part of a more
comprehensive problem behind the suicides, says Vandana Shiva: “[Un]nder
globalisation, the farmer is losing her / his social, cultural, economic
identity as a producer. A farmer is now a "consumer" of costly seeds and
costly chemicals sold by powerful global corporations through powerful
landlords and money lenders locally.” (26)

ADJUSTING AFRICAN AGRICULTURE
De-peasantization is at an advanced state in Latin America and Asia.
And if the World Bank were to have its way, Africa would travel in the
same direction. As Deborah Bryceson and her colleagues correctly point
out in a recent article, the World Bank Development Report for 2008,
which touches extensively on agriculture in Africa, is practically a
blueprint for the transformation of the peasant-based agriculture of the
continent into large-scale commercial farming. (Kjell Havnevik, Debkorah
Bryceson, Lars-Erik Birgegard, Prosper Matandi, and Atakilte Beyene,
“African Agriculture and the World Bank: Development or
Impoverishment?”, Pambazuka News, March 11, 2008;
http://www.pambazuka.org/en/category/features/46564.) The problem is
that, as in many other places today, the Bank’s wards are moving from
sullen resentment to outright defiance.

At the time of decolonization in the sixties, Africa was not just self
sufficient in food but was actually a net food exporter, its exports
averaging 1.3 million tons a year between 1966-70. (27) Today, the
continent imports 25 per cent of its food, with almost every country
being a net food importer. (28) Hunger and famine have become recurrent
phenomena, with the last three years alone seeing food emergencies break
out in the Horn of Africa, the Sahel, Southern Africa, and Central
Africa. (29)

Agriculture is in deep crisis, and the causes range from wars to bad
governance, lack of productivity-enhancing agricultural technology, and
the spread of HIV-AIDS. However, as in Mexico and the Philippines, a
very important part of the explanation was the phasing out of government
controls and support mechanisms under the structural adjustment programs
to which most African countries were subjected as the price for getting
IMF and World Bank assistance to service their external debt.

Instead of triggering a virtuous spiral of growth and prosperity,
structural adjustment imprisoned Africa in a low-level trap in which low
investment, increased unemployment, reduced social spending, reduced
consumption, and low output interacted to create a vicious cycle of
stagnation and decline.

Lifting price controls on fertilizers while simultaneously cutting back
on agricultural credit systems simply led to reduced applications, lower
yields, and lower investment. Moreover, reality refused to conform to
the doctrinal expectation that the withdrawal of the state would pave
the way for the market and private sector to dynamize agriculture.
Instead, the private sector saw reduced state expenditures as creating
more risk and failed to step into the breach. In country after country,
the opposite of that predicted by neoliberal doctrine occurred: the
departure of the state “crowded out” rather than “crowded in” private
investment. In those instances where private traders did come in to
replace the state, an Oxfam report noted, “they have sometimes done so
on highly unfavorable terms for poor farmers,” leaving “farmers more
food insecure, and governments reliant on unpredictable aid flows.” (30)
The usually pro-private sector Economist agreed, admitting that “many of
the private firms brought in to replace state researchers turned out to
be rent-seeking monopolists.” (31)

What support the government was allowed to muster was channeled by the
Bank to export agriculture to generate the foreign exchange earnings
that the state needed to earn to service its debt to the Bank and the
Fund. But, as in Ethiopia during the famine of the early 1980’s, this
led to the dedication of good land to export crops, with food crops
forced into more and more unsuitable soil, thus exacerbating food
insecurity. Moreover, the Bank’s encouraging several economies
undergoing adjustment to focus on export production of the same crops
simultaneously often led to overproduction that then triggered a price
collapse in international markets. For instance, the very success of
Ghana’s program to expand cocoa production triggered a 48 per cent drop
in the international price of cocoa between 1986 and 1989, threatening,
as one account put it, “to increase the vulnerability of the entire
economy to the vagaries of the cocoa market.” (32) In 2002-2003, a
collapse in coffee prices contributed to another food emergency in
Ethiopia. (33)

As in Mexico and the Philippines, structural adjustment in Africa was
not simply underinvestment but state divestment. But there was one
major difference. In the Philippines and Mexico, the Bank and Fund
confined themselves to macromanagement, or supervising the dismantling
of the state’s economic role from above, leaving the dirty details of
implementation to the bureaucracy. In Africa, where they dealt with much
weaker governments, the Bank and Fund micromanaged, reaching down to
make decisions on how fast subsidies should be phased out, how many
civil servants had to be fired, or even, as in the case of Malawi, how
much of the country’s grain reserve should be sold and to whom. (34) In
other words, Bank and IMF resident proconsuls reached to the very
innards of the state’s involvement in the agricultural economy to rip it up.

Compounding the negative impact of adjustment were unfair trade
practices on the part of the EU and the United States. Trade
liberalization simply allowed low-priced subsidized EU beef to enter and
drive many West African and South African cattle raisers to ruin. With
their subsidies legitimized by the WTO’s Agreement on Agriculture, US
cotton growers offloaded their cotton on world markets at between 20 to
55 per cent of the cost of production, bankrupting in the process West
African and Central African cotton farmers. (35)

According to Oxfam, the number of people living on less than a dollar a
day more than doubled to 313 million people between 1981 and 2001—or 46
per cent of the whole continent. (36) The role of structural adjustment
in creating poverty, as well as severely weakening the continent’s
agricultural base and consolidating import dependency, was hard to deny.
As the World Bank’s Chief Economist for Africa admitted, “We did not
think that the human costs of these programs could be so great, and the
economic gains would be so slow in coming.” (37)

That was, however, a rare moment of candor. What was especially
disturbing was that, as Oxford University political economist Ngaire
Woods pointed out, the “seeming blindness of the Fund and Bank to the
failure of their approach to sub-Saharan Africa persisted even as the
studies of the IMF and the World Bank themselves failed to elicit
positive investment effects.” (38)

MALAWI: FROM COMPLIANCE TO DEFIANCE
This stubbornness led to tragedy in Malawi. It was a tragedy preceded by
success. In 1998 and 1999, the government initiated a program to give
each small-holder family a “starter pack” of free fertilizers and seeds.
This followed several years of successful experimentation in which the
packs were provided only to the poorest families. (39)The result was a
national surplus of corn. What came after is a story that will
definitely have to be enshrined as a classic case study in a future book
on the ten greatest blunders of neo-liberal economics.

The World Bank and other aid donors forced the drastic scaling down and
eventual scrapping of the program, arguing that the subsidy distorted
trade. (40) Without the free packs, food output plummeted. In the
meantime, the IMF insisted that the government sell off a large portion
of its strategic grain reserves to enable the food reserve agency to
settle its commercial debts. The government complied. When the crisis
in food production turned into a famine in 2001-2002 there were hardly
any reserves left to rush to the countryside. About 1500 people
perished. (41) The IMF, however, was unrepentant; in fact, it suspended
its disbursements on an adjustment program with the government on the
grounds that “the parastatal sector will continue to pose risks to the
successful implementation of the 2002/03 budget. Government
interventions in the food and other agricultural markets…crowd out more
productive spending.” (42)

When an even worse food crisis developed in 2005, the government finally
had enough of the Bank and IMF’s institutionalized stupidity. A new
president reintroduced the fertilizer subsidy program, enabling two
million households to buy fertilizer at a third of the retail price and
seeds at a discount. The results: bumper harvests for two years in a
row, a surplus of one million tons of maize, and the country transformed
into a supplier of corn to other countries in Southern Africa.

But the World Bank, like its sister agency, still stubbornly clung to
the discredited doctrine. As the Bank’s country director told the
Toronto Globe and Mail, “All those farmers who begged, borrowed, and
stole to buy extra fertilizer last year are now looking at that decision
and rethinking it. The lower the maize price, the better for food
security but worse for market development.” (43)

FLEEING FAILURE
Malawi’s defiance of the World Bank would probably have been an act of
heroic but futile resistance a decade ago. The environment is different
today. Owing to the absence of any clear case of success, structural
adjustment has been widely discredited throughout Africa. Even some
donor governments that used to subscribe to it have distanced themselves
from the Bank, the most prominent case being the official British aid
agency DFID, which co-funded the latest subsidized fertilizer program in
Malawi. (44) Perhaps the motivation of these institutions is to prevent
their diminishing influence in the continent from being further eroded
by their association with a failed approach and unpopular institutions
at a time that Chinese aid is emerging as an alternative to World Bank,
IMF, and Western government aid programs with all their conditionalities.

Beyond Africa, even former supporters of adjustment, like the
International Food Policy Research Institute (IFPRI) in Washington and
the rabidly neoliberal Economist acknowledged that the state’s
abdication from agriculture was a mistake. In a recent commentary on
the rise of food prices, for instance, IFPRI asserted that “rural
investments have been sorely neglected in recent decades,” and says that
it is time for “developing country governments [to] increase their
medium- and long-term investments in agricultural research and
extension, rural infrastructure, and market access for small farmers.”
(45) At the same time, the Bank and IMF’s espousal of free trade came
under attack from the heart of the economics establishment itself, with
a panel of luminaries headed by Princeton’s Angus Deaton accusing the
Bank’s research department of being biased and “selective” in its
research and presentation of data. (46) As the old saying goes, success
has a thousand parents and failure is an orphan.

Unable to deny the obvious, the Bank has finally acknowledged that the
whole structural adjustment enterprise was a mistake, though it smuggled
this concession into the middle of the 2008 World Development Report,
perhaps in the hope that it would not attract too much attention.
Nevertheless, it was a damning admission:

"Structural adjustment in the 1980s dismantled the elaborate system of
public agencies that provided farmers with access to land, credit,
insurance inputs, and cooperative organization. The expectation was that
removing the state would free the market for private actors to take over
these functions—reducing their costs, improving their quality, and
eliminating their regressive bias. Too often, that didn’t happen. In
some places, the state’s withdrawal was tentative at best, limiting
private entry. Elsewhere, the private sector emerged only slowly and
partially — mainly serving commercial farmers but leaving small-holders
exposed to extensive market failures, high transaction costs and risks,
and service gaps. Incomplete markets and institutional gaps impose huge
costs in forgone growth and welfare losses for small-holders,
threatening their competitiveness and, in many cases, their survival.” (47)

FOOD SOVEREIGNTY: AN ALTERNATIVE PARADIGM?
But it is not only defiance from governments like Malawi and dissent
from their erstwhile allies that are undermining the IMF and the World
Bank. Peasant organizations throughout the world have increasingly been
vocal and militant in their resistance to the globalization of
industrial agriculture. Indeed, it is on account of pressure from
farmers’ groups that the governments of the South have refused to grant
wider access to their agricultural markets and demanded a massive
slashing of US and EU agricultural subsidies, bringing the WTO’s “Doha
Development Round” of negotiations to a standstill.

Farmers’ groups have networked internationally, and one of the most
dynamic networks to emerge is Via Campesina (literally translated from
the Spanish as “the Peasant’s Path”). Via does not only seek to get “WTO
out of agriculture” or oppose the paradigm of a globalized capitalist
industrial agriculture promoted by the Bank. It proposes an
alternative: “food sovereignty.” Food sovereignty means first of all,
the right of a country to determine its production and consumption of
food and the exemption of agriculture from global trade regimes like the
WTO. It also means the consolidation of a smallholder-centered
agriculture via protection of the domestic market from low-priced
imports, remunerative prices for farmers and fisherfolk, abolition of
all direct and indirect export subsidies, and the phasing out of
domestic subsidies that promote unsustainable agriculture. (48) Via’s
platform also calls for an end to the Trade Related Intellectual
Property Rights TRIPs regime that allows corporations to patent plant
seeds, opposes agro-technology based on genetic engineering, and demands
land reform. (49) In contrast to the integrated global monoculture being
created by capitalist industrial agriculture, it offers the vision of an
international economy marked by diverse national agricultural economies
relating to one another but focused primarily on domestic production.

Once regarded as relics of the pre-industrial era, peasants are now
leading the opposition to the paradigm of capitalist industrial
agriculture that would consign them to the dustbin of history. They
have become what Karl Marx described as a politically conscious “class-
for-itself,” contradicting Marx’s own predictions about their demise.
With the current global food crisis, they are moving to center stage—and
they are not without allies and supporters. For as peasants fight
de-peasantization and refuse to “go gently into that good night,” to
borrow a line from Dylan Thomas, developments in the 21st century are
revealing the panacea of globalized capitalist industrial agriculture to
be a nightmare. With environmental crises multiplying, the social
dysfunctions of urban-industrial life piling up, and capitalist
industrial agriculture creating more and more food insecurity, the
farmers’ movement increasingly has relevance not only to peasants but to
everyone threatened by the catastrophic consequences of global capital’s
vision for organizing production, community, and life.

* Walden Bello is a senior analyst at and former executive director of
the Bangkok-based research and advocacy institute Focus on the Global
South. He can be contacted at waldenbello@yahoo.com. He is also
president for the Freedom from Debt Coalition and professor of sociology
at the University of the Philippines.

NOTES
1. Ana de Ita, “Fourteen Years of NAFTA and the Tortilla Crisis,”
America Program, Center for International Policy, January 10, 2008;
http://americas.irc-online.org/am/4879.
2. Morris Miller, Debt and the Environment: Converging Crisis (New York:
UN, 1991) , p. 215.
3. Walden Bello, Shea Cunningham, and Bill Rau, Dark Victory: the United
States, Structural Adjustment, and Global Poverty (San Francisco: Food
First, 19994), p. 39.
4. Cited in Michael Pollan, “A Flood of US Corn Rips at Mexico,” Common
Dreams News Center, April 23, 2004;
http://www.commondreams.org/cgi-bin/print.cgi?file=views04/0423-02.htm
5. Email communication, April 30, 2008
6. Ibid,
7. Florian Alburo, et al., “Towards Recovery and Sustainable Growth,”
School of Economics, University of the Philippines, Diliman, Quezon
City, September 1985
8. World Bank, World Bank Debt Tables, Vol. 2 (Washington, DC: World
Bank, 1994), p. 378.
9. World Bank, World Development Indicators 1998 (Washington, DC: World
Bank, 1997), p. 199
10. Government data from Riza Bernabe, personal communication, May 5, 2008.
11. Rovik Obanil, “Rice Safety Nets Act: More of a Burden than a
Shield,” Farm News and Views (1st Quarter 2002), p. 10
12. Selected Agricultural Statistics, 1998 and 2002 (Quezon City:
Department of Agriculture, 1998 and 2002); Rovik Obanil, “Rice Safety
Nets Act: More of a Burden than a Shield,” Farm News and Views First
Quarter 2002), p. 10
13. Aileen Kwa, “A Guide to the WTO’s Doha Work Program: the
‘Development’ Agenda Undermines Development,” Focus on the Global South,
Bangkok, January 2003.
14. Selected Agricultural Statistics, 1998, 2002 (Quezon City:
Department of Agriculture, 1998, 2002).
15. See Walden Bello et al., The Anti-Development State: the Political
Economy of Permanent Crisis in the Philippines (Quezon City: University
of the Philippines, 2004), pp. 146-148.
16. Selected Agricultural Statistics 1998, 2002 (Quezon City: Department
of Agriculture, 1998, 2002).
17. Submission of Republic of the Philippines, World Trade Organization
Committee on Agriculture, Geneva, July 1, 2003.
18. Food and Agricultural Organization (FAO), “Agriculture, Trade, and
Food Security: Issues and Options in the WTO Negotiations from the
Perspective of the Developing Countries, Vol. 2: Country Case Studies
(Rome: FAO, 2000), p. 25
19. Quoted in “Cakes and Caviar: the Dunkel Draft and Third World
Agriculture,” Ecologist, Vol. 23, No. 6 (Nov-Dec 1993), p. 220
20. OECD Agricultural Trade Statistics,
http://www.oecd.org/dataoecd/48/2/40010981.xls
21. Oxfam International, Rigged Rules and Double Standards (Oxford:
Oxfam International, 2002), p. 112.
22. Frances Moore Lappe, Joe Collins, and Peter Rosset, World Hunger:
Twelve Myths (New York: Grove Press, 1986), pp. 19-20.
23. Deborah Bryceson, “Disappearing Peasantries? Rural Labor Redundancy
in the Neo-Liberal Era and Beyond,” in Bryceson, Cristobal Kay, and Jos
Mooij, eds., Disappearing Peasantries? Rural Labor in Africa, Asia, and
Latin America (London: 2000), p. 304-305; cired in Mike Davis, Planet of
Slums (London: Veerso, 2006), p. 15.
24. Utsa Patnaik, “External Trade, Domestic Employment, and Food
Security: Recent Outcomes of Trade Liberalization and Neo-Liberal
Economic Reforms in India,” Paper presented at the International
Workshop on Policies against Hunger III, Berlin, Oct. 20-22, 2004, p. 1
25. The Hindu, Nov. 12, 2007;
http://www.hindu.com/2007/11/12/stories/2007111257790100.htm
26. Vandana Shiva, “The Suicide Economy,” Znet, April 2004,
http://www.countercurrents.org/glo-shiva050404.htm
27. “Africa’s Hunger—A Systemic Crisis,” BBC News, Jan 21, 2006;
http://news.bbc.co.uk/2/hi/afria/462232.stm
28. “The Development of African Agriculture,”
http://www.africangreenrevolution.com/cgi-bin/african_green_rev/printer_friendly.cgi?f
29. See, inter alia, Oxfam International, Causing Hunger: An Overview of
the Food Crisis in Africa (Oxford: Oxfam, July 2006)
30. Ibid.,p. 18.
31. “The New Face of Hunger,” Economist, April 17, 2008;
http://www.economist.com/world/internatiional/PrinterFriendly.cfm?story_id=11049284
32. Charles Abugre, “Behind Crowded Shelves: as Assessment of Ghana’s
Structural Adjustment Experiences, 1983-1991,” (San Francisco: food
First, 1993), p. 87.
33. Oxfam, p. 20
34. See “Did the IMF Cause a Famine?,”Yingsakfoodnetwork.com, April 28,
2008, http://wwwyingsakfoodnetwork.com/did_the_imf.asp
35. “Trade Talks Round Going Nowhere sans Progress in Farm Reform,”
Business World (Phil), Sept. 8, 2003, p. 15
36. Oxfam, p. 13
37. Quoted in Miller, p. 70
38. Ngaire Woods, The Globalizers: the IMF, the World Bank, and their
Borrowers (Thaca: Cornell University Press, 2006), p. 158
39. Stephanie Nolen, “How Malawi Went from a Nation of Famine to a
Nation of Feast,” Globe and Mail, Oct. 12, 2007; “Starter Packs: a
Strategy to Fight Hunger in Developing Countries: Lessons from Malawi,”
CAB Abstracts,
http://www.cababstractsplus.org/google/abstract.asp?aspAcNo=20053142997
40. Nolen
41. Nolen
42. IMF statement, quoted “Famine in Malawi Exposes IMF Negligence,”
Economic Justice News, Vol. 5, No. 2 (June 2002;
http://www.50years.org/cms/ejn/story/89. This article summarizes a
report by ActionAid, State of Disaster: Causes, Consequences, and Policy
Lessons from Malawi, released on June 13, 2002
43. Wold Bank Country Director Tim Gilbo, quoted in Nolen
44. Department for International Development (DFID), “A Record Harvest
in Malawi,” Case Studies, May 8, 2007;
http://www.dfid.gov.uk/casestudies/files/africa%5Cmalawi-harvest.asp
45. Joachim von Braun, “Rising Food Prices: What Should be Done?”, IFPRI
Policy Brief, April 2008; http://www.ifpri.org
46. See Abhijit Banerjee, Angus Deaton, Nora Lustig, and Ken Rogoff, “An
Evaluation of World Bank Research, 1998-2005,”
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/0,,contentMDK:21165468 pagePK:64165401 piPK:64165026 theSitePK:469372,00.html
47. World Bank, World Bank Development Report 2008: Agriculture for
Development (Washington, DC: World Bank, 2008), p. 138
48. Henry Seragih and Ahmad Ya’kub, “The Impact of WTO and Alternatives
to Agricultural Trade,” Paper presented at the Regional Conference on
Agricultural Negotiations in the WTO: Implications for Trade and
Agriculture in East Asia, Hong Kong, January 12-14, 2004.
49. Ibid.

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