You through to us a challenge to comment on the prices of food, i.e., their volatility and how diets are becoming more expensive for poor people with higher %s of income being spent on food. You hinted that the link: food prices to undernutrition is yet to be established. I beg to disagree and here is why. I apologize, because the evidence cannot be presented in just 2-3 paragraphs.
As our contributors know, current conventional economic theory says that there is an ‘invisible hand’ of self-correcting cycles of supply and demand. This notion may have had some utility when it was invented by Adam Smith over 200 years ago. Now it is more like believing in Father Christmas. All indicators point to the fact that food prices are unlikely to fall any time soon and may indeed rise much higher.
Rising food prices are inconvenient and even troublesome for people with plenty of disposable income. They are often a disaster for impoverished populations and communities.
The impact of ‘free market ideology’ is great on food production and distribution, and thus on the cost of food, as well as on food insecurity, on equity and on nutrition. The impact of the latter on poverty and on the misery of children is undeniable.
Public health nutrition professionals can effectively do their jobs only when they understand and act at upon the underlying and basic social, economic and political determinants of nutrition at population and community levels. Otherwise they cannot do much more than apply band-aids to deep wounds.
The crisis we face is not only of rising prices, it is also of fluctuating prices. Price instability, whether of money itself or of food, in itself destabilises societies. This, especially for city dwellers with little disposable income who do not produce food, but buy it, and have been hard hit. Often, they now literally do not have the money for basic foods.
Food prices are rising and fluctuating wildly for a number of reasons. Supply and demand issues cannot explain the speed and severity of the phenomenon observed. Neither current prices nor the commodities futures markets (designed to bet on what food may be worth not now but later) reflect or relate to real supply and demand.
Protectionism: robbing the poor to pay the rich: We are supposed to be living in a world of free trade. The reality is different though. One of the causes of rising food prices is protectionism. Governments remain stubbornly committed to subsidise agribusiness in Europe and the US so they can and do export food at prices that have been ‘cheapened’ --and this distorts markets. National food production in the South cannot compete, and the livelihoods of small and family farmers are undermined or even destroyed.
Speculation: manipulating the markets: Food is treated as just another commodity so that its value is manipulated by speculators, including futures traders. Many investors continue to believe that commodity markets are in the midst of a super-cycle --a long-term trend that will continue to drive prices higher for years to come. In theory, this should be a good thing --not for consumers, but for big producers and speculators who sell before bull markets become bear markets and prices drop. But high levels of speculative investment are always problematic. There is no guarantee that small farmers will benefit from productivity increases and high prices.
High levels of speculation in food are creating price volatility that is driving hundreds of millions of people into poverty and the threat of starvation. What is needed here, is limits on speculation, and stricter regulation of market manipulation.
Taken all together, the current food prices crisis has highlighted the fragility of the world’s food system, and its vulnerability to shock. Consumers are now spending a larger share of their income on food. In some countries a large proportion of the more impoverished population groups simply do not have the necessary additional money. Within countries, impoverished urban communities are the most affected by high food prices, because they rely on food purchases for their food supplies.
There are specific nutritional consequences of the food price crisis; they are:
The cost of doing nothing to alleviate the impact of food price rises, and of working towards new systems of governance that will equitably stabilise food prices, would be very heavy indeed. To summarise, it will include increased low birth weight rates, decreased breastfeeding rates, increased malnutrition rates, increased under 5 mortality, and a heavy toll on child development. Populations on the margins of poverty will suffer more, and those already in poverty will be pushed towards destitution. What remains unknowable is just how great the damage will be. Children wl suffer the most.
Rises and fluctuations in the price of food are here to stay. This is a corollary of an ideology that treats food as a commodity whose value is determined by money markets that continue to drive the world’s economy with minimal regulation. The negative impact of the unpredictable high prices of food on society, most of all in the South, are now quite evident. The most vulnerable populations and communities are, as usual, the most affected. These are mothers and their children who live in impoverished regions and countries.
Long-term the answers must be structural. The prevailing systems of political and economic governance that determine, among many other things, the price of food, are not working in the public interest. Will ICN2 deal with these issues?
Claudio Schuftan, Ho Chi Minh City
Links and resources:
Earlier FSN Forum ICN2 discussions: