{"id":206,"date":"2008-07-10T14:27:04","date_gmt":"2008-07-10T14:27:04","guid":{"rendered":"http:\/\/global-labour.info\/en\/2008\/07\/10\/the-role-of-financial-speculation-in-the-food-price-crisis-ron-oswald\/"},"modified":"2008-07-10T14:27:04","modified_gmt":"2008-07-10T14:27:04","slug":"the-role-of-financial-speculation-in-the-food-price-crisis-ron-oswald","status":"publish","type":"post","link":"https:\/\/global-labour.info\/en\/2008\/07\/10\/the-role-of-financial-speculation-in-the-food-price-crisis-ron-oswald\/","title":{"rendered":"The Role of Financial Speculation in the Food Price Crisis – Ron Oswald"},"content":{"rendered":"


\n\u201cHigh-Level Panel on the Food Crisis, Production,
\nInvestment and Decent Work\u201d – 97th ILO International
\nLabour Conference, Geneva, June 11, 2008<\/strong><\/em>
\nContribution of Ron Oswald, General Secretary, IUF<\/strong><\/em>
\nThe IUF welcomes this ILO policy discussion on the link between food
\nsecurity, production, investment and decent work, because it is precisely
\nthese dimensions of the present crisis which are missing from much of the
\nanalysis and policy proposals on offer today, including the conclusions of the
\nrecent FAO High Level Conference on World Food Security, which we
\ntherefore regard as a failure.
\nOne of the reasons for this failure is that the food crisis is seen mainly in
\nterms of the rapid escalation in food prices over the past three years. Yet this
\nis only one manifestation of a persistent, longer-term crisis in which the right
\nto adequate food is denied to more than 800 million people, including those
\nwho work in agriculture. Recall that in 1996 the Rome Declaration on World
\nFood Security stated, “We consider it intolerable that more than 800 million
\npeople throughout the world, and particularly in developing countries, do not
\nhave enough food to meet their basic nutritional needs.” And this was when
\nthe global prices of major agricultural commodities were collapsing, hitting
\ntheir lowest levels in three decades. Whether agricultural prices are hitting
\nrecord highs or record lows, hundreds of millions of people continue to be
\ndenied the right to food.
\nIn 2002, the IUF published “The WTO and the World Food System”. We
\nbegan by asking, “If access to safe, nutritious food is a fundamental human
\nright, why are 820 million people living in hunger today? Why are people in
\nfood-exporting countries living in hunger, and why are agricultural workers
\namong the malnourished? If the value of annual global exports in agricultural
\nproducts is USD 545 billion, why do waged agricultural workers and small
\nfarmers register among the highest levels of global poverty? More than half of
\nthe world’s workforce is engaged in agricultural production. Why then are the
\nconditions under which food is produced so destructive to the health and wellbeing
\nof these people?”
\nSince 2002, global agricultural trade has steadily increased to over USD 700
\nbillion – and that figure is before the recent hyperinflation. Where are the
\nbenefits of expanding trade in agriculture promised us by the WTO, whose
\nDoha Round the FAO urges be concluded as the main solution to global
\nhunger? In 2007, the FAO estimated that 850 million people were chronically
\nmalnourished, though food production continued to outpace population
\ngrowth. Now, in 2008, even the IMF is speaking of an additional 100 million
\npotential new victims of starvation.
\nA system which routinely condemns over 800 million people to hunger and
\nmalnutrition is self-evidently in permanent crisis. From the standpoint of
\ninternational human rights law, which establishes the universal right of all
\nhuman beings to adequate, affordable nutrition and the obligation of
\ngovernments to ensure that that right is defended and fulfilled, the system is
\nmore than a failure. It is a crime. Among the foremost victims of this massive
\nviolation of the right to food are the nearly half a billion women and men who
\nhelp produce the food we all depend on: waged agricultural workers.
\nWhat is new today is the near-simultaneous appearance of mass protests in
\nsome 30 countries which has elevated this ongoing violation of human rights
\nto a potential political crisis for governments.
\nThe new element driving these protests is hyperinflation in the price of staple
\nfoods. Prices of some of these essentials have doubled and tripled in the
\nspace of a year, some of them in the space of months. On March 31, the price
\nof rice rose by 31% in a single day; on February 25, that of wheat by 27%.
\nIt has been estimated that every percentage point increase in the price of
\nstaple foodstuffs can send an additional 16 million people into hunger. The
\nfirst question to ask, therefore, is why are so many millions already on the
\nedge, and why are so many of them employed in agriculture?
\nWhile it is an urgent necessity to halt the rise in prices, let us ask why there
\nare no official proposals to raise rural workers’ incomes to compensate for the
\nloss of purchasing power and the reduction in calories. We should be asking
\nwhy millions of rural workers sank into hunger and poverty when agricultural
\ncommodity prices fell steadily downwards, as they did through the 1990s. We
\nshould ask why the retail prices of, for example, coffee, tea, or sugar
\nremained essentially stable, or even increased, for over a decade, while world
\nmarket prices for these commodities were in prolonged free fall. Why, during
\nthese years, did the profits of the transnational processors and traders
\nincrease, along with their buying and marketing power; while the wages of
\ncoffee, tea, and sugar workers stagnated or fell, sometimes drastically?
\nWhere is the linkage between commodity prices, retail prices, wages and
\npurchasing power the WTO assured us liberalized trade would achieve
\nthrough the “optimal utilization of resources”? Dependence on volatile global
\ncommodity prices has pushed entire populations to the brink of starvation.
\nThe FAO conference last week concluded with a call to quickly complete the
\nDoha round. How can we rush to a faster conclusion of the Doha Round when
\nit was the WTO regime\u2013 and the Agreement on Agriculture in particular – that
\nfacilitated import surges that have devastated vital systems of local and
\nnational food production. Between 1995 and 2000, the price of maize in
\nMexico fell by 70% while the price of tortillas, the staple maize bread,
\nincreased by 300%, and quadrupled in the space of a few months last year. In
\nthese 5 years, an estimated 1.3 million workers and small farmers were forced
\nto abandon the countryside in search of work. Many of these were forced to
\nleave Mexico.
\nCommodity prices in themselves tell us nothing about the capacity of the
\nworld’s agricultural workers to feed themselves, or the urban poor. The key
\nissues are vulnerability, volatility, and the extraction of value along the food
\nchain.
\nWhile an additional 100 million people face possible starvation as a result of
\nrapidly rising cereal and oilseed prices, corporate profits for the traders and
\nprimary processors are at record levels. Cargill, the world’s leading trader,
\nregistered an 86% increase in profits from commodity trading in the first
\nquarter of this year. 2007 profits for ADM, the second global trader, were up
\n67% per cent last year. Bunge, riding the wave of demand for oilseed for
\nbiodiesel, enjoyed a 77% increase in first quarter profits this year. Nestl\u00e9, the
\nworld’s largest food corporation, posted exceptional 2007 profits and launched
\na 25 billion dollar share buyback program – while telling its workers that higher
\ninput prices mean they should brace themselves for layoffs and wage cuts.
\nYou can search in vain for the word corporation in the FAO’s 50 page briefing
\npaper for the World Food Crisis Summit – this in a report entitled “Facts,
\nPerspectives, Impacts and Actions Required”. You won’t find it either in the
\nOECD-FAO Agricultural Outlook 2008-2017 – though you will find a message
\nto the global poor that food will be unaffordable for the next decade or more.
\nThe main issues and actors in the crisis of the world food system are simply
\nnot there. The driving force behind liberalizing agricultural trade over the past
\ndecade – the enormous increase in the reach, power and market share of
\ntransnational corporations, not only across borders but within local and
\nnational markets through intra-company trade and subsidiaries – is entirely
\nabsent. There are only markets, market signals, and prices. With these “facts”
\nand this “perspective”, how can we understand the real mechanisms at work,
\nand meaningfully address the issues?
\nThe forces generating hunger don’t simply happen \u2013 they are made to
\nhappen. If world cereal stocks are low, it is because governments were
\nsystematically pressured, lobbied, blackmailed and seduced into selling them
\noff, thereby privatizing an essential mechanism for managing supply. The
\ncorporations now manage the planet’s food stocks. Publicly funded
\nagricultural research did not simply “decline” \u2013 it was consciously dismantled
\nunder the watchful eye of the World Bank, ensuring that research would
\nbecome the exclusive preserve of corporate R&D.
\nWith the major actors rendered invisible – and in particular, the corporations
\nand the financial speculators who increasingly dictate how and what kind of
\nfood is planted, harvested, processed and marketed at what price, we\u2019re left
\nwith an “action plan” which tells the poor it will essentially be business as
\nusual. What should have been an opportunity in Rome for governments to
\nshow their commitment to following through on their obligation to protect and
\nenforce the right to food therefore concluded with humanitarian assistance
\nand vague calls for more investment, more seed, more fertilizer etc. – without
\nspecifying what kinds of investment, what investors, what seeds, and
\ninvestment for whom.
\nWhile international agencies have suddenly discovered underinvestment,
\ninvestment in commodity indexes has climbed from US$13-billion in 2003 to
\n$260-billion in March 2008 – and according to some analysts may soon hit a
\ntrillion US dollars. Yet the FAO briefing paper for the Rome summit devoted a
\ndismissive two paragraphs to the phenomenon in its “assessment of recent
\ndevelopments”, and nothing in its concluding “policy options”. Private equity
\nand hedge funds – investors focused on short-term, high-yield gains – have
\nbeen expanding beyond futures markets and are now pouring billions into
\nacquiring farmland, inputs and infrastructure. The real world has been left
\nbehind – and with it production, investment and decent work. The real issue is
\nwhat kind of investment, what kind of production, and who benefits.
\nWorld Bank research has convincingly established that the massive diversion
\nof cereal and oilseed crops for biofuel production is responsible for much of
\nthe pressure behind food price inflation – from one-third to as much as 75%,
\naccording to one study, when land use and the impact on food stocks are
\nfactored in. The escalating price of oil is also a critical factor, for the world
\nfood system is addicted to carbon fuels for pesticide and fertilizer inputs and
\nfor long-distance transport. Food has become a branch of the petrochemical
\nindustry. The FAO sees speculation playing no significant role in pushing
\nprices upwards, but meanwhile investment funds are betting hundreds of
\nbillions of dollars on higher prices, creating a bubble that drives prices
\nupwards. It was speculation alone which drove up the price of rice futures by
\n31% in a few hours on March 31. Retail prices follow, and the consequences
\ncan be fatal. As Tom Giessel, a US wheat farmer said recently “We’re
\ncommoditizing everything and losing sight that it’s food, that it’s something
\npeople need. We’re trading lives”.
\nCombating hunger requires moving away from the industrialized monocultures
\nwhich are strip-mining the soil and depleting and contaminating water
\nresources. Governments must have restored to them the policy tools they
\nneed to ensure food security through investment in local and national food
\nsystems. Clearly, we must halt the diversion of food from human consumption
\nto fuel tanks. Food and agriculture must be defended from the incursions of
\nfinancial markets through regulation. And we must ensure the basic rights of
\nall those who work in agriculture. These are in fact among the conclusions of
\nthe UN’s own International Assessment of Agricultural Knowledge, Science
\nand Technology for Development – the IAASTD, whose recent report has
\nbeen endorsed by over 60 nations but whose findings and conclusions played
\nno role in the FAO summit.
\nAs we mark the 60th anniversary of ILO Convention 87 on freedom of
\nassociation, the rights of agricultural workers are still systematically violated,
\nand this systematic violation of rights is reflected in a food system which is
\nneither socially nor environmentally sustainable. Agricultural work remains a
\ndomain of poverty, violence, child labour, death and injury on the job.
\nAgricultural workers are still specifically excluded from national systems of
\nindustrial relations in some of the richest countries of the world, countries
\nwhich are major producers and exporters of food. How is it possible in 2008,
\nthat we are still fighting for recognition of agricultural workers’ right to potable
\nwater as a universal human right?
\nThe missing link between investment, production and decent work \u2013the title of
\nthis panel – is social regulation. No matter how many billions or even trillions
\nflow into agriculture, this investment fails to deliver decent work and fails to
\nadvance the right to food. What we see instead is more volatility and therefore
\nmore vulnerability. Social regulation at national and sub-national level,
\nincluding the implementation of ILO standards, is necessary to ensure that
\nthese capital flows are channeled into decent work, poverty alleviation and
\nsustainable food security. Governments must have and be able to exercise
\nthe right to be able to protect food and food workers.
\nThis is why the ILO must play a central role in the UN’s interagency work on
\nfood security. We therefore think it essential that, in the followup to the work of
\nthis year’s ILC Committee on Rural Employment for Poverty Reduction, the
\nILO call for the rapid organization of a public policy forum on the global food
\ncrisis from the standpoint of production, investment and decent work, a policy
\nforum in which the women and men who help produce the world’s food, and
\ntheir trade unions, can bring the real issues and real solutions to the table.
\n* * * * *
\nThe International Union of Food, Agricultural, Hotel, Restaurant, Catering,
\nTobacco and Allied Workers\u2019 Associations (IUF<\/a>) is an international trade union
\nfederation composed of 373 trade unions in 121 countries with an affiliated
\nmembership of over 2.8 million members. It is based in Geneva, Switzerland<\/em>.
\nInternational Union of Food, Agricultural, Hotel, Restaurant, Catering,
\nTobacco and Allied Workers\u2019 Associations (IUF)
\nRampe du Pont-Rouge, 8, CH-1213 Petit-Lancy (Switzerland)
\nTEL: + 41 22 793 22 33
\nFAX: + 41 22 793 22 38
\nwww.iuf.org
\niuf@iuf.org<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[39],"tags":[],"_links":{"self":[{"href":"https:\/\/global-labour.info\/en\/wp-json\/wp\/v2\/posts\/206"}],"collection":[{"href":"https:\/\/global-labour.info\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/global-labour.info\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/global-labour.info\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/global-labour.info\/en\/wp-json\/wp\/v2\/comments?post=206"}],"version-history":[{"count":0,"href":"https:\/\/global-labour.info\/en\/wp-json\/wp\/v2\/posts\/206\/revisions"}],"wp:attachment":[{"href":"https:\/\/global-labour.info\/en\/wp-json\/wp\/v2\/media?parent=206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/global-labour.info\/en\/wp-json\/wp\/v2\/categories?post=206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/global-labour.info\/en\/wp-json\/wp\/v2\/tags?post=206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}