The rich benefit from the current food crisis. To what extent is this true?
Lately, there has been a sharp rise in food prices globally. In fact, since 2005, food prices have risen a whopping 80 percent, pushing approximately 100 million people worldwide below the poverty line. This, is the current food crisis. It has all along been a controversial issue where many argued that the rich, the developed countries that control the world’s economy such as the G8 and the Multinational Corporation (MNCs), tends to gain economically, enlarging their profit margin, at the expense of the poor since they are the one who have greater power in terms of monetary values. Indeed, the rich benefit due to their abusing of market system through the pursuit of their unlimited wants. However, it is not always the case.
Due to the depletion of fossil fuels and to reduce its dependency on foreign oil to achieve self-sustainability, many developed countries have diverted corn from food to biofuels, resulting in global food prices shooting up by seventy-five percent. As the oil prices hit an all time high, above $145 per barrel, biofuels are another area where investors, assisted by governments giving biofuel production subsidies, can reap huge profits at the expense of hungry people. Indeed, the push for biofuels by developed countries today such as the United Sates worsens the current food crisis. In Washington, the government provides a subsidy of 51cents a gallon to ethanol blenders and slaps a tariff of 54 cents a gallon on imports, attracting more investors to the biofuels sector. Thirty percent of the corn production has been diverted into the production of ethanol in America, which has boosted demand for other staples. Not only that, other developed countries such as the European Union, India, Brazil and China all have their own targets to increase biofuels, decreasing the food supply. The percentage of corn used for the production of biofuel has increased from 6% in 1999 to 33% in 2008. The jump in ethanol production in 2007 alone has more than doubled the average annual growth in demand for the world’s grains that took place between 1990 and 2005. At this rate, it is estimated than half of the US corn yield has to be diverted to ethanol production by the end of 2008. The emphasis on increased of production of ethanol from corps has resulted in a sixty percent rise in corn prices in the past two years. Therefore, the rich in this case definitely benefit from the current food crisis since as more crops are used for biofuels, all the more are they able to maximize their profit margin through the subsidies provided by their government.
The rapid urbanization of the developing countries has inadvertently aided the current food crisis. The rich tends to gain in the long run as huge areas of farmland are gobbled up for development projects - some of dubious use such as the building of suburban style housing and golf courses for the wealthy. For example, Singapore-Vietnamese joint venture will soon build a 700 hectare industrial park and township, turning the rural area into a satellite city. One good example would be the alarming pace of farmland conversion in China. From the period of 2000 to 2005, there was an average annual loss of 2.6 million acres of farmland used for development, which resulted in a remarkable success in economic development over the past two decades. Hence, more farmlands are utilised for other purposes which tend to bring more economic benefits, as compared to agriculture. However, this drives the farmers in the rural areas to lose their jobs causing a dip in food supply. And with the rising long term demand, countries must import food from others, boosting the prices of staple food globally. The rich hence benefit from this current food crisis as the MNCs earn more revenue through the clearing of farmlands for profit oriented projects and people from higher income group now stand to enjoy greater standard of living with more luxury goods.
However, the rich does not stand to gain if the current food crisis is caused by natural disasters. Natural disasters play quite an important role in contributing to the current food crisis, cutting down the global food supply and resulting in an increased in the price of staple food. A cyclone in Bangladesh destroyed approximately about 600million dollars worth of rice crop in 2007, leading to an overall seventy percent increased in rice price. Also, grain yields have fallen tremendously due to the prolonged droughts in Australia, the second largest exporter of grain. In this case, both the rich and the poor suffer due to inflation, paying more for the same amount of food; however, the rich are better able to overcome the problem due to their financial capability. Hence in the short run, the rich may stand to lose too. Rising affluence due to the effect of globalization causes the growth of middle class in several countries such as China and India. With the rising long term demand in countries like China and India, where millions of increasingly prosperous people are eating more, countries must import food from other others to meet the demand. This increasing demand for meat among the middle class is one of the causes of the increased in the price of food products such as corn and soybeans. For an example, the world’s total meat supply was 71 million tons in 1961. However, in 2007, it was estimated to be over 284 million tons. In the developing world, it rose twice as fast, doubling in the last twenty years ago. All these contribute to the current food crisis as people are consuming more than what's being produced. Both the rich and the poor will suffer due to the increased in price of food products. However, the rich are still able to manage it more effectively due to their financial capability since they are able to pay more.
In conclusion , the rich indeed benefit from the current food crisis as they are part of the main culprit behind the current food crisis, gaining benefits through unfair means, neglecting the poor in order to obtain their wants. The rich benefits in terms of monetary values as their profit are increasesd significantly from the production of ethanol and development projects. Furthermore, in a free market, producers always sell their products to those who are able to pay, which are the rich as they have more money votes and greater say.
http://en.epochtimes.com/news/8-6-6/71540.html
http://www.lincolninst.edu/pubs/PubDetail.aspx?pubid=913
http://files.tikkun.org/current/article.php?story=20080521081510344
http://www.actionaid.org/main.aspx?PageID=1110
"No Grain, Big Pain" Time Mag.
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