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God's Politics

How to Stop the Next Food Crisis (It’s Easier than You Think)

by Elizabeth Palmberg 11-11-2009

Here’s what the news stories aren’t telling you about the bill Senator Dodd brought out yesterday: it could spell life or death for hungry people worldwide. It all depends on what happens in the weeks to come — and what Congress hears from constituents.

Here’s what I’m talking about: when I was writing about the food crisis last year, which had plunged over 100 million people into poverty, I was appalled to realize that one big cause was speculation. What has been called the giant pool of money (the mushrooming amount of capital that global investors are looking to get a return on) took a notion to pour into wheat, corn, and other food futures contracts, helping to cause some food prices to double — which spelled disaster for people who were already paying up to 80 percent of their daily income for food. Food riots ensued.

A couple months ago, I found out the good news: there is a road-tested, quick, and pretty darn cheap way to stop this from happening.

I found this information credible not only because the social-justice Catholic advocacy types who alerted me to it know their hunger policy, but also because the idea was endorsed by a U-of-Chicago-alum financial-industry insider, plus a hedge fund manager living in the Virgin Islands. After my head stopped exploding from this strange-bedfellows combination, I started to listen real, real seriously.

Here’s the secret: We need to put back the ground rules that, until 2000, prevented big-money types from turning food prices into a high-rolling casino, with people’s daily bread/rice/tortillas as the chips. These simple ground rules worked for decades. Throwing them out was a failed experiment in greed. And its complete, disastrous failure should not be a surprise, considering the source: the same speculative bubble-makers who brought us the dot-com bubble, the mortgage-securities bubble (and its child, the real estate crash), and seesawing oil prices.

Now that this incompetent crew has driven the economy off of a cliff, it’s time to throw their ideas in the garbage where they belong, and reinstate food commodities speculation limits. The pre-2000 system allowed farmers and food buyers to hedge against risk; the post-2000 system hurts farmers and eaters with prices that wildly seesaw as investors stampede into and out of the market.

Compared to most other anti-hunger actions, fixing this is insanely cheap – you don’t have to ship food hither and yon, hire staff to distribute it, or worry about undermining local farmers. You just have to re-institute the principle: First, do no harm.

And that’s why Dodd’s bill might help. News stories report that it puts some restrictions on derivatives, the larger category that includes food futures (along with a lot of other things). I haven’t yet read in-detail analysis – it appears the current bill has some loopholes, and the details are sure to change as the bill sets off the mother of all turf wars between different interested parties and regulatory agencies in upcoming weeks.

But here’s something anyone can understand: so far, Congress has apparently been flooded with lobbying from Wall Street types out to protect their profits – while not hearing much at all from ordinary constituents asking them to do the simple, decent thing for farmers and hungry people worldwide. (On a different note, this giant bill might also bring about decent consumer financial protection for people in the U.S.)

Earlier, when talking about strange bedfellows, for dramatic effect I withheld a key piece of information: that hedge fund manager and that U of Chicago grad are both Christians, and feel called by their faith to fight world hunger. That fight is something that anyone, insider or not, can understand. You can read more about it at www.stopgamblingonhunger.org.

Elizabeth Palmberg is an assistant editor of Sojourners magazine.

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  • nms
    Hmm... I went to a number of meetings on Capitol Hill last summer (2008) and I kept hearing that the global food crisis occurred from three basic causes:
    - Higher oil prices (leads to higher fertilizer prices and higher travel costs)
    - Increasing middle class in India and China who are choosing more meat and dairy like their Western cohorts (dairy and meat are much more intensive and costly than other foods)
    - More droughts, floods, etc (I'd say due to global warming)

    While this may be oversimplified, I think your article wrongly suggests that your answer is a magic bullet. There are a lot of layers going on here. Rising meat consumption in India and China (and even current meat consumption in the U.S. and other Western nations) seems to be like the greatest culprit--not to mention a great concern for environmental and ethical reasons as well.
  • MarkJay
    Maybe America has been so spoiled and we've abused our food industry too much? Maybe America needs a food crises?
  • "Global hunger could be directly attributed to meat-eating." ---Chrissie Hynde

    Half the world's population does not receive an adequate amount of food to eat. Ten to twenty million die annually of hunger and its effects. The Institute for Food and Development Policy reports that, "Forty thousand children starve to death on this planet every day," or one child every two seconds.

    The livestock population of the United States today consumes enough grain and soybeans to feed over five times the entire human population of the country. We feed these animals over 80% of the corn we grow, and over 95% of the oats. Less than half the harvested agricultural acreage in the United States is used to grow food for people. Most of it is used to grow livestock feed.

    Ronald J. Sider of Evangelicals for Social Action, in his 1977 book, Rich Christians in an Age of Hunger, pointed out that 220 million Americans were eating enough food (largely because of the high consumption of grain-fed livestock) to feed over one billion people in the poorer countries.

    The world's cattle alone, not to mention pigs and chickens, consume a quantity of food equal to the caloric needs of 8.7 billion people. It takes 16 pounds of grain to produce one pound of beef. According to Department of Agriculture statistics, one acre of land can grow 20,000 pounds of potatoes. That same acre of land, if used to grow cattlefeed, can produce less than 165 pounds of beef.

    In his book, The Hungry Planet, Georg Bergstrom points out that protein-starved underdeveloped nations export more protein to wealthy nations than they receive. He calls this "the protein swindle." Ninety percent of the world's fish meal catch, for example, is exported to rich countries. One-third of Africa's peanut crop winds up in the stomachs of European livestock. Half the world's cereal crop is fed to livestock and the United States annually imports one million tons of vegetable protein from Third World nations--just to feed its farm animals.

    Bergstrom writes: "Sometimes one wonders how many Americans and Western Europeans have grasped the fact that quite a few of their beef steaks, quarts of milk, dozens of eggs, and hundreds of broilers are the result, not of their agriculture, but of the approximately two million metric tons of protein, mostly of high quality, which astute Western businessmen channel away from the needy and hungry."

    Jeremy Rifkin, author of a dozen influential books and President of the Foundation on Economic Trends, writes in his 1992 bestseller Beyond Beef:

    "Cattle and other livestock are devouring much of the grain produced on the planet. It need be emphasized that this is a new phenomenon, unlike anything ever experienced before.

    "Contrary to popular belief, the poor are getting poorer each year...Increased poverty has meant increased malnutrition. On the African continent, nearly one in every four human beings is malnourished. In Latin America, nearly one out of every seven people goes to bed hungry each night. In Asia and the Pacific, 28 percent of the people border on starvation, experiencing the gnawing pain of a perpetual hunger."

    "In the Near East, one in ten people is underfed. Chronic hunger now affects upwards of 1.3 billion people, according to the world Health Organization--a statistic all the more striking in a world where one third of all the grain produced is being fed to cattle and other livestock. Never before in human history has such a large percentage of our species--nearly 25 percent--been malnourished.

    "The transition of world agriculture from food grain to feed grains represents an...evil whose consequences may be far greater and longer lasting than any past examples of violence inflicted by men against their fellow human beings."

    The Worldwatch Institute has released a remarkable report entitled Taking Stock: Animal Farming and the Environment, which lists nation after nation where food deprivation has followed the switch from a grain-based diet to a meat-based one.

    Most of the nations importing grain from the United States were once self-sufficient in grain. The main reason they aren't is the rise in meat production and consumption.

    Oxfam estimates that in Mexico, 80 percent of the children in rural areas are undernourished, yet the livestock are fed more grain than the human population eats! The livestock are exported of course, to satisfy the developed nations' craving for cheap hamburgers.

    In the early '60s, sorghum was almost unknown in Mexico. But by 1980, it covered literally twice the acreage of wheat. Sorghum isn't grown for humans. It is fed to livestock. In the late '60s, livestock consumed only 6 percent of Mexico's grain. Today, the figure is over 50 percent.

    In country after country the pattern is repeated. Livestock industries are consuming feed to such an extent that now almost all Third World nations must import grain. Seventy-five percent of Third World imports of corn, barley, sorghum, and oats are fed to animals, not to people. In country after country, the demand for meat among the rich is squeezing out staple production for the poor.

    According to Buckminster Fuller, there are enough resources at present to feed, clothe, house and educate every human being on the planet at American middle class standards. The Institute for Food and Development Policy has shown that there is no country in the world in which the people cannot feed themselves from their own resources.

    Moreover, there is no correlation between land density and hunger. China has twice as many people per cultivated acre as India, yet less of a hunger problem. Bangladesh has just one-half the people per cultivated acre that Taiwan has, yet Taiwan has no starvation, while Bangladesh has one of the highest rates in the world. The most densely populated countries in the world today are not India and Bangladesh, but Holland and Japan.

    Many of us believe that hunger exists because there's not enough food to go around. But as Frances Moore Lappe' and her anti-hunger organization Food First! have shown, the real cause of hunger is a scarcity of justice, not a scarcity of food.
  • evgatch
    hi macarthur,
    i think youre opening up a whole other can of worms. i agree with everything that you are saying about how bad our food processing is in america and we need a change but change will cost more money if we dont change our habits. I can ramble about this for a while and yes, on this front we need lots of change on the production and how we eat food in america.
    I think what Elizabeth is talking about though is food price speculation. This means that investors are try to guess how much certain food will cost in the future and invest money or take out money on that certain food item to make money on it in the future. they invested lots of money in the future price of some food commodities which in return greatly raised the current demand which raised the price of the commodity now because the demand of the future.
    This had very little to do with how much food was available now or in the future.

    So what Elizabeth is suggesting is that we ask the government to put in some regulation so that investors don't ping pong the prices of basic food items because of them trying to make money on it in the future. if there is some stabilization in the price of food, farmers will have something to semi rely on instead of trying to go all in when their commodity is high and hold out when its low.
    All this will take is some civic will to achieve, not monster overhaul and this will help millions around the world. I personally see this as restoring justice and greatly support it but I see it very difficult to rally churches behind an idea like this.

    I totally agree with you Macarthur, but but the Food inc. stuff is just another conversation for another day.
  • hansachs
    I guess that this could cause an addition to Matthew 25: "I was hungry, but was not fed because you were making money speculating in food futures."
  • MacArthur4
    evgatch I did not quite understand her solution in the article . Seemed at best to be a small band aid . Just watched Food,INC . It was a quite interesting , a documentary that leaves you feeling quite more aware of the situation. Also left me feeling a bit overwhelmed also.


    Did not realize the food production system had as many problems in it as there are.
    But yes , they make food that is less healthy, cheaper then healthy foods with government subsidiaries and intervention. The corporations have taken over food production and have DC in their pockets.


    Also the use of the legal profession to intimidate smaller farmers. Reminds you somewhat of the medical problems
    we have with lawyers , just in the medical debate left leaning side seems to give lawyers a pass. This causes a break down in the ability for the church to unite, Lincoln was a corporate lawyer , not all corporate lawyers are evil . But the use of lawyers in the way they are used in medical and food productions have been hard on the general welfare of this country. Well that was a tangent , sorry .

    Bottom line though positive change will cause higher prices in food . Which before government intervention would have happened naturally , now correcting the problem will be seen as government interference causing prices to up. The government has caused much of the problem the the corporations seized upon to utilize making a an unhealthy product that is used more then healthy products . Causing health problems , especially with this newer gereration . Half of white kids will have diabetes born after 2000. Two thirds of minorities will .


    That will hurt the poor the most , but doing nothing will hurt the poor worse in the wrong run .

    Need an action plan . Just don't think it will be seen as a positive thing coming from many of the sources that have soured the public civil discourse on so many other issues that have divided Christians . and with the method of making one side the bad guy making it worse. The side where this seems the best noticed so far appears to be the progressive circels , unfortuantely they have had shown a way of distancing themself from the church as a whole in the past , This issue needs to be seen from within the church , not at the church .
  • meekman
    I agree - thanks for informing me that speculation caused a bubble in food prices and "plunged over 100 million people into poverty." It's amazingly sad that insufficient regulation can allow so much harm to occur.

    The website linked at the very end of the article has 3 particularly good links in its right hand column:

    - "Take ACTION!" provides a template email that you can sign and send to your senators and representatives
    - "Talking Points" provides a few revealing stats (along with their sources) that you can bring up with friends, maybe even at church!
    - "Commonly Raised Objections" responds powerfully to a long list of criticisms against the regulation of speculation
  • evgatch
    thank you elizabeth! How can we get the church to mobilize this issue though? I feel like this really an example of justice and many will not care or care to know about it. How can we change this in our churches without being pushed off stage?
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