The Food Crisis: Global Markets and Deregulation Strike Again

April 18th, 2008

by Gretchen Gordon

You wouldn’t know it by watching Congressional debate on C-SPAN, but if you turn on the news, it’s clear that the global food system is in crisis. Food prices globally have skyrocketed, in some cases 80%. Food protests and riots from Italy to Yemen have begun capturing worldwide attention, and policymakers are scrambling to point fingers at a litany of culprits—everything from climate change, high oil prices, a weak dollar and the biofuels boom, to meat eaters in China. All of these factors have played a part in the current crisis, but the blame game is also allowing one culprit—the principle protagonist in this story—to get away with not even a mention. It’s a character you might have heard of recently for its role in that little unfortunate sub-prime mortgage mess. That’s right, deregulation.

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Deregulation in agricultural markets, like economic deregulation in many sectors, reached full tilt in the eighties and nineties. Trade and development economists preached the wonders of open markets, unfettered production, and industrial agriculture. The World Bank and International Monetary Fund conditioned loan policies on the elimination of government intervention in agricultural markets. Global commodity agreements, price supports, and other mechanisms which helped keep global supplies and prices stable were dismantled. The World Trade Organization’s Agreement on Agriculture, together with multi-lateral and bilateral agreements including the North American Free Trade Agreement (NAFTA), slashed agricultural tariffs in the developing world, and opened up markets for a growing global agribusiness industry.

In the U.S., the 1996 Farm Bill eliminated the last vestiges of domestic price supports for most commodities and replaced them with a massive system of subsidies—the only thing left to prop up a farm economy in perpetual crisis. Market liberalization and the dumping of cheap commodities swamped small farmers here and abroad, pricing them out of local markets. Cheap feed crops fueled industrial livestock production, increasing meat consumption and driving out small producers. The few independent farmers who stayed in farming shifted production to a few commodities including corn and soy that can be stored and shipped to distant markets.

http://www.foodfirst.org/en/node/2099