Man’s daily bread is an important thing; more so, when he doesn’t have enough of it. And that’s what I’m hearing all over. The universal cry is “food prices are increasing”.
It’s very strange you see, because it seems as if this so-called ‘food crisis’ has almost materialized out of thin air. One day, everything was hunky-dory and then, without warning or preamble, people were rioting because their stomachs were empty.
You might believe that I’m not being sensitive to the real needs of the people who are going to bed hungry by diminishing, in some ways, their plight but that would be patently untrue.
All I’m trying to do is look at the issue in a wider manner than it is usually portrayed in a strictly demand and supply viewpoint.
Let’s start with what is happening here at home in Rwanda. According to the Sunday Times [20th April] , the Minister of Commerce, Monique Nsanzabaganwa has been summoned by the Senate to explain why prices of food stuffs were skyrocketing and what her ministry was doing to regulate the prices of the produce.
The senators were particularly irked by the scam, allegedly perpetrated by a local cooperative ‘Abadahemuka’, whereas the cooperative falsely created scarcity of foodstuffs by hoarding the produce and then selling it at an exorbitant rate.
So, the crux of the matter is that there isn’t a ‘real’ food scarcity but rather ‘false’ food scarcity that is caused by factors other than real production of food.
What I’m trying to put across is that maybe, just maybe, this food crisis isn’t as simple as “there is not enough food to feed the country” because factors other than agricultural output are at play in my opinion. Certain things make me wonder.
Usually, increased prices on staple foods [often grains like rice, wheat and maize] are caused by less output in the large, grain producing nations like Canada, United States and India. These shortages are usually caused by weather conditions like El Nino and the like.
However, this year and the last saw lovely global weather. No hurricanes and tornadoes in the North America, typhoons in Asia, drought in Africa. In fact, I’d be hard-pressed to remember a huge natural cataclysm.
However, there was a huge man-made shock last year. The western world’s financial problems caused by high oil prices [caused due to the Iraqi quagmire and the intentionally weak dollar] and poor mortgage lending by the biggest financial institutions have caused massive losses on the money-markets of Wall Street.
Stocks in the largest banks have been sliding since last year and things will only get worse in the money markets and this is having a huge effect on the lives on the ‘normal’ American. That is bad news for the rest of us. The way I read it, the US government will be damned if it watches its citizens suffer without doing anything about it.
So, guess who has to suffer on their stead? We- the world citizenry- who have been buyers of the excess American corn and wheat.
Why do I think that? Because, along with the control of the financial markets the American ‘hyper-power’ also has de-facto control of the commodities market i.e. the market that connects buyers and sellers of goods like oil, grain, minerals and the like.
Interestingly enough, the commodities markets unlike its financial counterparts are doing brisk business and making record profits.
So, the losses made in the financial markets are being absorbed by the profits made in the commodities markets thereby softening the impact of the slowing American economy.
How can all is this be possible, you ask? Easy; all the producers of the grains have to do is to keep a portion of it off the market and instantly there is a shortage because these big producers have such a dominant market presence.
All these producers have to do is watch the grain prices rise and later, in their own time restore the former prices by increasing the supply. This hullabaloo about bio-fuels is just a smoke screen to hoodwink us all, I believe.
Bio-fuels, especially in the United States don’t even supply more 5% of the energy needs of the US economy. Brazil, which uses bio-fuels quite a lot doesn’t use grain to make bio-fuels but rather sugarcane.
So, unless you’re talking about a sugar scarcity then stop taking about bio-fuels. I believe that we, the poorer nations are victims of speculators in the west; speculators not unlike our very own ‘Abadahemuka’ cooperative, but a lot more destructive.