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SUSAN GEORGE is the author of fifteen books written in French and English and widely translated. She is president of the Board of the Transnational Institute in Amsterdam, a decentralised fellowship of scholars living throughout the world whose work is intended to contribute to social justice and who are active in civil society in their own countries. She is also honorary president of ATTAC-France [Association for Taxation of Financial Transaction to Aid Citizens] where she also served as vice-president between 1999 and mid-2006 and remains a member of the scientific council.

Her most recent books are Whose Crisis, Whose Future [Polity Press 2010]; Hijacking America: How the Religious and Secular Right Changed What Americans Think [Polity Press 2008]; We the Peoples of Europe [Pluto Press 2008]. Other recent books are Another World is Possible if... [Verso, New York and London, 2004] and The Lugano Report: On preserving capitalism in the 21st century [Pluto Press 1999], both available in many other languages.

She has received honorary doctorates from the University of Newcastle-upon-Tyne and the Universidad Nacional de Educacion a Distancia of Madrid as well as the first “Outstanding Public Scholar Award” of the International Political Economy section of the International Studies Association.

For a full biography and list of publications, please visit http://www.tni.org/users/susan-george.

AUTHOR'S FOREWORD

This study is a contribution to the Transnational Institute's International Economic Order Project directed by Howard M. Wachtel. It is an attempt to place issues concerning food and agricultural commodities in the context of changing world economic relationships. The first part deals with what the Third World is asking for; the second with what, in my view, it is actually getting. As one discussion after another on agricultural raw materials ends in stalemate, new kinds of food systems are meanwhile introduced in underdeveloped countries by the powerful nations of the North, led by the USA. The study is intended, however, less to provide answers than to suggest a critical perspective and perhaps some new tools for analysis of the ongoing takeover of Third World food systems, designed in the image of the developed countries and for their benefit.

Since many readers of this study and of my book will of necessity be the same people, I have taken what I hope are sufficient pains not to bore them by using a different approach here and by not incorporating examples, data, etc. previously published (at least not by me!). This may result in some unevenness, and I have occasionally resorted to noting that certain important matters are better covered in the book than in this shorter study. Readers interested in my fuller views on the food problem (which have altered only marginally since 1976-77) will find How the Other Half Dies available in the United States through Allanheld, Osmun & Co., 19 Brunswick Road, Montclair, New Jersey 07042 (at $4.95 in paperback and $12.50 in hardback) and in the United Kingdom and Canada through Penguin Books (as a Pelican Original).

I am most grateful to my colleagues at TNI, Eleanor LeCain and Howard M. Wachtel, as well as to Claude Bourdet, Harris Gleckman, Sylvain Minault and Pierre Spitz; all of whom took the time and trouble to contribute their extremely helpful suggestions for improving this study.

PART I: THE NEW INTERNATIONAL ECONOMIC ORDER: WHO WOULD BENEFIT?

Along with energy and the arms race, food is certainly one of the crucial political problems of the remainder of the twentieth century. Assuming that we do not manage to blow up the planet in the next twenty-five years or so, and that growing awareness of the scarcity of non-renewable resources leads to decisive action on alternate and safe sources of energy, food may indeed be the issue that shapes our economic and political future. Who grows food—and how much; who eats it—and at what cost—are questions that will determine social and political relationships not only inside the boundaries of individual nations but also between countries at the international level. When, for example, Egypt increases the price of basic foodstuffs, riots immediately break out, imperiling the government which retaliates with military force. Other governments with chronic food shortages risk imminent collapse in the absence of outside aid. And with the aid come directives from the donors as to what measures the recipients must take to put their political houses in order. Meanwhile, even pretenses of "development" founder in countries where large percentages of the population are in no position to grow enough or to buy enough food to meet their fundamental physiological needs. Food dependency conditions other kinds of dependency, and so long as a nation has failed to solve its own food problem, there is little chance that it can practice any truly independent policies, whether domestic or foreign.

Ever since OPEC's arrival in the foreground of the international scene, a new mood of militancy has taken hold in the underdeveloped countries (UDCs) and calls for a New International Economic Order (NIEO) have become more vigorous. Nineteen seventy-six was an especially important year, marked by the Third Ministerial Meeting of the Third World in Manila, the fourth United Nations Conference on Trade and Development (UNCTAD) meeting in Nairobi, and the Conference baptised "North-South Dialogue" (CIEC) in Paris.1

The NIEO, as seen from the Southern hemisphere, is about economic justice on a world scale, to be achieved through more favorable, stable and guaranteed prices for the UDCs' major exports; together with equally important measures such as a larger share of the world's industrial capacity, debt relief, increased aid, indexation of the prices of primary commodities to those of industrial goods and greater access to Northern industrial markets. The NIEO has been fully defined by the UN General Assembly's sixth and seventh Special Sessions; while the basic Third World demands have been elaborated by UNCTAD over the years and stated most concisely in the Manila Declaration and Program of Action (February 1976), drafted by the representatives of the UDC's "Group of 77" which now includes over a hundred Third World States.

Whatever the total package of measures that should ideally make up the NIEO, the only serious negotiations to date have concerned an Integrated Commodities Program, meaning producer-consumer agreements to hold stocks of the principal commodities and to keep their prices within predetermined limits; as well as a $6 billion Common Fund to finance the stockpiles. Whereas UNCTAD has recommended that eighteen primary products make up the Integrated Commodities Program; in fact, only ten have actually come under discussion. They are referred to as the "core commodities" and eight of them are agricultural products or foodstuffs. The list of ten is: coffee, tea, cocoa, sugar, cotton, jute, rubber, hard fibres, copper and tin.

The industrialized nations unfortunately tend to become excited about commodities only when prices are high. When prices stabilize or fall, they revert to their customary foot-dragging behavior at negotiating conferences and this has prevented any serious progress from taking place. In this regard, Germany and Japan are as tough customers for the Third World as the US. The latest round of negotiations (April 1978) ended in failure. There are, however, signs that some concessions may be made to Third World claims in a relatively short term future.

The NIEO and Development Choices

We must recognize that most UDCs are at present highly dependent on revenue from exports of primary products and we should therefore defend their demands for fairer prices and stabilized world markets. This being said, we owe to ourselves and to those who are struggling in the Third World for greater social and political justice a critical examination of what the NIEO may mean. Which social classes in the UDCs would most benefit from it? What are its prospects for fostering real development? To what degree might the acceptance of certain UDC proposals by the wealthy nations actually result in greater manipulation and dependency of the poor countries? And while the industrialized North is allowing the peripheral South to talk itself to death in Dialogue after Special Session after International Conference, what other NIEO in the realm of food and agriculture is being surreptitiously introduced into the UDCs? These are some of the questions we shall try to address.

The "package-deal" NIEO has not really been taken seriously by the North and all the talks to date have revolved around export incomes from primary products—which boils down to renovating the "export-led" development strategy. Third World negotiators may not be happy about it, but for the moment they are boxed into putting these particular items first on the agenda. There is, in fact, no agenda for negotiating the other measures that ought normally to make up the NIEO. So export-led development strategy it is, like it or not.

Let us assume this strategy succeeds, that the industrialized countries recognize the demands of the Third World (those on the current agenda) and that suddenly an Integrated Commodities Program and a Common Fund become realities. This is not an entirely gratuitous hypothesis, and in the middle term may even be a likely one. We are no longer living in the age of cave-man capitalism. The Director of the US National Commission on Supplies and Shortages recently reported on his discussions with executives of companies and described "a new concern on their part for stability and continuity of supply (of Third World raw materials)—even if it means they must pay higher prices."2*

The Trilateral Commission and Zbigniew Brzezinski have come out for "a more forward attitude" towards the demands of the Third World—even though this attitude has not yet been much in evidence in the US negotiating stance. The more sophisticated spokespeople for a renovated capitalist economic order must of course contend with the dinosaurs who see the unchecked activities of the "market" as the best allocator of resources. But it is possible that one day certain facts may filter through, even to the dinosaurs, and the facts indicate that the United States has a good deal to gain from acceding to these particular demands of the "77."

A distinguished American economist has, for example, concluded after detailed study that "important benefits would accrue to industrial countries from price stabilization." In the United States alone, had stable commodity prices been instituted ten years ago, the economic gains for Americans (in prevented unemployment and GNP loss) would have amounted to "about $15 billion over the decade." For the same period, incremental income to UDC exporters of the core commodities would have been only about $5 billion—or three times less. Moreover, such gains could be had without aggravating inflation. Depending on how one calculates, it would take price increases for core commodities of 30% to 200% to cause even a 1% increase in the US consumer price index. Such figures are vastly above what the UDCs are actually calling for. The buffer stock scheme would even reduce inflationary pressures and this argument may well be the clincher in the US government's attitude:

The really large gainers from international commodity stabilization programs may be the residents of the developed countries due to the amelioration of inflationary pressures. In the United States, the government is placing increasing emphasis on these gains in explaining its recent greater receptivity to the possibility of instituting new international commodity agreements.3

Western governments may thus have a very real interest in promoting price stabilization on a world scale. More difficult to gauge precisely is the attitude of multinational corporations (MNCs) who, although they do not sit at the negotiating tables, are nonetheless heeded by those who do; their preferences may be crucial to the outcome of international talks. On the one hand, the firms which are the major users of the core commodities want stability, as risk-free a business climate as possible, and above all, predictability. They would probably prefer anything, including higher costs (to be passed along to the consumer anyway), to the establishment of effective OPEC- type cartels for primary products. But on the other hand, MNCs are certainly in the best position to profit from present fluctuations on international commodity markets and they possess the necessary information networks that enable them to take immediate advantage of particular situations. If a given country is desperate for foreign exchange and willing to sell its core commodity at bargain-basement prices, an MNC is not going to refuse. So-called "world" prices for commodities are frequently mythical and set after-the-fact; they may hide a huge number of special cases and the kinds of price heterogeneity that well-managed firms will seize upon. Price stabilization would eliminate some of the unpredictability from doing business, but it would simultaneously eliminate some of the more exciting opportunities for making coups.

One cannot therefore flatly state that there will be a noticeable shift in US policy towards the NIEO, insofar as this policy is determined by multinationals. Things are presently (September 1978) quiet on the North-South front. Predictions are especially dangerous, as the man said, when they concern the future. Still it seems reasonable to suppose that when higher commodity prices or Third World political pressures result in serious negotiating, the industrialized countries' stance may chance.

Naturally, there would be some advantages to UDCs (or at least to their upper classes) in wresting from the North even a truncated NIEO. Negotiators for the "77" do not, however, always appear fully aware of the disadvantages, and they do not generally object to the class structures in their own societies which prevent equitable distribution of whatever wealth there is. Put more bluntly, and assuming higher revenues for these exporting nations, who, exactly, is likely to see the money? In the most common instance, not the producers who do most of the work to supply the commodities. If we take a look at data on pie-sharing in Third World core commodity-producing countries, we find, for example, that in the Ivory Coast—a major coffee and cocoa exporter—the top 5% of the population receives 30.% of the national income, while the bottom fifth of the population gets 4%. In Brazil (coffee and sugar exports) the figures are respectively 27% for the wealthiest 5% and 5% for the poorest 20%; in Malaysia (rubber) 28% for the top and only 3.4% for the bottom; in the Dominican Republic (sugar) 26% and 5%, etc. A comparison with developed capitalist countries shows that in the USA the top 5% of the population receives 13.3% of the national income and the bottom 20% gets 6.7%; in Canada it is 14% and 6.4%.4

People who believe in the "trickle-down" theory of development may claim that higher national incomes will eventually benefit the worst off, but even a modest knowledge of the past shows that upper classes do not cheerfully share their privileges—indeed one wonders why anyone should expect them to do so if not forced. Nor do they (in most UDCs) spend their revenues on employment generating activities but prefer speculation, Swiss bank accounts and conspicuous consumption of imported luxuries to productive investment in their own countries.

Furthermore, there are several large and densely populated countries (especially in Asia) for whom the proposed commodity agreements would make little difference, since 20% or less of their exports are made up of the core commodities. Such nations as Burma, India, Indonesia and Pakistan—all classed by the World Bank as among the poorest—would benefit relatively little from such programs.

Countries that stand to gain the most—those whose exports are made up of 70% or more of the ten core commodities—are Bangladesh, Sri Lanka, Zambia, Zaire, Chile and Uganda (plus a smattering of very small ones like Mauritius and Rwanda).5 One is led to ask if higher revenues for Mobutu, Pinochet and Idi Amin Dada should be priorities for the international community. There are, of course, countries where increased export revenues would doubtless be used to better the conditions of the people as a whole; the examples of Tanzania and Jamaica come to mind. Nor should one exclude the possibility of revolutionary change in others where singularly unjust class structures prevail today.

Still, there are reservations to be made concerning the NIEO on grounds of gross inequalities of distribution inside many Third World societies, on grounds of the repressive nature of several governments that would most benefit and because the scheme as it stands would leave many nations out in the cold. Commodities trading is not, however, the best area in which to envisage or apply political sanctions and these reservations do not imply that there should not be fairer prices for raw materials—simply that of themselves such adjustments would certainly not erase the problems of poverty and underdevelopment.

Since the eradication of poverty and underdevelopment has not proved to date of overriding concern to the industrialized countries, they are not likely to hesitate if they see, individually or collectively, their economic or geopolitical interest in acceding to certain Third World demands. The United States, for example, may well have noticed that European countries and Japan would bear most of the financial burden of a Common Fund since they import over five times as many commodities from the Third World as does the United States.6 But since these same Third World countries are also important customers for Europe, the latter should encourage higher revenues for commodities, revenues which can be pumped back into the EEC economies. The same argument applies to America which now sends about 27% of its exports to non-oil producing UDCs. If the latter are to continue to pay for these goods, they must have incomes from their own exports.

There must be a two-way street in trade not only to enable the Third World to remain a paying customer for the industrialized countries' goods, but also to ensure that it can pay off its debts to Western banks. (On the question of Third World debt and how it fits into the New (and the Old) Economic Order see Howard M. Wachtel; The New Gnomes: Multinational Banks in the Third World, Institute for Policy Studies, 1977) This debt is current over $253 billion (owed to both public and private sources). Most of the incremental income from higher commodity prices would come right back to the industrialized world in the form of orders or interest.

The Northern hemisphere has still other reasons for moving in a more conciliatory direction. Let us note that while serious negotiations have taken place on the ten core commodities, these have been limited to discussions of stockpiles of goods to be released in conjunction with market fluctuations, in order to maintain agreed floor and ceiling prices, and to the creation of a Common Fund to pay for the cost of handling such stocks.

UNCTAD had previously recommended that eight "other" commodities be included in the talks, but these seem now to have been lost in the shuffle and there is no calendar for putting them on the agenda. The "other" commodities are bananas, meat, vegetable oils, tropical timber, bauxite, iron ore, manganese and phosphates. Bananas and meat present special stockpiling problems; iron ore and phosphates are important only to a handful of developing countries (e.g. Liberia, Morocco). Their absence from the negotiating calendar can thus perhaps be justified for these reasons. But bauxite, tropical timber and vegetable oils—the last two especially important to a number of poor African countries—seem to have been somewhat arbitrarily abandoned. The immediate costs to the North of an NIEO would therefore very likely be limited to those relating only to the ten core commodities.

Even more serious for the UDCs, but reassuring for the rich nations, is the fact that there is at present no provision whatsoever made for discussing price indexing. This means that the "fairer and more stable prices" the UDCs might receive for their primary products are not linked in any way to those they will be expected to pay for imported industrial goods—which as everyone who has experienced Western inflation knows, are constantly on the increase.

The basic foodgrains, wheat and rice, also used to appear on UNCTAD's "shopping list" but are now omitted as well; in the crucial area of food which concerns us here, there is no indexing of, say, Egypt's cotton nor of Brazil's coffee to their massive wheat imports from the USA; no linking of Indonesia's rubber nor of Bangladesh's jute exports to the huge amounts of rice they must pay for in hard currency. It is, of course, the United States and to a lesser extent Canada, France, Australia and Argentina, that will profit from wheat purchases. More surprising to many people is the fact that the US outdistances both China and Thailand as the world's top exporter of rice. The lack of an index linking exported cash crops to imported food crops will constitute a continued threat to the economies of nations like Brazil, Peru, India, Egypt, Pakistan (heavy wheat importers) or Bangladesh, Sri Lanka, Malaysia, Senegal and Indonesia (dependent on imported rice). But it can only be of benefit to those industrialized countries which have special clout in the food trade.

In their bargaining stance, the "77" countries may be relying on stable prices for the major food grains they cannot do without and are not producing for themselves. If so, they are very much mistaken. In the context of its heavy balance of payments deficits, the United States has an immediate interest in higher grain prices. Agricultural exports are indeed vital if the US is to avoid international bankruptcy.7 As soon as wheat stocks in the US again approached glut levels and prices fell back from the 1973-74 highs, President Carter announced a 20% cutback in wheat acreage in order to reduce reserves and raise prices. Even more ominous noises come from a "Confidential Report to Executives" prepared by the Chase Economic Consulting Service, which examines the long term outlook (up to 1986) for the major American agricultural commodities.8 It argues that standards of living in the developed countries will cause a continuing demand for more grain-fed meat and animal protein; that Russia should continue its policy of raising the dietary standards of its population and hence will continue to import cereals; and that population pressures in the UDCs will generate further demand. Not much can be done about raising price substantially between now and 1980, according to our friends at Chase, but from that date until 1986, prices should rise steadily until they again reach the record levels of 1973-74—i.e. about $4.50 a bushel for wheat.(*) (See endnote 8)

Chase does not discuss the forecasted prices for rice, but the US Department of Agriculture (USDA) has been steadily pursuing its market development programs for this grain, successfully competing with traditional suppliers like Burma, China and Thailand. Mid- Eastern and OPEC markets are growing especially fast. In early 1978, the USDA expected "continued strength" for rice prices and can be counted on to attempt to raise, or, at worst, to maintain them at present levels.9

Money Isn't Everything

Since America is one of the major customers for the core food commodities, UDC planners would be well advised to sit down for a few hours with US agricultural import statistics if they have not already done so. They would then discover that demand for what they have to offer is practically stagnant. The USDA classifies the nation's agricultural imports in two broad categories: "complementary" and "supplementary." "Complementary" foodstuffs are those products which cannot be grown in the US itself, like cocoa or coffee.

"Supplementary" refers to products the US can raise, but of which it wants or needs more. This category includes meat, fruits, vegetables and oils. (It also includes sugar which is both a tropical and a temperate crop, but demand for sugar is steady as well so this does not fundamentally alter the reasoning that follows).

"Complementary" product imports reached saturation levels years ago, but there is ever-increasing demand in the US for such luxury "supplementary" items as fresh or frozen strawberries. If one takes 1967 as a base year with an index of 100, then demand for coffee, tea and cocoa has inched up to all of 103 in ten years' time. Compared to the same base year, sugar reached only 105 by 1976, while the index for all complementary products hit a puny 114 (and even this was mostly because rubber rose to 158 in 1976).10 These "complementary" products are nothing but UNCTAD's core commodities under another name.

If we look at the same phenomenon from the standpoint of value, we find that during the two decades between the end of World War II and the mid-sixties, the US paid out a good deal more money for complementary than for supplementary products. Then the balance began to shift. Statistics for the seventies show a stable trend: during the seven calendar years from 1970 to 1976, the United States imported $20 billion worth of complementary (i.e. tropical, core products) but $40 billion worth of supplementary ones, or twice as much."11 The US is moreover now buying substantially more of its supplementary national diet from UDCs than from other developed countries.12 This means that the US is purchasing fewer and fewer core commodities proportionally to its total imports, but more and more food from the Third World. We will shortly examine why this is an important and a dangerous trend for the future of UDCs.

While it has become statistically evident that the Third World is progressively taking over the job of feeding already well-nourished Americans, while demand for its traditional products stagnates, the aggregate data we have just given cannot sufficiently highlight the situations individual producer countries may have to face. They must scramble (or kowtow) to keep the same customers from one year to the next. The same collection of USDA statistics illustrates this point: supplier countries can go from incomes of several million dollars to zero (or vice-versa) in a single year and have no guarantees as to the future intentions of their chief clients. Here is a sample of US imports of some core commodities; the fluctuations concern the changes that occurred between 1975 and 1976. The value of Brazil's sugar exports to the US drops from $100 million to zero. The Philippines, on the other hand, export over 800,000 lbs. of sugar to the US in 1975 and nearly three times that much in 1976. Guinea's cocoa exports to the US fall from nearly two million pounds to nothing and Chad's from over five million to nothing; while Liberia and "other West Africa" make up part of the difference by jumping from zero to over four million pounds. Mexico's cotton exports to the US are halved, while India's increase by 400% and Pakistan's drop by 90%. For long fibre cotton, Egyptian exports are multiplied by four and Sudan's by fourteen but Israel's are reduced ninefold. Peruvian cotton exports meanwhile move up from zero to nearly eight million pounds. 13

These examples are chosen among the more extreme cases, but they are meant to demonstrate the fact that major customers in the industrialized nations have an enormous choice of suppliers and that they are in a position to play one off against the other. Decisions in favor of some suppliers as against others may be made on political as well as on economic grounds.

Even assuming that prices are set at fairer floor/ceiling levels, no individual country is sure of selling uniform quantities year after year. This could make future national planning which relies on commodity revenues for replenishing the State budget just as problematical as it is today. Furthermore, it is far from sure that producer countries are fully aware of the flexibility of advanced capitalism and its adaptive capacity to the changing facts of economic life—and of trade. Substitutions for several core commodities that were unheard of ten years ago are now not only feasible but are being widely used. The case of jute is an obvious one—plastic bags and carpet backings make more durable and cheaper substitutes. Cotton has become almost a luxury fiber as synthetics have taken over greater and greater shares of developed country markets. Although everyone may know about plastic bags and polyester fibers, it might be revealing to take a poll of the economic planners in sugar-producing U DCs to find out how many appreciate the properties of high-fructose corn syrup; to learn in rubber producing countries how many persons in authority know about guayule; or in cocoa producing ones to what degree the plasticity of the soya bean is understood. Here are some of the more sophisticated steps agribusiness has taken lately.

When sugar prices skyrocketed in 1974, US agribusiness was quick to see the advantages of converting plentiful corn in to super- sweet syrup. High sugar prices at that time caused so many companies to scurry into high fructose production that investment has resulted in some over-capacity, but as the Wall Street Journal remarks, "a very major segment of the food business may never be the same again."

Indeed, high fructose corn syrup is about twice as sweet as sugar and is especially well adapted to the industrial uses (soft drinks, jams, confectionery and bakery products) that absorb three-quarters of all the sugar consumed in the U.S.(High fructose corn syrup recently received a kind of consecration when conservative Coca-Cola announced a switch from sugar to HFCS for one of its drinks) Consumer resistance to high sugar prices in 1974 also encouraged the syrup makers. US consumption of sugar hit a record 103 pounds per capita in 1973, but two years later had been curtailed to around 90 pounds. This was the result of a sort of blanket national refusal to pay the going prices for refined sugar and for products with a high sugar content. Meanwhile, per capita consumption of high fructose corn syrup is expected to double from 9 to about 18 pounds between now and 1980.14 Add to this the fact that world sugar stocks have grown by several million tons every year for the past four years and now stand at about 27 million tons, or some 30% of annual world consumption—and one is left with an ideal context for continuing depressed prices.15

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"Boom and bust cycles for primary products have occurred with such inexorable frequency and so exclusively to the detriment of the Third World countries that one wonders how they can still be taken in by the commodities shill- game."

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How were tropical sugar-growing countries reacting while the industrialized nations were busily building high-fructose plants? They apparently took high prices in 1974 as a signal of shortages. Actually, sugar was even then fairly plentiful and high prices were largely the result of what I have referred to elsewhere as "planned scarcity." These countries nonetheless assumed that high prices were here to stay and immediately took the very decision guaranteed to wipe out any temporary shortage and to drive down prices: they planted larger and larger areas with sugar cane. Boom and bust cycles for primary products have occurred with such inexorable frequency and so exclusively to the detriment of Third World countries that one wonders how they can still be taken in by the commodities shill game. It is not entirely their fault. Because no mechanism for consultations among producers has been established (this smacks of "cartel" and is energetically discouraged by the North) they regularly and mutually insure their impending collective fate by rushing into world over-production like lemmings to the sea.

By late 1975, as was inevitable, the bottom dropped out of the sugar market and producer countries were left holding several million bags. An occasional supermarket in the US actually gave the stuff away—but so, literally, did the producers—because world prices at 10c a pound or less do not always compensate for the costs of production, even in low-wage countries. The new International Sugar Agreement provides for slightly higher prices, but it also imposes export quotas on participating producer countries. Since the US is the world's largest sugar importer, its decision to protect its own growers automatically affects outside suppliers unfavorably by reducing their commercial prospects. As if the common or garden laws of supply and demand (plus quotas) were not enough to face, Third World sugar producers have little cause for optimism in the short or long term: a brokerage firm quoted by the Wall Street Journal observes that while cost comparisons between high fructose corn syrup and sugar "are difficult to obtain, it is generally thought that corn priced at $3.00 a bushel is competitive with ... raw sugar... at around six cents a pound." (In June 1978, corn was worth about $ 2.60 a bushel).

This economic data may seem rather dry, but what it means is that sugar exporting countries are placed in a no-win situation: If they increase sugar production, they create a glut and lower prices. They must, moreover, sell very close to cost if not below—otherwise they will encourage recourse to sugar substitutes. If they cut back production in the hopes of causing prices to rise, and if prices do rise, there will simply be even greater recourse to corn-based sweetners. Analysts of these phenomena note that once a substitute product has been adopted, the situation rarely returns to the status quo ante. Unless and until the price of corn used as raw material increases by at least 15%, there is no way poor countries can make a decent income on sugar unless they further squeeze their already low costs—which means cutting back on wages or on prices paid to individual producers. Demand could be further reduced. Even a country with a collective sweet-tooth like the USA has shown itself capable of reducing consumption by 13 pounds per head in a single year. Sugar is not, to say the least, a very sure bet for "export-led" economies in the Third World.

We may be telling a similar tale about rubber during the next ten years or so. Of course, synthetics have already cut into the natural rubber market for many uses; but the cost of petroleum (the basic ingredient in synthetic rubber) makes its use less attractive and radial tire technology requires natural rubber. This combination of circumstances has sent the price of natural rubber up to about 40c a pound and the major US tire builders are currently expanding their Third World plantations or improving the ones they have. So all is well for the rubber exporters? Not necessarily, for the companies have also rediscovered a desert shrub called guayule that grows wild in the Southwestern United States and that contains substantial quantities of latex.16 It may take another ten years of R & D, but many people are convinced that guayule will become a commercially viable substitute for natural rubber. Goodyear is already growing it experimentally and Fortune points out that guayule could have the added advantages of productively using marginal land while furnishing "potential employment for Indians." Widespread use of the shrub would also, of course, greatly reduce the current half billion dollar US import bill for natural rubber and consequently the revenues of producer countries like Indonesia, Malaysia, Thailand, Sri Lanka and Liberia. The tire companies want no part of an International Rubber Agreement that would increase prices paid to producers and if one were imposed on them "the rubber people in Akron are confident that if they are forced to they can devise new synthetics incorporating natural's remaining peculiar characteristics."17*

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" ... even if producer countries obtain guaranteed and stable prices for their primary products, no law in the present or future world can promise them that they will be in a position to sell the same quantities as before."

♦♦♦

So we meet another double-bind situation for another core commodity. If the price goes too high, it will encourage synthetics and a crash program for guayule. Any "fair and stable" price in a future international agreement will most likely be set by the rubber industry which is in a better position to make the rules to suit its interests than are the producer countries.

But there's nothing like the taste of fresh roasted coffee or velvety chocolate, right? Wrong. Cargill has already invented a soybean- based chocolate substitute; while Su Crest prefers molasses as the raw material for its cocoa extender. Coffee substitutes may be based on anything from barley to oats to peanuts; all are quite capable of replacing 5% to 80% ground, roast or instant coffee depending on individual taste preferences, according to trade journals.18 Consumer boycotts of high beverage prices only encourage further industrial experiments in substitutes.

What the foregoing discussion is meant to establish is that even if producer countries obtain guaranteed and stable prices for their primary products, no law in the present or future world can promise them that they will be in a position to sell the same quantities as before.

America's acceptance of the 77's most pressing demands in this area would be an intelligent move on several counts: It would bring some economic gains to the US while Europe and Japan would pay the greater share of the costs; yet it would not prevent innovative capitalism from introducing alternative solutions exactly tailored to its own needs, thereby imposing a quota system for UDC exports in all but name.

Here an important qualifier is necessary. Although the West may agree to an Integrated Commodities Program and to a Common Fund for financing it, there is very little chance that it will accept any system that would effectively allow UDCs simply to produce as much as they like of core commodity X, Y or Z and sell it at a fixed price to a central authority. Here the opponents of these measures are quite right to affirm that no international agreement on earth could then prevent prices from sinking if unwanted stocks were allowed to accumulate yet still had to be financed. UNCTAD is aware of this and recommends "internationally agreed supply management measures, including export quotas, and production policies and, where appropriate, multilateral long-term supply and purchase commitments." It is also conscious of the substitution problem and hopes for "measures to encourage research and development on the problems of natural products competing with synthetics and consideration of the harmonization, where appropriate, of the production of synthetics and substitutes in developed countries with the supply of natural products produced in developing countries."19 There is, however, no machinery proposed for allocating production among developing countries and it is hard to see how they are to be stopped from overproducing. It also seems Utopian for UNCTAD to imagine, figuratively speaking, that high-fructose corn syrup producers like Archer Daniels Midland or CPC will one day sit down at the same table with the governments of Mauritius or Guyana to determine who has the right to produce how much of what kinds of sweeteners.

Perhaps the greatest advantage that industrialized countries, especially the US, would find in granting the minimum demands of the UDCs in this area is an ideological one. Such an attitude (whatever the very cold economic and political calculations behind it) would appear to the world as a generous gesture. The Third World would doubtless feel, for a time, euphoric until this victory showed its Pyrrhic face. How much time might then elapse between the implementation of all the other provisions that ought to make up a genuine NIEO is anybody's guess. The "77" would be told, in effect, that they were inordinately greedy after obtaining such startling concessions from the industrialized nations; that they should not ask for the moon. Except on a case-by-case basis, no debt relief would be forthcoming (and debts would still have to be paid back out of export revenues). Agricultural processing, value-adding activities (although they, too, figure in the UNCTAD resolutions) would not be much furthered. Non-tariff barriers could well remain the same for the UDCs manufactured exports. Most important, no indexing of primary commodities to goods and foodgrains imported from the rich nations would have been introduced. Northern inflation would continue to be financed partially by the South.

Possibly the most alarming feature of locking oneself into the single strategy of the Integrated Commodities Program and the Common Fund would be the consecration of the present international division of labor assigning Third World producers the task of supplying certain raw materials (on other people's conditions) throughout eternity. Economic diversification could be retarded. Whole societies would be geared to supplying the needs of other, richer, people. By doing this, UDCs would continue to divert necessary labor from assuring food production, while remaining without any guarantee that the food they needed to import would be sold at affordable prices.

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"One possibility of increasing UDC revenues that has been barely explored is that of increased trade between the Third World countries."

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Is there any way that the drawbacks of this situation could be converted into plus signs? For, as we have noted, it is not morally or politically possible to come out against an NIEO for the Third World, however truncated. Outside of giving unrealistic and unwelcome advice to UDC negotiators to hold out for the perfect package, there are a few things that might be helpfully said. We, in the developed world, should try to make clear to any citizen of the poorer countries willing to listen that they should expect no presents from the USA in the way of food.20 The era of relatively low grain prices in which we are currently living is not going to last if the U S government and the US grain traders can help it. No national development plans involving wheat imports at under $3.00 a bushel should be made for the middle term—50% more than that remains realistic in the longer run.

One possibility for increasing UDC revenues that has been barely explored is that of increased trade between Third World countries. The whole emphasis of UNCTAD and most of the other international forums is placed on North to South, South to North flows. This is logical enough because these are the directions in which the trading patterns, the shipping routes, the banking and insurance channels run and have run since the era of the colonial empires.

And it is true, of course, that intra-Third World trade is naturally restricted because so many UDC products are competing rather than complementary. Today, only about 6% of all world trade goes on between developing countries (only about 2.5% if oil is excluded). Surely with better communications among themselves, it should be possible to enhance inter-UDC commercial relations. These unnaturally low figures are themselves an argument for agricultural diversification—why not food trade as well between Southern hemisphere States? Such a strategy could be especially important for nations which, in a variety of ways, are attempting to make the transition to more equalitarian, democratic societies in the face of heavy odds. Mutually advantageous trade could turn out to be the most effective kind of international solidarity.

UDC negotiators could strengthen their position vis a vis the Center by making a concerted effort to buy all possible products from other UDCs before turning to Northern suppliers. They could furthermore, for many of their present imports, shift their purchases from industrialized countries whose opposition to the NIEO has been adamant (e.g. Germany) to those which have taken a more positive attitude (e.g. Holland, Scandinavia).

Such strategies will, however, be useless to the cause of true development if no overall social housecleaning and reordering of priorities takes place in the UDCs themselves. Assuming still that their NIEO strategy works, the first priority for use of any incremental income obtained through improved commodity prices should be investment in agriculture for local food consumption. Otherwise, there is every reason to fear that any gains from commodities will be literally eaten up by imports from nations producing the basic foodstuffs, and chief among them, from the USA.

However vital, such investment in agriculture will require a revolutionary change in the thinking of Third World nations that have until now conceived of "development" as industrialization at all costs. Government spending on agriculture—that is, on the sector where the vast majority of Third World people are active—is in most cases abysmally low. This state of affairs shows up clearly when summarized in the form of a table showing government choices as regards two categories of current expenditure: agriculture and defense. These figures may be usefully contrasted with those that indicate the percentage that the agricultural sector contributes to the Gross Domestic Product, i.e. to national wealth. Countries selected have all incurred serious food shortages in recent years.21

From these figures it is apparent that although farmers may contribute to their countries half or more of its GDP, they receive very little in return in the form of State services that could make their lives easier and more productive. Wealth they create is transferred into other pockets or provides new toys for generals. Investing in agriculture would not simply be more equitable, but more intelligent: when farmers' incomes rise as a result of greater productivity, their spending acts as a spur to the rest of the economy—not to mention providing it with far cheaper food than can be had via imports.

Source: World Bank, see note 21.

[* "Agricultural expenditure comprises current expenditure for agriculture, forestry, fisheries, irrigation and land reform" (World Tables 1976, p. 12)]

The reasons for some cases of bloated defense spending, such as Egypt's, are tragically obvious, but you may well ask who are the dangerous enemies of Senegal, Mali or Upper Volta whose governments all spend at least twice as much on defense as on agriculture. So many tons of paper and ink have been used to denounce the arms race that there is no way to avoid triteness when bringing it up. All one can do is point out that it is even more senseless in countries where a significant proportion of the population suffers from serious food deficits. "Defense" spending is now often used to keep hungry, rebellious populations in check; the hunger/arms equation is a self- perpetuating one.

We have already suggested, by noting the inequities of existing patterns of income distribution, that most of the increased revenues from commodities would accrue to the upper classes—perhaps one reason why UDC negotiators, also upper class, push so hard for them. But this is not a hard and fast rule. Whatever its limitations, the "trickle-down" theory does occasionally apply. Dr. Moises Behar of the World Health Organization notes, for example, that in Costa Rica there is a strong correlation between the world market price for coffee and the number of children hospitalized for malnutrition. When the coffee price is high, there is a lower incidence of disease and malnutrition and vice versa. Costa Rica is a country where coffee is largely grown by smallholders.22 Peasant production is frequently the chief source of a great many of the core commodities. Most people are aware that cotton is an important crop for African farmers, but are surprised to learn that rubber, generally thought of as the plantation crop par excellence, is supplied to a considerable degree by peasants employing only family labor. In Malaysia, 55% of the whole rubber crop is collected in this way; in Thailand there are at least half a million small farmers that make this country the world's third largest rubber exporter.23

This is fine when, as in Thailand, the smallholders are primarily concerned with growing enough rice (or some other foodgrain) to feed their families, and devote themselves to the cash crop as a sideline without being dependent on it for physical survival. Such situations are not, unfortunately, the rule and cash crop price fluctuations can thus make or break smallholders. With stable and guaranteed prices, the small peasant would at least be in a better position to calculate the optimum use of his land and labor— if his own government can be counted upon to pass on the cash crop revenues to him. For it is not enough that economic justice prevail between nations on a world scale. Before the NIEO can do much good for anyone but the elites, this justice must also obtain between the social classes in individual countries.

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"Before the NIEO con do much good for onyone but the elites, economic justice must olso obtain between the social classes in individual countries."

♦♦♦

quotes, for example, US chocolate industry executives lamenting the fact that the policies of the Ghanian military government discourage farmers from producing cocoa. '"The farmer in Ghana gets about 16% of the export price of his beans and the military government gets the rest' groans the President (of the chocolate manufacturers). 'There's no incentive to produce'."24 This may be bad for Hershey and Mars Bars, but it's worse for the Ghanian peasant.

There are two other strategies that mark a departure from the "trickle-down" ideology. They come under the catch-phrases of "Basic Needs" and "Self-Reliance"; often linked to "Collective Self- Reliance." Before looking at these important concepts, we should examine the kind of International Economic Order that is actually being introduced in the area of food and agriculture. Geared to feeding fewer and fewer people better and better it is being quietly introduced in the underdeveloped countries while their representatives are talking themselves hoarse in one international forum after another.

PART II NIEO: THE NEW IMPERIALIST ECONOMIC ORDER

I have tried to show some of the pitfalls of putting too much stress on cash crop, commercial commodities agriculture via UNCTAD negotiations and the like.1 But there are other, more immediate dangers for Third World rural societies and they, too, originate in the wealthy, industrialized nations. Some of these dangers are already manifest; others will soon become so; all have to do with food systems. It is not an exaggeration to say that the economic, social and political futures of UDCs will largely be determined by the kinds of food systems they adopt.

Please note here the use of the term "food system" as opposed to "agriculture." Social scientists have got us all into the habit of thinking in terms of the Primary, Secondary and Tertiary sectors, supposedly embodying agriculture, industry and services respectively. Such a classification may have been useful sometime before World War II but it has relatively little to do with today's realities, especially in rich countries like the United States. In order to understand what is meant by a food system, one may imagine a line divided into three segments. The first segment is labeled "inputs," the second "food production" and the third "post-harvest;" or, if one prefers, "storage, processing and distribution." These three abstract categories apply to every human community (including those that don't farm—like Eskimos—if one replaces "harvest" with "catch") but their food systems will naturally vary enormously in length and complexity. The chain will be shortest in self-provisioning farming communities that rely on "natural" inputs (rain, self-reproduced seeds, hard work) and that store the resulting harvest on the spot. In shortline food systems, processing is limited to grinding and cooking—mostly breads and porridges; the producers and the consumers are the same people. The line is without doubt longest in the United States where industry has taken over the provision of all the agricultural inputs (including rain, if one counts cloud-seeding); where the farming community itself is just a tiny segment of the line; where the storage, processing and distribution are immensely sophisticated operations and cost two-thirds of every dollar spent on food. Most academic research has focused on one or another of the divisions or subdivisions of the line (often on production alone) and has thus frequently not seen the forest for the trees.2 Unless one tries to place particular aspects of food systems in their total context (not an easy job precisely because of the lack of research) one is likely to miss what is actually taking place. And what is actually taking place has, in my opinion, sinister implications for underdeveloped countries. I do not myself claim X-Ray vision, nor can I present an absolutely air-tight case in defense of this viewpoint; still there seem to me to be discernible and threatening trends in the evolution of Third World food systems which are worth close attention.3

Here are some hypotheses concerning food systems we shall be dealing with from now on:

(1).There is a recognizable pattern in the evolution of the food systems of capitalist countries; among them the US system is the one that has progressed furthest towards a high-technology type. This US system is tantamount to a model or paradigm towards which other countries are moving. This model will therefore, over time, tend to become unique.

(2).There is a concentrated effort on the part of the agents of the capitalist world system ("agents" in the non-conspiratorial sense of those who act, produce an effect); largely though not exclusively multinational corporations, to introduce the food system model they have devised at home to the underdeveloped nations. This is not being done with the aim of making UDC food systems independent and viable but rather in order to dominate them more effectively, so that the "periphery" may better serve the needs of the "center."

(3).This model has no relevance, past or present, to the needs and realities of Third World societies, since it evolved in the developed world under radically different circumstances. Indeed, it will be (and already is) enormously harmful to them, in particular because it perpetuates and reinforces hunger and malnutrition; still it is being accepted and put into practice with enthusiasm.

The fact that this model is both offered and accepted with such enthusiasm is doubtless due to the class interests, both in the industrialized and the Third World countries, that the model serves. These are real interests, and they are not playing games. I entertain, however, the naive hope that there may be cases in which this model is being allowed to penetrate rural societies in the Third World simply because no one authority there really understands what is going on. There may also be a remote chance of changing the perceptions of part of the "development Establishment"; one might, in time and with a lot of help, contribute to making certain approaches at least unfashionable. This could be important to the extent that Third World leaders may sometimes adopt development theories and "solutions" which they perceive as being fashionable in the West and which they erroneously equate with the notions of "agricultural progress" or "modernization."

Firms and Farms: The US Food System

To understand the sort of food system that is gradually being introduced into Third World rural societies, we should first see how it operates in America as a prototype. Many American readers will know most of what follows concerning the US food system: they should either skip to page 32 or bear with the repetition of what may seem obvious. This study is not, however, addressed to an exclusively American audience and the rather detailed look at the high technology model and all it implies may be of some use as a "counterexample" to those who are searching for alternatives to Western- sponsored and Western-inspired development models. The US model is, unfortunately, relevant to what is now occurring in many UDCs; I am hopeful that the following pages will make this point clear.4

We will follow the same imaginary line, starting "upstream" from the farm itself at the inputs end. American farmers now spend over $85 billion a year on manufactured inputs and they are totally dependent on industry for every item that goes into food production. In former days (this is still true in some parts of Europe) "farms" were not vast stands of a single crop—they were complex operations involving both plants and animals—often several different kinds of both. In such polycultural operations, the farmer can be at least partially self-sufficient: seeds can be reproduced from crops (and exchanged with neighbors); animals provide much necessary fertilizer, pesticides are less necessary because the variety of plant species inhibits the spread of pests and disease; energy requirements may also be supplied on the spot when traction is provided by animals "fueled" with home-grown fodder.

All this changes with one or two-crop agriculture, and the changes have been particularly striking in the US in the past 40 years. For decades, American agriculture has been characterized by plentiful land and a shortage of labor, so productivity quite logically has been measured according to how much could be produced per man, not per unit of land. Under these conditions, farm machinery assumed enormous importance early on. Until shortly after World War II (when commercial fertilizers and pesticides also began to enjoy wide use) some especially expensive machines like threshers were jointly owned, thus spreading the costs of farm production among several cooperators. But this meant that the harvest had to be brought into the barn to await the arrival of the thresher—or risk spoiling in the field if bad weather struck. The shortage of labor to perform this extra task was such that cooperative ownership broke down and farmers came to prefer individual ownership of every machine, however expensive. This has become the rule since the late 1940s.5

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