Burning Food for Fuel
Tuesday, May 22nd, 2007
Noam Chomsky writes: The chaos that derives from the so-called
international order can be painful if you are on the receiving end of
the power that determines that order’s structure. Even tortillas come
into play in the ungrand scheme of things. Recently, in many regions of
Mexico, tortilla prices jumped by more than 50 per cent.
In January, in Mexico City, tens of thousands of workers and farmers
rallied in the Zocalo, the city’s central square, to protest the
skyrocketing cost of tortillas.
In response, the government of President Felipe Calderon cut a deal
with Mexican producers and retailers to limit the price of tortillas
and corn flour, very likely a temporary expedient.
In part the price-hike threat to the food staple for Mexican workers
and the poor is what we might call the ethanol effect — a consequence
of the US stampede to corn-based ethanol as an energy substitute for
oil, whose major wellsprings, of course, are in regions that even more
grievously defy international order.
In the United States, too, the ethanol effect has raised food prices
over a broad range, including other crops, livestock and poultry.
The connection between instability in the Middle East and the cost of
feeding a family in the Americas isn’t direct, of course. But as with
all international trade, power tilts the balance. A leading goal of US
foreign policy has long been to create a global order in which US
corporations have free access to markets, resources and investment
opportunities. The objective is commonly called “free trade,” a posture
that collapses quickly on examination.
It’s not unlike what Britain, a predecessor in world domination,
imagined during the latter part of the 19th century, when it embraced
free trade, after 150 years of state intervention and violence had
helped the nation achieve far greater industrial power than any rival.
The United States has followed much the same pattern. Generally, great
powers are willing to enter into some limited degree of free trade when
they’re convinced that the economic interests under their protection
are going to do well. That has been, and remains, a primary feature of
the international order.
The ethanol boom fits the pattern. As discussed by agricultural
economists C Ford Runge and Benjamin Senauer in the current issue of
Foreign Affairs, “the biofuel industry has long been dominated not by
market forces but by politics and the interests of a few large
companies,” in large part Archer Daniels Midland, the major ethanol
producer. Ethanol production is feasible thanks to substantial state
subsidies and very high tariffs to exclude much cheaper and more
efficient sugar-based Brazilian ethanol. In March, during President
Bush’s trip to Latin America, the one heralded achievement was a deal
with Brazil on joint production of ethanol. But Bush, while spouting
free-trade rhetoric for others in the conventional manner, emphasized
forcefully that the high tariff to protect US producers would remain,
of course along with the many forms of government subsidy for the
industry.
Despite the huge, taxpayer-supported agricultural subsidies, the prices
of corn — and tortillas — have been climbing rapidly. One factor is
that industrial users of imported US corn increasingly purchase cheaper
Mexican varieties used for tortillas, raising prices. (05/22/07)
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