Magazine of Socialist Action in Australia

Food: Scoffing on profits

Reading Time: 5 minutes

The lives of 18 million people in the Sahel region of West Africa are currently threatened by poor harvests and high food prices. In 2011 the United Nation’s Food and Agriculture Organisation reported that world food prices were at the highest since tracking began in 1990.

In 2010 the World Bank estimated that around one billion of the world’s seven billion population were malnourished. Every year six million children worldwide die of malnutrition before their fifth birthday. In many advanced countries food prices are increasing by more than the rate of inflation.

By Iain Dalton, Socialist Party

One factor behind the current rocketing prices is the ongoing drought in the US. In a report sounding more like Sub-Saharan Africa than the US, the Guardian reported: “Some stalks are chin-high – but with no ears of corn. Others are as squat as pineapple fronds. Soy bean that should be spread out at knee-level barely graze the shin.”

Roughly a third of the US is now officially a disaster zone. In July the National Climatic Data Centre found that 55% of the continental US was in moderate to extreme drought. Wildfires have broken out in Utah and Colorado.

The US government estimates that a third of corn and soy bean crop is in poor condition, but those on the ground suspect the devastation to be far worse. One farmer told the Guardian: “Some stuff technically is not going to be worth the combine bill to harvest it.”

On 23 July, corn hit a record $8 a bushel, when in 2006 the price was $2. This will have a knock-on effect on milk and meat prices as corn is used in most animal feeds. It’s reported that some farmers have resorted to feeding their livestock candy.

Livestock is being slaughtered because US farmers can’t afford the higher costs of feeding them, horse shelters are taking in extra animals and there has been a 70% drop in sales of tractors and farm machinery in parts of the mid-west. One retailer commented: “We’ve even had guys putting the money down and letting the money go just so they can get out of their contracts.”

This situation in the US follows the worst drought in Russia’s Black Sea region in 130 years which sent prices of wheat spiralling. As climate change leads to greater occurrences of extreme climate events such as droughts, tsunamis and flooding, the devastating impact on food production will be felt.

With 40% of US corn being used in ethanol production a debate is heating up on the question of biofuels. Some states have reported that ethanol and bio-diesel plants are either cutting back or shutting down production temporarily. Countless summits have shown that pro-big business politicians are incapable of taking action against the powerful energy lobbies.


There are other factors that affect food prices. As the banks went into crisis in 2007-8, a wave of speculation developed on commodity futures, including foodstuffs such as sugar and cattle – their total value increasing from under $2 trillion in 2004 to $9 trillion in 2007. Big institutions which buy and hold goods over long periods started investing in the commodity bubble, not only increasing prices, but also cutting off supplies – principally to developing economies.

Speculators have again welcomed the latest crisis with massive bets on food prices. Their attitude to rising prices was summed up by one fund manager: “It’s like a big money tap has been turned on” (Bloomberg 23 July).

But “not only do high food prices weigh heavily on the incomes of the poor, they lead to more political unrest around the world,” as the Economist recently blurted out.
2008 saw food riots in West Africa, Haiti, Morocco, Bangladesh and the Philippines.

After a general strike over bread prices in the Egyptian city of Malhalla, the army was ordered to bake and distribute subsidised bread to stop further protests occurring.

While Tunisia and Egypt were in the midst of revolutionary upheavals in early 2011, fuelled in part by soaring food prices, Algeria was buying up 800,000 tonnes of wheat and Indonesia 800,000 tonnes of rice – both ruling elites trying to prevent upheavals in their own countries too.

Yet this option to stave off upheavals is limited. Many countries have severely reduced their stockpiles of grain reserves, seeing them as unnecessary.

There are very real threats to food production, especially climate change, but the biggest is the way food is produced. While the food industry is controlled by private companies for profit and speculators control the prices, millions will continue to starve or suffer malnutrition. In the West, undernourishment in poor families is increasing while millions of others suffer health problems, such as obesity, due to highly processed, unhealthy but profitable foods.

The Socialist Party calls for food, like other production, to be democratically planned and controlled by workers and the poor in the interests of all. Once the capitalist profit motive has been removed it will be entirely possible to eradicate hunger.

Our demands include:

-Set up popular committees, including trade unions and consumer groups, to monitor prices and measure the real cost of living increases for working people
-Open the books of the big companies that dominate the food industry and economy, to determine their real costs, profits, executive pay and bonuses, etc
-Immediately raise the minimum wage to $20 an hour, with regular increases to cover price rises. Substantially increase welfare payments to reflect the cost of living. Invest in a mass programme of job creation
-Nationalise the major agricultural, wholesale, retail and distribution companies, alongside the banks and financial institutions. Pay compensation only on the basis of proven need
-For major investment into researching and developing safe, alternative sources of renewable energy. Develop techniques to phase out ecologically harmful farming techniques
-Plan agricultural production and distribution to provide nutritious food for all in a sustainable manner rather than short-term profits for a few at the top

End market madness!

Ever had people tell you that socialism can’t work? Or that planning can’t work and the only way you can run an economy is by the ‘hidden hand’ of the markets?

When I worked in a supermarket bakery it was very clear that they didn’t leave making a profit to chance. We had plans of production that we drew up every day of how many of each product we would make based on recent sales figures, longer term trends in the industry as well as items that were on special offer.

We would have targets of what we would aim to sell that day, with the actual levels of items we produced being slightly higher in case of a surge in demand.

Linked to this we had a semi-automatic ordering mechanism to replenish stock. In the afternoon each day after we had cooked most of the products, we would take a stock count and the shortfall would be delivered the following morning.

But because our production was organised for profit, other things went out of the window – especially hygiene. Staff shortfalls on groceries and checkouts were made up by dragging staff away from hygiene and maintenance tasks. When we got new technology such as self-service checkouts this was seen as an excuse not to replace checkout staff that were leaving.

The big supermarket companies make millions in profits yet staff in the supermarkets are still paid only a small amount above minimum wage and small suppliers are mercilessly squeezed.

The industry is crying out for being brought into public ownership democratically so that its wealth can be used to benefit all of society instead of a handful of the super rich.

The wealth exists to both ensure shops are fully staffed and pay all staff a living wage – such measures would remove much of the drudgery of working in retail.

New technology could be used to reduce the working week for all, with no loss of pay, to allow workers the time to take part in the running of the industry and society as a whole. On the basis of socialist planning whole new vistas of possibilities could open up that capitalist markets cut off.


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