Bread riots down supply chains: From Cairo to Longview

Questions

1. Where is your food produced?

2. What percentage of your income goes to food?

The Economist food index, created in 1845, reached its highest level ever in 2007. Reversing a 150-year trend of decreasing food prices as capitalism drove peasants and small holders off the land and proletarianized them into cities -- requiring affordable food for the reproduction of labor power, food prices have been climbing even despite bumper harvests of staples like wheat.

Facts about Wheat Cultivation

• Was first domestically grown in the Fertile Crescent and Nile Delta as early as 9,000 years B.C.E.

• It is grown on more land area than any other commercial crop

• Global wheat trade is greater than all other crops combined

• Wheat is second only to rice for human consumption (maize is used more extensively for animal feed)

• New farming machinery in the 1870s, cheap land & railroad transportation allowed for large-scale “bonanza” farms run like factories

• Proletarianization of farm labor is depicted in Frank Norris’ novel The Octopus, about the deadly struggle between Southern Pacific Railroad robber barons and small-scale family farmers

• In the 1880s agribusiness made extensive use of steam engines for pulling plows and combine harvesters (tractors came decades later)

• New wheat growing regions in the U.S. (centered on the Dakotas), Canada (Manitoba), Australia and Argentina drove thousands of peasants off the land in southern & eastern Europe -- sending the latter to be proletarianized in the former

• Prices collapsed: 1 bushel of wheat dropped 61¢ from 1871 to 1885

• It created the bizarre paradox in many countries where living standards rose as nominal wages fell

• By 1880 it was cheaper to ship wheat from Argentina to Spain than to move it 100 miles from interior of country

David A. Wells

The Bessemer rail, the modern steamship, and the Suez Canal have brought the wheat-fields of Dakota and India, and the grazing-lands of Texas, Colorado, Australia and the Argentine Republic, nearer to the factory operatives in Manchester, England than the farms of Illinois were before the war to the spindles and looms of New England

—David A. Wells in Recent Economic Changes (1895) p. 91

Grain growing regions worldwide

Modern Grain Production

• The human diet has changed more in the last 50 years than in the previous 10,000

• Corn & soybeans are key industrial foods; overproduction of these leads to overconsumption

• Corn, soybeans, wheat, rice & cotton receive approximately $25 billion per year in U.S. government subsidies; corn is produced below its cost

• Corn is used in most processed food, like high-fructose corn syrup, as well as for animal feed

• Highly processed corn & soy products have been directly correlated to cause obesity & diabetes

• Global trade institutions (i.e. WTO, IMF, World Bank) have created food dependency by forcing countries to open up to global agribusiness, speculators & subsidized food of rich countries

• Structural Adjustment Programs force poor countries to adopt monocrop agriculture & export-oriented farming

• "ABCD" control 80% of world grain trade: Archer Daniels Midland; Bunge Corporation; Cargill; Louis Dreyfus

• Walmart sells 18% of all groceries in the U.S. & is growing ($141 billion in sales, compared to $41 billion for Safeway and $9 billion for Wholefoods) [statistics from 2011]

Financialization of Food

• 1991 Goldman Sachs Commodity Index offered investment shares in 18 products, including cattle, coffee, cocoa, corn, hogs & wheat

• By 2005 food prices, especially. wheat, steadily climbed for first time after stably declining for a century

• In 2010, 51% of the world live in urban areas

• The U.S. is currently world’s #1 exporter of:

1. Corn

2. Wheat

3. Soybeans

4. Cotton (raw)

5. Cows milk

6. Meat (chicken, beef, pork & turkey)

Our Toxic Diets

• From 1985—2000 price of
fruit & vegetables went up 40%
soft drinks went down 23%

• Genetically Modified Organism (GMO) crops in the U.S. in 2012:
soybeans 91%
cotton 88%
corn 85%

• 47,000 different products available in average U.S. supermarket

Wall Street Food Profiteering

• In the 1st quarter of 2008, corporate profits for Cargil (world’s biggest grain trader) went up 86%

• Bunge's profits were up 77% in 2010, to $2.4 billion

• Archer Daniels Midland (ADM) profits were up 67% (for all of 2007)

• On February 25, 2008 hard red spring wheat hit $25 a bushel on the Minneapolis Grain Exchange — the normal price for decades was in $3-6 range

• 2008 was the largest wheat harvest ever in human history (surpassed in 2010)

2008 Bread Riots & Egypt

• Despite the largest bumper crop of wheat, 25 countries had more hunger than a decade before (UN Human Development Report (2004) — and there were bread riots in at least 33 countries

• In the spring the global price of wheat went up 130%; rice increased 74%

• In Nigeria 73% of the household consumption expenses are for food

• In Egypt government and military-run bakeries ran short due to speculation of flour on the black market; bread was plentiful, but 5-10 times more expensive — and unaffordable for the working class

• Anger at Mubarak’s neoliberal reforms & the looting of the public sector by his ruling class cronies led to riots

• Egypt is the world’s #1 importer of wheat, bringing in 6 million tons — 50% of their national requirement (see this interactive Global Food Security chart)

• Egyptians are near top in the world for per capita bread consumption, double the world average

• Bread is only affordable with subsidies of 5% of total government spending

• In response Mubarak ramped up government & military bakeries, setting up kiosks to distribute bread

• Worker protests in the massive textile factory city Mahalla al-Kubra in April led to a general strike, a “Revolution of the Hungry”

While China, India, and Russia produce more wheat, they have massive domestic consumption, and the U.S. is the world's #1 exporter.

EGT: The Walmart of Grain

• Export Grain Terminal (EGT) is a joint venture between U.S.-based Bunge, ITOCHU from Japan, and South Korea’s STX Pan Ocean

• It is the first new export grain terminal in the U.S. since ConAgra built a facility on Columbia River in 1983

• EGT's terminal was built for $200 million, subsidized with tax breaks

• It is a node in the global grain commodity chain, shipping to: • Japan • South Korea • China • Taiwan • the Philippines • Indonesia • Vietnam • Guatemala • Chile • El Salvador • Peru • Columbia

• 100 countries import wheat; 40 import rice

• Iran & Egypt import 40% of their grain

• Algeria, Japan, South Korea & Taiwan import 70%

• Israel & Yemen import more than 90%

• 6 countries supply 90% of grain exports:
USA (controls 50% of global grain trade)
Canada
France
Australia
Argentina
Thailand

Origin of Wheat Supply Chain

Marubeni's Columbia Grain high-speed shuttle loader Chester, Montana

• EGT built high-speed shuttle loaders in Montana, costing $20 million each, at:
Fraser (2011)
Chester (2011)
Carter (2012)

• 14 of the 22 new high-speed shuttle loaders in Montana were built by Asian grain traders:
Mitsui (Japan): built 3 new shuttle loaders
Marubeni (Japan) is 2nd largest exporter of U.S. grain to China: they built 8 new shuttle loaders

• With the shuttle loaders, 110-cars can be loaded in 10 hours (half the time previously), saving farmers 10-15¢ per bushel; 4-6 workers work the shuttle, which have a capacity of 800,000 bushels

Wheat growing regions and shuttle and traditional elevator locations in Montana

Changing Diets in Asia

Buhler Swiss-built high-speed grain unloader at Rizhao Port, Shangdong, China

• China has 20% of the world's population, but only 7% of arable land; in the 1980s, the Chinese state made the conscious decision to prioritize an export-oriented economy over being food self-sufficient, resigning itself to be a net food importer

• Other advanced industrial Asian countries like Japan & South Korea are approximately 70% mountainous and face the same limited arable land as China; hence they are also major net food importers

• With rising incomes, a mark of middle class status is car ownership and meat consumption; with so little arable land for animal feed, developed and developing Asian countries must import the grains for a livestock industry for meat

• In a 2012 survey of consumers in 15 cities by China Market Research Group, they found food and product safety were the respondents #1 concern; the solution: eating at restaurants like McDonald's and Kentucky Fried Chicken, shopping at bigbox supermarkets like Carrefour, and buying IKEA furniture because "they believed it would use good-quality glue and varnish"

Just-In-Time Grain Supply Chains

• But there is still one major blockage to their just-in-time system, and that is the work rules and high salaries of longshore workers at the Columbia River and Pacific Northwest grain handling ports

• So, on February 27, 2013 Mitsui locked out ILWU Local 4 from their United Grain terminal in Vancouver, Washington when they refused to accept the same conditions as EGT workers in Longview

• Then on May 4, 2013, Marubeni locked out ILWU Local 8 workers at its Columbia Grain terminal in Portland, Oregon for the same reason -- and because, without a contract, they want to impose the Longview EGT conditions

Marubeni's just-in-time Columbia Grain Terminal, Portland, Oregon

In 2014 the contract for the 29 West Coast container ports will expire and the Pacific Maritime Association is going to demand the same concessions that the Northwest Grain Handlers Association achieved at Longview, and are presently trying to achieve with the lockouts in Portland and Vancouver, Washington. Longview grain-handling longshore workers have demonstrated their willingness to fight back. Other longshore workers in at least 5 others ports (Anacortes, Everett, Seattle, Tacoma and Portland) wildcatted in solidarity on September 8, 2011 to back up their sabotage of Longview grain trains.

Longshore workers have some of the highest industrial wages in North America, so they have a lot to lose. They recent disaffiliation from the AFL-CIO might have something to do with preparing for the immanent class war on the docks as management tries to undo the gains won in the 1934 coastwide strike, that led to the successful 4-day San Francisco General Strike. On August 19, 2013 troqueros, the short-haul port truckers who work side-by-side with longshore workers, wildcatted at the Port of Oakland . If those two sectors -- along with the railroad brotherhoods and maritime workers -- can act with class unity and solidarity, things could get really interesting in 2014.