Ask an Economist: Assistance Still Needed for the Poorest

Ilene Grabel

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Will we finally see an IMF/WB policy that truly acknowledges the rights of the poor and the least developed countries?  Will the reforms of the IMF/WB push for localization and food sovereignty as ways to face poverty?

Grabel: Certainly the IMF/WB have been discussing the poor and the poorest developing countries a good deal of late, especially in relation to the effects of the financial crisis on the most vulnerable. And some of the assistance packages that they’ve negotiated have paid somewhat more attention to the most vulnerable groups, such as pensioners (though concrete financial support for the most vulnerable groups has been pretty scant).

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Food Crisis Preceded the Financial Crisis

Mehdi Shafaeddin

What are consequences of the implementation of Neo-liberal economic philosophy for industrialization and development of poor countries? The answer: de-industrialization of many low-income countries; destruction of their food production (influenced also by protectionist agricultural policies of developed countries), thus their heavy dependence on food imports. The boom in commodity prices had improved the balance of payments of some developing countries temporarily before the “busts” emerged. But even then, it had detrimental impact on some other developing countries, through the hike in food and fuel prices, which were influenced by speculative activities of the trans-national corporations.

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Agribusiness and the Food Crisis: A new thrust at anti-trust

Timothy A. Wise

The food crisis has a new villain: agribusiness. A recent report by Olivier De Schutter, the UN Special Rapporteur on the Right to Food, on “Agribusiness and the Right to Food” takes a close look at the contribution of commodity buyers, food processors, and retailers to the food insecurity now plaguing over one billion people in the world.

Why agribusiness?  Aren’t they driving prices down?  Well, yes and no, and both are a problem. If they are so big they can exert monopoly control over key markets, they can raise prices for lack of competition, hurting all food consumers. And if they have excessive market power over suppliers – particularly farmers – they can exert monopsony control and force down crop prices.  That can benefit food consumers if low prices are passed through to consumers, but monopoly can rear its head again there. In any case, the price squeeze puts smallholder farmers in a precarious position. That contributes to the global food crisis because the majority of the world’s hungry are small-scale farmers.

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