Friday, July 27, 2007

Now milk- and other stuff

The proof of globalization? easy: prices of milk and dairy products have increased by 20% since the beginning of 2007, and it is set to increase a further 20% according to the head of the milk and dairy products importer in Lebanon. This is in great part due to the lifting of subsidies on dairy products in the EU as well as the increase in the Euro. But the replacement of forages with biofuel crops and the droughts also have their little role to play. I have blogged earlier about this worlwide increase in price, and you can put the pieces together if you search the blog under "milk". Now price increases may be a tad over exagerated (cartels have to make a living too you know) because the EU subsidies were at 27% and they have not yet been completely lifted, but there has been panic buying of milk world wide, and we are feeling it in Lebanon. This good report by Sahar Nasser in the excellent economic page of al-akhbar tells us that the price of one ton of milk rose from $2200 to $5500 and that of butter from $1800 to $5000. These increases are over 120%. The local retail prices have not completely caught up yet because of the stocks available in storage.

At the same time, the wheat mills owners cartel are refusing the government subsidy of $50 per ton and are threatening to dramatically raise the price of flour they sell to the breadmaking industry if the government does not provide them with a subsidy of at least $100 per ton. Labour union leaders are calling this "a blackmail by the mills cartel" (made of just 10 people). The government allows this monopoly to exist, as I've said earlier.

But now where does this leave us? in looming crisis. Hear me out:

Successive Lebanese government have acted knowingly and cold bloodedly to destroy the farming sector in Lebanon (see The roots of inequality and other feature articles). They still do that by signing skewed bilateral free trade agreements. This government in particular has been very, very active at that, and there are many posts below to show it.

There was a point to the super opening of markets: locally, it facilitated trade so that merchants could make money. But aspects of it are more sinister. Food import created dependency, which was very welcome by the US and the EU, as it facilitated control over governments. The same tactic was used in other Arab countries, like Tunisia or egypt: if they do not abide by the day's orders, trading is rendered more difficult, prices increase, bread or food riots ensue, and government become shaky until the donors send in food aid, or governments are allowed to pay subsidies. Subsidies are by the way only allowed to be given to the rich, and only on imported products. Monopolistic import cartels are the ones that benefit from them, as they are the trojan horses of the global economic order in the country. In Lebanon, the head of the grain mills union (cartel) also doubles up as the vice president of the Lebanese American Chamber of Commerce. For more details about this, see Rania Masri's excellent article in Al-Adab (if you can read Arabic-Rania, could you please blog the english version?).

So we now have a country's whose food sovereignty has been destroyed (note well, not food security, but food sovereignty, which is the right to decide what a nation grows and what it eats), and suddenly world food prices begin to climb.

The good news is that there is a lot that can still be done. Yes, as we are starting to hear, this will help create a revival in agriculture. Already, the increase in local food prices is making more people move back into agriculture (i myself am buying 20 bee colonies and 4 cows, but that's a diffferent issue). However, there are 2 excessively important issues here:

1. The adjustment period is going to be difficult. i would love to be able to say "the government should brace itself and prepare safety nets" and believe what I say, but this government and the dynasty it originates from has not shown any ability and willingness to do that. It has imposed one of the most unjust and primitive form of taxations, and its idea for collecting money is to create taxes that affect mostly the poor, like raising fuel prices. But someone must step in and take action. I hate the idea, but I can see here a great opportunity for sectarian-political leadership to enhance the already near total surogacy of their constituency by creating sectarian-based support systems (Hizbullah's Jihad al Binaa is one of them, and USAID supported NGOs are another- you didn't know that the US is now a Lebanese sect, and ambassador Feltman is its patriarch?).

2. The revival of farming isn't going to happen just like that. It must be promoted and prepared, and must benefit the poor and the small as well as the rich and the big. Sustainable practices must be adopted in order to mitigate the negative impacts of farming. Clear policies for regaining food sovereignty -making resourecs available to all is one of them- must be adopted. Otherwise, this opportunity will turn into another painful debacle.

Of course, a favorable government is absolutely essential for that. One that protects farmers and citizens, and not just the arms of the resistance and its leadership.

Do you think they'll talk about this in the next round of dialogue? if it happens?


Ms Levantine said...

Very informative post, tks. I was a little confused about all the subsidies talk.

I am glad to hear you got bees and cows. Your wife must be elated.

As you point out, there is a window of opportunity: if prices go up, Lebanese agriculture becomes more competitive. The problem here is that you need policies to help agri. achieve results.

It would have been nice to have functioning agricultural coops in Lebanon.

rania masri said...

Rami - thanks for the note of praise. Means a great deal from you. I'll blog the english version soon.