Street violence and frozen chicken

In spite of the obviously sectarian nature of the violent events that have taken place in Lebanon yesterday, the fact that they were associated with the general workers strike is highly symbolic. As elsewhere in the food-dependent countries of the Middle East, but also in Asia, Africa and the Caribbeans, the poor and the slightly less poor in Lebanon have been protesting the tremendous increase in food prices. The cost of living was never cheap in Lebanon, but it has now become prohibitive. I won't go into an analysis of the causes, as I have many previous postings about that and the world is awash with economic hindsight experts telling us what we already know. In Lebanon, a combination of laissez-faire economy of the worst kind, corruption, self-serving policies and worship of the market gods has led to the disintegration of the productive sector. To be fair, while farming has been left to die slowly, there has been some investment into industrialized agro-foods. By industrializing agriculture, definite economic gains are made because of the economy of scale and also because large investors have more political clout and can sway policies and legislations their way. The price is paid by small producers who do not have the investment power, the access to knowledge and to technology of the industrialists. This forces them out of business, their lands are purchased and consolidated, and they end up as wage laborers on their lands or they drift to the outskirts of the cities. This is what happened (on a much larger scale) in India and has led to the suicide of 150,000 farmers in the past 10 years. This is also what happened in Lebanon, but the farmers did not kill themselves, at least not directly. Some of them emigrated, but most migrated to the outskirts of the cities where they became fertile ground for radical movements of all kinds, and where they became clients of the sectarian politicians. This of course, is more like mass suicide.

I understand governmental policies on farming and agriculture. They are simplistic, like a lot of neo-classical economic policies. They are growth-oriented, and use lumped growth (GNP) as their basic indicator. GNP is important, but it is not the only measure. Indicators of development (such as equity) are at least as important not least because the more equity, the less the danger of revolts and violence of the kind we are seeing. It is also important to keep people into farming when governments do not have the slightest idea about how to address unemployment. I am all for the concept of economic efficiency, but it has to be done in a way that preserves the country and its society in the medium and long terms. Improving the efficiency and the return from farming by modernizing it is the way to go, but a big challenge remains: how to modernize without reducing the number of rural people from 12% (or 25%, or 40% depending on where you are) to 2% and 3% and end up with a food system exclusively managed by absentee landlords and bookkeepers? The social and political outcome of this demographic shift will be dramatic, and the environmental impacts cataclysmic. This is what we are witnessing in all developing nations, but more so in the countries that have adopted the full liberalization packages.

To illustrate, look at the situation of the poultry farmers in Lebanon. This morning's paper ran, alongside the frightening accounts of yesterday's street wars, a news item about the poultry producers threatening to close business because the government, in the same fated meeting which lit the fuse of the current troubles, also took the decision to remove import duties on imported chicken. This will have the immediate result of reducing prices, which will please consumers. But this will also annihilate the production sector, plagued with import duties on feed and high fuel prices. The large scale poultry industrialists will not suffer as much, because most of their production is contract-farmed to the small and medium producers, and they are vertically integrated: a large share of their profits come from adding value to poultry meat (nuggets, frozen, etc...). They still have the option of using the cheaper imports to manufacture their products. Those set to profit most are the meat importers. Now, of course, it is a pure coincidence that the head of the union of poultry producers is close to the opposition, while the head of the union of meat importers is a staunch loyalist.

If the government is intent on liberating prices, then it should do it for all imports, including feeds. More importantly, this and subsequent government must realize that they need to help farmers improve their efficiency. It has been shown repeatedly that, in spite of the economy of scale advantage, small, family producers can be just as efficient as big ones, especially if social and environmental costs are internalized. To confront the food crisis, populist measures are insufficient. Commitment to equity and development is needed, especially in countries that are torn by inequalities.