11.12.2023

Global Grain Markets

In North Africa, where millions of people are highly dependent on cereals and bread, Cairo hosts the world's most significant market for imported cereals. Jörg Gertel's book, "Global Grain Markets,"

In North Africa, where millions of people are highly dependent on cereals and bread, Cairo hosts the world's most significant market for imported cereals. Jörg Gertel's book, "Global Grain Markets," sheds light on how market variables, such as the main actors involved in the cereal trade, influence local supply conditions and food security, particularly through wheat supply and pricing negotiations. The war in Ukraine had considerable repercussions on the global supply, as Russia and Ukraine are among the world's most significant regions for cereal cultivation and play a substantial role in international exports, especially in recent years. The war-induced cereal production collapse, coupled with anticipated delivery shortages and a resulting price surge, primarily impacts North African nations with a heavy dependence on wheat imports. Inevitably, a decrease in cereal production in the global commodity market can result in price increases and the spread of hunger.

The reasons behind the pursuit of profit, the drastic increases in food prices, and ultimately hunger, are understandable, according to the presented thesis, only in the context of techno liberalism - which means the interplay between neoliberalism, technology, and knowledge production. These connections don't necessarily have to be permanent nor are they confined to a single space.

More accurately, they are rather about short-term configurations and constantly shifting alliances. These institutionalized procedures often operate out of public view, residing in offices and trading rooms, obscured by technical valuation processes, and concealed within opaque procedures. As a result, they frequently escape state regulation and oversight, slipping away without control. Furthermore, they avoid social responsibility and evade assessment or even social accountability. The Technology centered around speculation and arbitrage profits which also become effective in fractions of a second, operate exploitatively; they ultimately spike up bread prices and, eventually lead to a general lack of security, famine, and premature death.

To grasp the underlying mechanisms of losing control, one must reframe their perspective on money, recognizing it as a transactional tool. Researchers have thoroughly looked into the role of money, typically distinguishing between fiat currency and commodity money. Fiat currency serves as a payment method with no intrinsic value, typically in the form of banknotes issued by central banks. In contrast, commodity money, such as gold or grains, possesses tangible value. In North Africa, grains and grain storehouses have historically held a central position during emergency situations as well as helping maintain power. Even today, the term "Makhzan" (storehouse - a place where taxes are kept) is still used to refer to the government in Morocco.

Whilst dissecting the causes and risks associated with food crises, three distinct factors have been identified. It is essential to expand the scope of these factors in light of current developments.

  1. Production Issues (Production Failure): Hunger is the result of production failure. However, it's also obvious that production drops and their resulting price surges are now transmitted to consumers: The lack of production and delivery to and from Ukraine, in addition to consumption issues in Egypt and Tunisia.
  2. Market and Access Issues ( Défaillance des droits; Sen 1991): The main point in these concerns is that the dynamics of price formation and the volatility of food prices vary asymmetrically in internationally connected trade relations. Even with locally available foodstuffs, food insufficiency, and starvation can occur due to inadequate resources and poverty. Moreover, some cannot afford the locally available food due to access issues related to purchasing power.
  3. Liability issues and failed interventions (Défaillance de la réponse; Devereux 2007): These represent the "new" food crises that arise within the context of globalization. Intervention failures are often linked to restrictive political regimes and wartime events. In situations of armed conflict, hunger and violence are particularly closely intertwined. Empirical results from extensive interviews conducted in 2016 across North Africa (Morocco, Tunisia, Egypt) and the Middle East (Lebanon, Syria, Jordan, Palestine, Bahrain, and Yemen) regarding the significant changes since the Arab Spring (2011) revealed that respondents most commonly cited food scarcity and rising violence as major concerns.

However, those affected are often unable to identify the complex reasons behind their hunger, let alone the underlying spatial dynamics. While the impacts of violent conflict, forced displacement, and poverty are widely recognized, understanding complex mechanisms like the concentration of market power in international trading houses, global distribution chains, economic strategies of banks and sovereign funds, financial speculation in food commodities, and investment approaches of private capital consortiums, are difficult to locate, hardly comprehensible and sometimes deliberately concealed.

Long, fragmented chains of action, as well as cross-border networks linking different players whose transactions move from one area to another, further characterized by increasing transaction speeds, not only make regulatory issues more complex, but also call into question matters of responsibility (intervention) and liability (assumption of costs). Food shortages in times of armed conflict or chronic crises can result from the disruption of various segments of the food chain: whether at production, marketing, or distribution level. Famines are never accidental; they are deliberately created. Thus, they should not be perceived as a failure of the social or economic order, but rather as a product of that order. Consequently, it is essential to consider both the local causes of food shortages and external influences, particularly those who profit from famine and chaos.

Jörg Gertel  (Prof. Dr.) is a professor of Arabic studies and economic geography at Universität Leipzig. His education took him to the universities of Damascus, Cairo and Khartoum. He also taught and conducted research at Universität Freiburg and several times in Seattle and Auckland. His research focuses on the wider Mediterranean region and questions of food security, mobility and market dynamics, and the situation of youth and young adults.

You can consult and download the book available in German at this link

Gina Mehmood Awan former intern at FES Tunisia, Master student in "Comparative Middle East Politics and Society"

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