The Free Market Can’t Prevent Latin America’s Coming Food Crisis

Even before COVID-19 hit Latin America in earnest last month, one-third of the region’s population was facing food insecurity. Now, as the economy contracts under lockdown and supply chains falter, overhauling the continent’s market-driven food system is more necessary than ever.

Monopoly power is a problem that not only looms large in the daily operations of the agro-food system, but also in the government’s capacity to respond to the hunger crisis.

One of the most dramatic aspects of the global coronavirus pandemic is that beyond the short term, it threatens to generate a prolonged food crisis in Latin America. Across the continent, the food security of millions is at stake as already fragile supply chains meet hard borders and logistical challenges, as well as a wave of mass layoffs due to economic contraction. Although figures confirm that so far there have not been any significant disruptions in the food supply, several organizations have warned of trouble to come.

Moreover, the United Nations Economic Commission for Latin America and the Caribbean (CEPAL) has estimated a 5.5 percent contraction of the South American economy in 2020 – the largest contraction in its history. Such a recession, the CEPAL suggests, could lead to 11.5 percent unemployment, which would mean an increase of 11.6 million unemployed compared with 2019.

In Chile, the Minister of Agriculture has assured cities that the country has enough food stocks to make it through the winter. But hunger and undernourishment, as numerous studies show, are not a direct effect of a lack of availability of food, but of a lack of money to pay for it. It’s for this reason that protests against hunger have erupted across Santiago in the last few days, sparking state crackdowns as well as a renewed wave of national outrage against the Piñera government.

Moreover, even if Chile currently has enough food, potential logistical disruptions and chokepoints in the medium-term are likely to threaten this supply, especially since the national economy has become increasingly reliant on grain imports.

Simply abandoning these challenges to market dynamics poses a serious threat to political and social stability in Chile and beyond. Although historical comparisons should be taken with caution, one of the most important lessons that can be drawn from the food crisis that followed the Great Depression of the 1930s, is that it demanded efforts of mass public intervention to not only supply food, but also to restrain the monopoly power of speculators, retailers, hoarders, corrupt intermediaries, and so on. This kind of state activity was only made possible thanks to the widespread popular radicalism and mass politics making big demands and leading the way.

In Chile, as in other Latin American countries, the question of “popular nutrition” (alimentación popular) was of key importance to the construction of the welfare state during the decades that followed the Depression. In turn, popular nutrition was itself but one facet of a broader struggle to democratize land tenure systems and the structure of agricultural production, a question that continues to be at the center of contemporary political conflict in most of Latin America. For this reason, the region’s convoluted history with food and hunger might shed some light on the potential pathways that a global Green New Deal could eventually take there.

Supply Chains and the Politics of Monopoly Power

Even before the popular uprising that rocked Chile last October, households were facing difficulties acquiring healthy and nutritious food. In its annual reports on the state of food security in Latin America, the Food and Agricultural Organization of the UN (FAO) had been warning of the deterioration of national diets in Latin America, a region in which 188 million people – a third of the total population – was facing food insecurity. In Chile, findings from the family budgets survey of the National Statistics Institute (INE) reveal that most household income is spent on food. Strikingly, the most recent versions of this survey also conclude that household incomes for the first four quintiles of the population are surpassed by their expenses, which means that debt – and particularly credit cards issued by supermarket chains – has become one of the main mechanisms for buying food. According to the Chilean Financial Market Commission (FMC), Walmart Chile alone had issued 1,420,885 credit cards in 2019, a figure that is equivalent to almost 10 percent of all active credit cards in the country.

In macroeconomic terms, Chile’s export-oriented agricultural sector makes the country vulnerable to economic protectionism abroad, logistical disruption, and bottlenecks in global supply chains. Chile’s dynamic food-exporting sector has been underpinned by the aggressive modernization of fruit production, at the expense of other crop varieties that are crucial for tackling food crises such as grains, legumes, and tubers. Chile is now increasingly reliant on imports of grains and cereals. According to a recent FAO report, the country’s domestic food supply may be affected in the medium term by sudden variations in global food trade, and it is therefore urgent to keep channels of international cooperation open.

Figure 1: Wheat and Maize imports vis-à-vis cultivated surface for wheat, during the 1990–2019 period. Source: Author, with data from the UN Comtrade Database and from the Ministry of Agriculture (ODEPA).

Likewise, the trend toward increasing vertical integration of these chains has led to the progressive exclusion of small- and medium-scale farmers, who increasingly face greater entry barriers for accessing urban markets. According to a recent study, only 5 percent of the horticultural production by smallholder agriculture (Agricultura Familiar Campesina) can sell their produce in supermarkets, since the latter’s acquisition schemes are specifically tailored for highly concentrated suppliers. Most of this commercialization takes place within the framework of “informal” supply chains in which smallholders fall prey to abusive intermediaries, excessive charges, and asymmetries of information.

Monopoly power is a problem that not only looms large in the daily operations of the agro-food system, but also in the government’s capacity to respond to the hunger crisis. After the public outrage that followed the first protests over lack of food, Sebastián Piñera announced that the government would distribute 2.5 million food baskets to deprived families. This measure has been met with intense criticism over the potential devastation it might bring to local economies, as it would continue to fill the pockets of large food producers and retailers, at the expense of small producers and neighborhood shops.

Alternatives

The present state of agro-food systems in Latin America makes it imperative to design and implement a national program for popular nutrition that can guarantee access to food for the most vulnerable groups, both during the pandemic and in its aftermath. Recent months have seen the emergence of self-managed distribution mechanisms such as consumer cooperatives, short supply chains, and soup kitchens (ollas comunes). Some of these initiatives have been inspired by the idealism of food sovereignty, which originates from transnational agrarian organizations such as La Vía Campesina, and claims the right of peoples to not only consume nutritious food, but to also define the ways in which it is produced.

Despite the undeniable relevance of these citizen-led distribution initiatives, it is also urgent to implement institutional mechanisms that can also protect broader sectors of the population which tend to lack the cultural capital or associative networks to participate in dynamics of this sort. Critical readings of movements inspired by the ideals of food sovereignty and buen vivir attribute their limited impact in the region to the fact that they have lacked a concrete strategy to articulate the state apparatus, and to devise modes of intervention that supersede a narrow emphasis on subsidies.

A plan for popular nutrition thereby poses the thorny yet unescapable question about the form of a state that could enable a tangible democratization of agro-food systems in order to defend the common good. This, in turn, would call for an informed debate about the consequences of maintaining the country’s export-oriented agricultural economy, and of the sectors that could be stimulated to ensure food self-sufficiency in an increasingly volatile and uncertain global economy; about possible agro-food production models that guarantee more and better employment, and ensure responsible governance of water, soils and land in a setting of climate change and of encroaching desertification; and about the type of antitrust institutions that could fracture the monopoly power of large supply chains, and allow meaningful incorporation of family and peasant agriculture into urban consumer markets.

Although previous governments have sought to sponsor short supply chain programs as a means to allow fairer access for smallholders to urban markets, these have been designed to operate peripherally to the most efficient distribution infrastructure. Thus, a plan for popular nutrition would also involve questioning the ability of supermarkets to defend the public interest, without considering niche distribution schemes to be the only viable alternative.

The question is not whether or not supermarkets can be useful tools for radical social transformation; rather, it is what kind of supermarkets could promote a program of economic reconstruction in which mass distribution works collaboratively with grassroots and self-managed networks (such as consumer cooperatives, street fairs, soup kitchens, and short supply chains). In Argentina, for example, the incorporation of organizations inspired by feminist principles and food sovereignty into state institutions offers relevant perspectives for the democratization of large infrastructures of distribution. A member of the grassroots movement Unión de Trabajadores de la Tierra (UTT) was appointed as director of the largest wholesale market in Buenos Aires, and launched a comprehensive program aimed at targeting and dismantling unjust dynamics of price formation. A supermarket aisle law (Ley de Góndolas) that requires large retailers to limit products from a single supplier to 30 percent and give at least 25 percent of aisle space to small- and medium-scale suppliers, is also one among several initiatives aimed at curbing the polarizing forces of highly concentrated economic actors.

The project of food sovereignty demands mechanisms of distribution that operate under principles of solidarity and economic democracy, but that are also large in scale. During the Great Depression, popular restaurants, workers’ orchards, price and supply commissariats, people’s wholesale markets, and street fairs, became living embodiments of collective forms of sovereignty, which, in conjunction with an activist state, set out to protect the vulnerable during some of the most painful years of the twentieth century. These modes of institutional experimentation, it should be noted, attest to the fact that food crises are not only circumvented with charity and alternative practices, but with the radical democratization of existing distribution systems.

At a time when a Green New Deal, or Gran Pacto Ecosocial y Económico, begins to loom on the horizon of an internationalist project of Latin American economic reconstruction, agro-food systems emerge as a crucial target for mass intervention and radical political action. As Argentinian scholar-activist Maristella Svampa has pointed out, although a reconstruction program of this nature is a matter of upmost urgency, the Green New Deal as it is conceived in the United States cannot simply be exported to Latin American — largely because the region was excluded from the experience of the New Deal. If we look back at the sensibility that galvanized Latin American mass movements and popular fronts during times of economic collapse, however, questions of food and agriculture might offer some glimmers of inspiration for the struggles to come.