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Economic and political instability

  • 2020-02-01 09:34:30.0
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The political and economic context has a decisive influence on the functioning of the food system. The impending onset of a major economic crisis is a risk that must be seriously considered. All actors in the system would face serious difficulties, especially farmers and the poorest households.

In 2008, the insolvent mortgages of many American households were at the origin of a large-scale financial crisis, amplified and globalized by complex and opaque speculation mechanisms. A global economic crisis followed, affecting governments, banks and businesses as well as households. Since then, various parameters explaining the occurrence of this crisis have worsened significantly . The overall debt level increased by 50%, reaching 320% of global GDP ( Figure 9 ). The fall in interest rates has favored more profitable but riskier investments, and many of these loans are risky, like the “subprime” loans of 2008. The ability to repay this debt depends directly on the growth potential of the world economy, and therefore the means of production, and therefore the material and energy resources that can be physically mobilized to ensure this production. The constraints weighing on certain key resources - in particular fossil fuels - point to major difficulties in sustaining this growth in the near future.

In this context, the onset of a large-scale financial and economic crisis in the short term seems very likely . In its October 2019 report on global financial stability, the International Monetary Fund is particularly worried and considers that a relatively moderate slowdown in global economic growth would be enough to make nearly 40% of private corporate debt unsolvable.

Figure 9 : Evolution of global debt since 1999. The contributions of the various economic actors are indicated. The current level of debt corresponds to 320% of world GDP. Source : Les Greniers d’Abondance, with data from the Institute of International Finance (debt) and the World Bank (GDP).

Fundamental degradation : strengthening of the economic difficulties of farmers and households

The consequences of a large-scale economic crisis would be multiple, causing the bankruptcy of many banks or companies, and the impoverishment of the population. Farmers, who belong to the professional category with the highest poverty rate, are particularly vulnerable in this regard. Out of 100 euros of food purchase, only 6.5 euros go to French agriculture. Excluding subsidies, half of the farms would have a negative result . In addition, farmers have become heavily indebted in recent decades, especially for large farms. Increased charges, reduced revenues or subsidies would cause many bankruptcies.

On the consumer side, the drop in household income would reinforce food insecurity . This is already high in France: 8.8 million people live on incomes of less than 1,000 euros per month. Among them, 4.8 million benefit from institutionalized food aid (food banks, Restos du Cœur…).

Crisis situations : disruption of the supply of key supplies, social movements, local shortages

More generally, the scarcity of the factors of production - energy and natural resources - risks dragging the world economy into a phase of structural recession . Locally, the consequences can be multiple and unpredictable depending on the reactions of economic actors and the fragility of the networks of interdependence (buyers, suppliers, etc.). The food system could be challenged in different ways. On the one hand, farms would face material or economic difficulties in accessing essential production factors (tools, fuel, fertilizers, seeds, phytosanitary products), following economic difficulties or the bankruptcy of their suppliers. On the other hand, certain key infrastructures of the food system (transport, processing, distribution) could be put at fault for lack of investments, or as a consequence of sectorial and social crises (strikes, blockages, destruction of equipment) likely to erupt. . Agricultural crises can cause sharp increases in the price of major foodstuffs. The rise in food prices is historically closely correlated with the development of social movements and civil strife(Figure 10).

Figure 10 : World Food Price Index and Hunger Riots; the number of victims is indicated in brackets for each conflict. Source : Lagi et al. (2011).

Urban agricultural plot in Havana, Cuba. Following the breakup of the Soviet bloc at the end of 1991, "organoponicos" - or urban organic vegetable gardens - have multiplied in cities with state support. Cuba, which depended on the USSR and other countries for the importation of many products, was suddenly deprived of around 70% of its synthetic fertilizers and pesticides, and its domestic oil consumption fell by 20 %. As a result, the country's agricultural production - heavily industrialized at the time - collapsed by 45%, and the average calorie intake of residents by a third, within three years. Many nutritional deficiencies and diseases have developed. Urban agriculture has partially alleviated these difficulties. Crédits : SuSanA, CC BY-SA, Wikimedia Commons.

If our society has already gone through several economic crises without experiencing serious shortages, we must consider that the characteristics of the dominant food system today make the situation strictly singular: hyper-specialization of territories and actors, energy dependence, distancing of zones of production and consumption, centralization and integration into a global economy are all factors of vulnerability.

Ways of resilience : increase the agricultural population, promote the technical and energy autonomy of farms, diversify cultivated varieties and develop autonomy in seeds, move towards nourishing agriculture, develop local transformation tools , simplify and shorten food logistics

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