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The Institute for Agriculture and Trade Policy promotes resilient family farms, rural communities and ecosystems around the world through research and education, science and technology, and advocacy.

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Food Crisis

November 06, 2009

Betting on climate change: the carbon derivatives market

This week in Barcelona negotiators are making one more attempt to resolve some of many differences for a new agreement to implement the United Nations Framework Convention on Climate Change (UNFCC). There are three UNFCC “flexibility mechanisms” intended to enable countries to meet their Greenhouse Gas (GHG) reduction commitments. One mechanism is the buying and selling of “carbon allowances,” i.e., permits to pollute, and “carbon offset credits,” largely based on agricultural or forestry projects to reduce or avoid GHG emissions. Industrialized countries claim that Article 17 of the Kyoto Protocol authorizes them to extend the primary carbon trading market into the world of financial derivatives.

As part of IATP’s preparations for the UNFCC summit, December 6–18 in Copenhagen, Denmark, as a member of the Commodity Markets Oversight Coalition (CMOC), we helped to draft and signed an October 30 letter to Senators John Kerry and Barbara Boxer. The CMOC does not take a position on the overall Senate energy and climate change bill. Instead the letter outlines dangers that the carbon derivatives market poses to the realization of U.S. GHG reduction goals. The letter notes that Congress has yet to agree to fundamental reforms to the financial and commodity derivatives markets in which carbon derivatives would be traded. Indeed, there is strong opposition to most of these reforms from the financial services industry, which has created new loopholes in draft legislation that could induce extreme price volatility in derivatives markets, including that for carbon. Volatile and confusing carbon price signals would delay and inhibit investments in GHG reduction technology. Such investment delay would be a global warming accelerant.

To reduce the likelihood of extreme carbon price volatility, the CMOC letter calls for mandatory exchange trading—in other words, no more trading in the shadow banking markets. This demand is strongly opposed by the Coalition of Derivatives End Users, who claimed in an October 2 letter, that being forced to post the margin requirements to trade on exchanges would harm their economic interests. Most of the signatories to the letter—which originated when the U.S. Chamber of Commerce, acting on behalf of the taxpayer, bailed out  “too big to fail” banks—will be trading carbon derivatives.

The CMOC letter also calls for banning commodity index funds and exchange-traded funds from trading carbon derivatives. In a November 2008 paper, IATP showed how the bundling of agricultural futures contracts into index funds was partly responsible for the extreme price volatility in agricultural futures contracts. The role of index funds in driving price volatility was confirmed in a June 24 U.S. Senate investigation of excessive speculation in wheat contracts. This price volatility made the use of futures contracts by both U.S. farmers and developing country importers too expensive and unpredictable. The price increases contributed to food riots in more than 30 countries, according to the United Nations Food and Agriculture Organization (FAO).

Finally, the CMOC letter called on Congress to commission studies on the effects of a carbon derivatives market on agricultural, energy and other non-agricultural futures contracts. The Commodity Futures Trading Commission (CFTC) estimates that by 2017, the carbon derivatives market will trade $2 trillion in contracts. In 2008, the estimated value of all CFTC regulated contracts was $4–5 trillion dollars. No climate change bill should be passed before Congress has had time to review studies on carbon derivatives price volatility and the effect of carbon derivatives on other futures contracts, including contracts where carbon is bought to offset financial risks in the deregulated world of “mixed swaps” (i.e., with both security and commodity features).

—Steve Suppan

October 28, 2009

Monsanto and Pioneer duke it out over biotech corn, farmers take the hit

There is an old African saying “Whether elephants make love or war, the grass suffers.” The two elephants in the agricultural seed business are now making real war, although they have been wary of each other for years. Monsanto, a relatively recent entry into the business, has become the “dominant male” in the battle after moving to acquire a large number of formerly independent seed companies. Pioneer, content for years to be the premiere corn breeder in the world, has found itself suddenly defending its turf and trying to find ways to move into the new biotech ball game. The Des Moines Register recently covered this ongoing saga.

Monsanto has long been targeted as a corporate villain. From dioxin-laced Agent Orange for Vietnam to the industrial chemical, polychlorinated biphenyl (PCB), Monsanto was known as producer of persistent, deadly chemicals.  Lasso^tm, the alachlor-based pre-emergent grass herbicide with a long list of toxicity issues, was their first foray into agricultural chemicals.

Monsanto’s bottom line was being hurt by lawsuits and clean-up costs associated with dioxin and PCB pollution. Enter Roundup™ (glyphosate), launched in 1976. This is the chemical that made Monsanto the powerhouse it is today. Glyphosate is a broad spectrum nonspecific herbicide that has low acute toxicity and does not persist in the environment. It should be noted however that many questions remain regarding the long-term toxicity of glyphosate.

By 1982 they had the first genetically modified plant cells. Depending on definitions, humans have been genetically modifying crops for thousands of years. More correctly, these are termed transgenic crops, which involves inserting a gene that is not acquired by pollination. I have used genetically modified (GM) because it has become the standard term. Now plant life is patented, permitting GM companies to control technology, and prohibit use of seed from the GM crop.

In 1926, Henry A. Wallace and others founded the Hi-Bred Corn Company in Des Moines to develop and market the expanding hybrid seed corn business. Pioneer was added to the name in 1936. They moved into soybean seed operation in 1973, and soon became the leading corn and soybean seed producers. Pioneer gained the number the one corn seed sales spot in 1982 from its longtime rival, Garst. Pioneer, when I first came to the Leopold Center in 1988, was a family company: friendly, environmentally aware and benevolent. Its advances were based on classic plant genetics, not biotechnology. It was not to last.

Monsanto bought its way into the seed business by acquiring established companies including the number two seed corn producer, Garst. This predatory approach (Monsanto often paid more than market value for the seed companies) combined with its big breakthrough—developing genetically modified corn and soybeans resistant to glyphosate—gave them a huge market advantage. This initiated the trend to GM crops that is now dominant in the seed industry.

The predator habits of Monsanto long made Pioneer nervous. Patented Roundup Ready soybeans were first introduced by Monsanto in 1996. One year later, Pioneer had biotech corn and soybeans on the market, buying the technology from Monsanto. Pioneer Hi-Bred was purchased by DuPont (20 percent in 1997 and the remainder in 1999). Lawsuits began soon after.

By 2000, corn borer protection had been added by Monsanto (called YieldGard^tm) and Pioneer had to enter into agreements to use the Monsanto technology in its corn. Pioneer paid big bucks to use the Roundup Ready and YieldGard traits. Now Monsanto is suing Pioneer over infringement of these patent rights and Pioneer is moving ahead with a new set of seed traits called Optimum GAT. Monsanto saw red, and has countersued. Monsanto also became very unhappy when Pioneer recently co-sponsored an anti-Monsanto seminar in St. Louis, the home of Monsanto. The issues are complex, and involve “stacking” of seed traits. This means that genetic characteristics for two or more traits are included in a single seed. Often these stacked seeds have not had full evaluation regarding their safety and efficacy. In the meantime, Pioneer slipped to No. 2 in seed sales.

Monsanto now licenses these traits to about 200 seed companies. Their powerful monopoly has blocked competition. They will not even allow experimenters to evaluate the seed corn for efficacy in other environments.

During this time, the price of seed corn and Roundup^tm escalated rapidly. But now Monsanto is starting to lose money on its Roundup herbicide, mainly because it is off patent and others are now undercutting Monsanto on price. Furthermore, the pent up demand for glyphosate in South America had raised prices earlier, but this market now is being met.

So what does all this mean? I first encountered Monsanto in the early 1970s when at a regional research meeting in St Louis they invited the committee to tour their operations. At that time they were just getting into biotech and no one really saw its potential to make money.Then, about the time I was getting the Leopold Center programs underway, Roundup Ready soy field trials were under way on a site east of Ames. I had a tough decision to make on funding for field work that might involve GM materials, and decided we would not fund such work, but it soon became hard to delineate the lines between GM and non-GM. When Pioneer went over to Roundup Ready, and then both companies began stacking genes, I knew the game was lost. 

Genetically modified corn and soybeans dominate, especially in countries with high input agriculture. Claims that GM crops will “Feed the World” abound, especially around the time of the World Food Price presentations earlier this month. Other claims include the lowering of pesticide use and lessening of soil erosion. 

Monsanto now bills itself as a Sustainable Agriculture company! 

These are issues deserving of future blogs. I worry about how the world’s farmers are being shortchanged in the quest for improved and adapted seed varieties at reasonable costs. Now they cannot save seed for fear of the Monsanto cops taking them to court and ruining their lives. The seed industry is no longer competitive because about 90 percent of it is in the hands of two companies and the cost of seed is out of reach of small farmers. I worry about how the food system is now dependent on genetically engineered corn, soybean, cottonseed, canola and sugar beets (recently taken back off of the market). GM wheat, rice and other staple crops could follow as pressure continues to adopt these crops. The industry essentially says "We build it, you will use it."

We need to be smarter about these crops, question each claim and insist the government enforce antitrust laws. We should  resist the claims that they will solve the food shortage in countries where their use will do more harm than good. Specifically, this means the next food frontier, Africa, must not become a new “Green Revolution” based on the failed western world high technology model, rooted in GM crops.

—Dennis Keeney

October 23, 2009

The Power of Food Reserves: Volume 4

One of the political challenges in talking about food reserves, at both the national and international level, is that they are too often dismissed as a tool that has failed. Of course, food reserves have seen success and failure. And because many reserves have been mismanaged, agriculture economist Dr. Daryll Ray reminds us, "We need to delineate between the concept of the reserve and the way it's administered."

Roger Johnson, President of the National Farmers Union, addressed this political obstacle at a meeting we organized with ActionAid on food reserves last week. "At this point in history, we've entered an era that government is looked upon as the problem, not the solution. And that the private sector should be in charge of everything, including food aid."

"There is this sentiment that reserves are an old idea," said Johnson. "Nobody wants to talk about an old idea. The other side will say, 'we tried that, it didn’t work.'" But he believes that there is a new political opportunity to gain wider support for reserves, and that could involve emphasizing the benefits for consumers and the disadvantaged of the world.  

"Reserves accomplish a lot of the same things whether you are a farmer or consumer," said Johnson. "The predictability in pricing is a good thing for both. It is essential for lesser developed countries. If they are going to become more developed, the most common way to grow is through agriculture."

Larry Mitchell, former CEO of the American Corn Growers Association, emphasized the national security implications of not having a food reserve. "Our current reserve is in the hands of multinational corporations," said Mitchell. "We are one short crop away from being at the mercy of their benevolence. We need a public option for food."

"This is pretty scary to me," said Mitchell. "When we went to war in March 2003, we had less than a day’s worth of corn and soybeans. The impacts of a reserve are well-past hunger. It is also an issue of national security. I know why we are at war in the middle east. I don’t know who we’ll be going to war with when we need food."

Mitchell compared the deregulatory effects of the 1996 Farm Bill on agriculture to the repeal of the Glass-Steagall Act in 1999 on the banking industry. He emphasized the need to return to sound food management through a food reserve. A new reserve system could include more than just traditional grain and would benefit both the livestock industry and the emerging bioeconomy.

"Most farmers I know are willing to give up $7 corn if they can get a consistent and guaranteed $4, and a proper food reserve can help us accomplish that," said Mitchell.

Victor Suarez, IATP board member and director of the National Association of Rural Commercialization Enterprises in Mexico, highlighted the urgent need for government intervention in agricultural markets, not only to address the food crisis, but also as a counterweight to big agribusiness companies.

"When we start talking about strategic food reserves what we’re really talking about is state intervention into the market," said Suarez. "Markets are not self-regulating, particularly with regards to food. There’s always been a need for organized societies to prevent risks. In Mexico, when food prices rise, the free market logic is that people simply stop eating. One thing we have learned is that organized small farmers cannot confront alone organized monopolies. It is in no way a free market."

Instead, Suarez stressed the need for people and governments to work together to address the breakdown in the global food system—because we all are affected.

You can find video interviews, powerpoint presentations and more blog postings from our meeting on global food reserves at our web site.

—Ben Lilliston

October 22, 2009

The Power of Food Reserves: Volume 3

Details matter. This was clear in discussions about food reserves at a meeting last week we organized with ActionAid. How food reserves are run, by whom, and with what purpose, are all critical factors in determining whether a reserve is successful.

There is increasing interest in food reserves at the local, regional and international levels as a way to help better manage our food system. We heard two proposals about how institutions might best manage the details of food reserves.

Dr. Daryll Ray, of the Agricultural Policy Analysis Center at the University of Tennessee, outlined two central functions of a reserve: 1) to mitigate short-term disruptions or sudden demand; and 2) to stabilize world prices for consumers and farmers.

Ray pointed out that while critics have pointed to the costs of reserve programs, the costs of not having a reserve program can be enormous; including factors often not calculated by economists such as hunger, poverty, loss of food security and political destabilization. Ray suggested that poor management had unfairly given reserves a bad name. "We need to delineate between the concept of the reserve and the way it's administered," said Ray.

Food reserves can be useful at multiple levels, according to Ray. At the local level, families often use reserve concepts through traditional canning and freezing. But there are also different options for farmers, communities and local governments to store food in a shared facility. At the national and regional levels, reserves can be coordinated through governments and federations of cooperatives.

At the international level, with a goal toward stabilizing world supply and prices, Ray proposed an institutional framework similar to how the U.S. Federal Reserve operates. It would be politically independent, composed of regional chairs, and ultimately legitimized by the UN Commission on Trade and Development (UNCTAD) and the Food and Agriculture Organization (FAO).

"Food reserves are just one component of a food security system," said Ray. "We also need to look at production, infrastructure and increasing the purchasing power of people who are hungry."

Robin Willoughby of Share the World's Resources discussed food reserves within new efforts at the multilateral level to address a failed global food system. He emphasized that the context for reserves is very important. Food reserves are designed for a number of purposes, including: 1) to stabilize prices; 2) for humanitarian reasons; 3) for export promotion through regional trade blocs; or 4) to mitigate speculation.

He pointed out that there are severe institutional constraints to putting together a global food reserve. Global institutions have a patchwork of overlapping mandates with no obvious place to oversee such a system. And many of the most important actors (including smallholder farmers) are excluded from global discussions.

Because of these constraints, Willoughby proposed a Global Food Security Convention. It would encompass a new vision for food and agriculture that is based on human rights and multilateral cooperation. It would be based on three pillars: legal (human rights); political (inclusive and democratic); and technical (implementation).

You can watch video interviews and view powerpoint presentations from presenters at the global food reserve meeting at our web site. Next, we'll look at food reserves within the context of the U.S. and Mexico.

—Ben Lilliston

The Power of Food Reserves: Volume 2

In a bow to the power of markets, the U.S. removed the last traces of its grain reserve program in the 1996 Farm Bill. The result have been damaging across the board, with increasing volatility in agriculture markets—along with big swings in farm subsidies from year to year. But other countries see the continuing value of food reserves and are using them in creative ways to serve a variety of different purposes.

At a meeting on food reserves we co-organized with ActionAid last week, we heard about how two of the world's biggest agricultural exporters, Brazil and Canada, use food reserves. And how West African countries, struggling to provide enough food for their people, are using food reserves at the local level.

Celso Marcatto, of ActionAid Brazil, described the role of the state-controlled food company CONAB. While plagued by mismanagement in its early years, Brazilian President Luiz Inácio Lula da Silva instituted a series of reforms beginning in 2003 to refocus its mission. CONAB's purpose is two-fold: to ensure there is enough food in times of crisis and to help stabilize markets to limit speculation. In 2006-07, CONAB helped stabilize the corn market through the release stocks. In 2008, despite the dramatic spike in global prices for rice, CONAB's reserve program helped to stabilize prices within Brazil. "It was possible for Brazil to pass through the food price crisis without suffering too much," said Marcatto.

CONAB also helps run the Brazilian Procurement Program, known as PAA. The program purchases food from smallholder farmers and donates it to social organizations addressing people in need. The program also works with smallholder farmer organizations to help them set up their own reserves. The result is more stable prices for smallholder farmers and greater food access for those who  are hungry.

Marcatto and other civil society organizations are now targeting Mercosur, a regional trade agreement that includes most of South America. Currently, Mercosur is completely focused on commercial issues. "The idea is to pressure Mercosur countries to discuss hunger more seriously, said Marcatto. "We want Mercosur to be a policy space to support efforts to address hunger regionally—including reserves and support for small-scale farmers."

Ian McCreary, a former member of the Canadian Wheat Board and now with the Canadian Foodgrains Bank, relayed the history of the international wheat agreement, which was launched at the end of World War II and included 47 countries. While there were certainly bumps, the agreement was largely successful until it was finally broken in 1969. McCreary said the wheat agreement offers some important lessons in looking forward, particularly the importance of good governance and accountability. Ultimately, we must ensure that stocks aren't used to punish other countries as the U.S. did in the mid-1980s when it released its wheat stocks onto the global market and devastated other wheat producers around the world, according
to McCreary.

McCreary had three recommendations for food reserves moving forward: 1) they should be commodity-specific; 2) they should be nation- and region-specific, and governance must be strong in those areas; and 3) there needs to be international disciplines to ensure that hardships are not externalized on other countries.

"We have to have a mixture of intervention engaged not as a cleanup factor, but to take the rough edges out of the marketplace. The process of reserves fits within that context," said McCreary. 

Saliou Sarr, of the West African Farmers' Network (ROPPA), sees food reserves in an entirely different context. ROPPA is a network of 16 countries. His region's challenge is to increase their own food production to feed their people, and reduce their dependency on aid from other countries. Sarr pointed to a confluence of factors contributing to hunger in the region, including: the lowering of food stocks in the U.S., Europe and China; structural adjustment programs pushed by the World Bank that discouraged public investment in agriculture; and limitations on the use of tariff protections imposed by the World Trade Organization.

In response to the food crisis in the region, ROPPA has taken multiple approaches to food stocks, including public stocks, stocks at the farm level and at local food banks. In public stocks, their experience has been troubled, undermined by political mismanagement. But local food banks have been more successful in Bali, Niger and Burkina Faso. There, a committee at the village level buys grain during harvest when prices are low. Then, they use collective storage, and sell it to families in need throughout the year at a price that is affordable. This model has been limited because of the lack of production capacity. Right now, they are exploring food reserves at the village and family level, to work alongside greater access to credit and seeds,  to help build production and ensure there is enough food.

"We think a good mastery of the management of stocks at the world level should include capacity building for production, active policies that give priority to internal markets, and reinforce regional integration," said Sarr. "People can have sovereignty with regards to their food supply."

You can view video interviews and powerpoint presentations of participants at our meeting on global food reserves at our Food Security Web site. Next, we'll look at proposals for how food reserves might work in a global context.

—Ben Lilliston

October 21, 2009

The Power of Food Reserves: Volume 1

Make no mistake, the food reserve—a tool as old as food production itself—is a powerful idea. Most people think it's just common sense. The idea is simple: put some food aside in times of plenty to ensure there is enough in lean times. But a meeting we co-organized with ActionAid in Washington, D.C., last week, revealed how strongly this common sense idea challenges the free market ideology that permeates our global food system.

IATP's Sophia Murphy succinctly explained how reserves help address market failures that have plagued both farmers and consumers: "Reserves are really about how to make the market do its job better. They can put a floor or ceiling on prices in the face of monopolistic or oligopolistic markets."

We decided to organize the food reserve meeting for two main reasons: 1) the failure of agriculture markets is just too glaring to ignore. The FAO announced last week that the world's hungry has now reached 1.06 billion people; 2) countries, regions and international institutions are re-examining agriculture policy, particularly the role reserves might play to stabilize food systems.

Our first session gave an overview of the global issues around food reserves. Sophia pulled from an IATP report released last week outlining four main reasons food reserves are being considered: 1) to correct market failures; 2) to smooth volatile prices; 3) to complement and regulate the private sector; 4) for emergencies. Sophia also discussed the limitations of food reserves when it comes to addressing global hunger: reserves will not solve poor agriculture production which plagues many countries, or address chronic (as opposed to short-term) hunger that is often tied to people simply not having money to buy enough food.

The failure of global food markets has created a ripe political moment to assess reserves. "There is a new awareness among governments that food really matters—and a sense among governments that they've lost a lot of the tools that they've had when food is not available," Sophia told participants.

Chris Moore, at the United Nations World Food Program (WFP), reported that both donor and recipient countries are seeking advice from the agency on best practices for running food reserves. The WFP, the world's largest food assistance agency, is already using a variety of food reserves. Moore described reserves in Haiti and other Central American countries, community cereal banks in Cameroon and the Sahel region of West Africa, and a multi-partner national grain reserve system in Mali. The WFP is working with West African countries to assess a regional system to help multiple countries coordinate national stocks.

For countries assessing whether a reserve is the right tool to use, Moore outlined a series of key questions: What do we want reserves for? What other options have been tried? Can you ensure the reserve is well-managed? What transparency rules are in place? Can a regional group integrate reserves and food security needs across borders? And finally: How can reserves fit within a path toward food security?

Hui Jang, of the USDA's Foreign Agricultural Service (FAS), had a starkly different view on reserves. The FAS's mission is to expand U.S. agriculture exports. She argued that reserves distort relationships between supply and demand. And that the existence of a reserve does not guarantee stability. She cited the recent price spike in rice, even though many Asian countries had been building up their reserves for several years. Despite the reserves, countries stopped exporting and prices shot through the roof. Countries will undermine an international or regional reserve system because they will act in their own interest in times of crisis, Jang reported.

Instead, she proposed a financial reserve where countries struggling with hunger could purchase grains and inputs (seeds, fertilizer, machinery, chemicals and the hiring of consultants to boost production). In addition, she proposed a series of other tools to help poor countries like adding futures markets, catastrophic bonds, improved infrastructure and  crop insurance.

Jang's presentation follows the strong support for technological fixes (particularly biotechnology) to address global hunger pushed by her boss, USDA Secretary Tom Vilsack, at the newly minted National Institute for Food and Agriculture, and Bill Gates at the World Food Prize meeting last week.

But the growing consideration of food reserves around the world indicates that most aren't holding their breath for the next technological quick fix. Many see the market failures we are experiencing in agriculture as structural and ultimately requiring government intervention to ensure that everyone has enough healthy food to eat and farmers are paid a fair price.

You can view powerpoint presentations and video interviews with participants at our food security page. In our next blog, we'll report on how other countries and regions are using food reserves as a tool. 

—Ben Lilliston

October 14, 2009

Grain Reserves vs. World Hunger and Market Volatility

With world hunger surpassing one billion people, in a time of extreme market volatility, IATP's Sophia Murphy has authored a new report exploring the option of strategic food reserves. The report, "Strategic Grain Reserves In an Era of Volatility," was released today—a day before a public briefing on food reserves in Washington, D.C. tomorrow. That meeting will include representatives from Brazil, West Africa, Mexico, Canada and the U.S. to discuss their experiences with food reserves and how a new system of reserves might work.

Though food reserves have been used for thousands of years (China has run an ever-normal granary since 498 A.D.! More info in the report, pg 5.) they have fallen out of discussion in recent decades. Sophia Murphy's research examines the risks and potential benefits of grain reserves in our current socioeconomic atmosphere:

“Given the extreme volatility we’ve seen in agriculture in recent years, grain reserves deserve another look,” said Sophia Murphy in our press release announcing the new report. “There are no magic bullets. Reserves alone will not end chronic hunger, and many reserves have been poorly run. But with sufficient resources, clarity of purpose, and effective governance, reserves can play a key part in a food system designed to eradicate hunger.”

Check back for updates from the "Food Reserves: Facing the Hunger Challenge," briefing soon!

—Andrew Ranallo

The Cost of Palm Oil

"The day the (palm) seeds arrived in our country on the plane, I wondered, `what are these seeds?'" Matilda Pilacapio told us at a meeting in late September. Pilacapio is a human rights advocate from Milne Bay, Papua New Guinea and she stopped by our Minneapolis office on the way to a meeting with Cargill—the largest palm oil importer in the U.S.

Papau New Guinea, a former British colony, contains some of the last remaining intact rainforests and 5 percent of global biodiversity. Palm oil first came to the island in 1994, when Pilacapio was the country's Minister of Agriculture. Palm quickly replaced coconut that had been grown on plantations owned by British companies and the British government's Commonwealth Development Corporation.

"Life has dramatically changed," Pilacapio told us. "We have a traditional life of sharing and giving. What we have, we share with our village. Now, our people live in a monetary world. Our people are at a crossroads."

In the mid-1990s, the World Bank required a number of structual adjustment programs in Papua New Guinea as conditions for a loan to the country's government, according to Pilacapio. Among the changes, were the user pay system—where people pay for things like education and health care—but also land registration (which opened up land that had previously been controlled by Indigenous peoples). Part of the World Bank loan to the country was to develop palm oil plantations, says Pilacapio.

Cargill owns three palm oil mills in Papua New Guinea. The company took over the mill in Milne Bay, where Pilacapio lives three years ago. She currently works with the Milne Bay Women in Agriculture to strengthen traditional agriculture systems in response to Cargill's expanding oil palm plantation in the region.

Pilacapio said young people in Papau New Guinea who want to farm no longer have access to land because so much is going toward palm oil plantations. Previously able to provide food for its own population, the growth in palm oil plantations has led Papua New Guinea to become heavily dependent on food imports.

Pilacapio came to visit Cargill as part of an effort by Rainforest Action Network to get the company to improve its practices at palm oil plantations, starting with simple things like creating buffer zones to protect water systems. Thus far, the company has not budged. Pilacapio is asking Cargill to: 1) stop the expansion of palm oil plantations, particularly from traditional landowners and onto virgin lands; 2) share its profits with local governments and landowners; 3) provide workers with better wages and working conditions; and 4) clean up water that is downstream from their milling plant.

So, what is the cost of palm oil? In the marketplace, the palm oil produced in Pilacapio's community certainly doesn't reflect all its costs, including damage to a traditional culture, diminished food security in the region, the loss of biodiversity and effects on global climate change. The "monetary world" Pilacapio describes is not working.

—Ben Lilliston

October 07, 2009

Can food reserves address global hunger?

Almost since the beginning of time, people have put food away in times of plenty to ensure they have food in times of need. Many countries, including the United States, have utilized food reserves over the years for a number of reasons like addressing hunger, stabilizing food prices and ensuring a fair return to farmers.

Now, as global hunger has surpassed one billion people, and the global cereal stocks/to use ratio has tightened, there is talk at the international level of food reserves. At the G-8 meeting in July, leaders agreed to explore: "The feasibility, effectiveness and administrative modalities of a system of stockholding in dealing with humanitarian food emergencies or as a means to limit price volatility need to be further explored." These sentiments were further supported at the G-20 meeting in Pittsburgh last month.

In light of this interest, IATP and Action Aid are co-sponsoring an open briefing, "Food Reserves: Facing the Hunger Challenge" in Washington, D.C., on October 15. Representatives from Brazil, Canada, West Africa, Mexico and the United Kingdom will meet with U.S. agriculture experts to discuss:

• past experiences with food reserves at the country and regional level;
• what role international institutions might play within a food reserve system;
• the opportunities and pitfalls of a strategic grain reserve in the U.S.

We hope you can join us. Watch the below video with IATP's Alexandra Spieldoch to learn more about the food reserve meeting.

—Ben Lilliston

Another take on the WTO and food systems

What can the World Trade Organization (WTO) contribute toward addressing global hunger? IATP asked four experts from the Philippines, France, India and the U.S. at last week’s WTO Public Forum in Geneva. You can listen to the discussion here.

Of course, there was the usual argument about whether trade liberalization helps or hinders food security, but there were other important points of consensus:

• Despite high-level calls and declarations to address the food crisis last year, nothing has been delivered to improve the coherence of global governance on food and agriculture: a major failure of the post-food crisis response.

• The WTO is still unable to take into account rural development and food security concerns in its treatment of agriculture. Instead, it consistently reinforces an unsustainable model, characterized in particular by market concentration. Ambassador Bhatia of India pointed to a few improvements, but insisted that they fall far short of the needs.

• The IAASTD report, a global assessment of agriculture at the turn of the 21st century, provides recommendations for the way forward on agriculture which WTO members should take on board to put the multilateral trading system back on track.

As the Doha negotiations remain deadlocked, IATP believes there is space to keep pushing on these issues. Next week, we will host a meeting in Washington, D.C. on the role of food reserves in responding to the global food crisis. We will also continue to push these issues at the World Summit on Food Security in November, at the WTO Ministerial Conference in December, and at the Copenhagen climate negotiations in December. Stay tuned!

—Anne-Laure Constantin

October 05, 2009

The risks for agriculture in global climate talks

IATP's Jim Harkness and Anne Laure Constantin are in Bangkok at the global climate talks. Below, Jim blogs on what is at stake for agriculture.

“Fifty years: no Bangkok!

In the sea!

Hot, hot! Very hot!”

This was the very surprising, almost haiku-like declaration of my taxi driver earlier tonight. He then said, “Ice: TOOM!,” illustrating the second word by chopping downward with one hand, in a motion that to me looked a lot like a huge chunk of the Ross Ice Shelf splitting off and falling into the sea.

I am in Thailand’s capital with Anne-Laure Constantin for the penultimate preparatory talks before the Copenhagen climate summit in December. Earlier today, we had a workshop that brought representatives of grassroots farmers’ organizations from Asia, Africa and Latin America together with climate lobbyists from development and environment groups. One important conclusion, confirming what we had observed at earlier prep meetings from Poznan to Bonn, was that this kind of exchange is sorely needed, both to inform the national-level advocacy of farm groups and to deepen the international lobbyists’ understanding of what’s at stake for farmers in the developing world. For more background, see our new fact sheet, "Integrating agriculture in a global climate deal: Benchmarks for Copenhagen."

Now the connections among these groups are finally taking shape, and participants from our workshop met this evening with Climate Action Network, the largest and most influential non-governmental alliance pushing for a strong climate deal. The hope is that we can get wider backing for language about agriculture in the climate treaty that is informed by both strong science and the climate justice demands of developing country farmers. The drafts that we have seen to date have neither.

If the clearing of forests and grasslands to expand cultivation is included, then agriculture is far and away the biggest contributor to climate change worldwide. (Its climate footprint is considerably smaller in the U.S., not because our farming is climate-friendly, but because we wiped out all of the original vegetative cover by the end of the last century.)  It’s also incredibly complex, and the science is so far behind the rest of what we know about climate change that basic questions—like how much carbon soils can sequester and for how long—remain unanswered. As a result, wild and speculative (in more ways than one) schemes are being promoted—including techno-fixes like industrial biochar that would take enormous areas of land in poor countries out of food production and put them into the hands of rich-country investors. Some of these schemes actually have a chance of getting into the official text.

Not long ago, we were concerned that the important role of agriculture might be ignored in a climate deal. Now it appears the danger is that agriculture will be included with such broad or vague language that the door will be open to schemes that could gobble up vast areas of land and displace food production without actually helping to solve the climate crisis.

Jim Harkness

—Ben Lilliston

September 14, 2009

Food, water and filmmaking: this month's Radio Sustain

In the newest IATP Radio Sustain podcast, we sit down with Brother David Andrews to discuss the fundamental human right to food and water and how this right is being established internationally. Next, we talk with Wayne Rogers of the Toronto Food Policy Council about what a food policy council is, and why every city could use one. Lastly, Filmmaker Ana Joanes discusses her new documentary FRESH and the optimism she found after exploring the farms, businesses and people that are changing—and improving— the American food system.

Listen to the entire episode here (mp3).

—Andrew Ranallo

August 24, 2009

Do we need industrial agriculture to feed the world?

Okay, only fair to warn you. I do not answer the question here. Second, the subject is not really one for a blog, more for a book. But it's important to say short things as well as long. Third, I have a bias. We all do. In this case, it matters that I like Michael Pollan's writing and that I believe there is much wrong with conventional agriculture as practiced in the United States. You will see why that is relevant in just a moment. Now back to the question.

This one really matters. The world (I guess I mean governments, but also private companies and a lot of NGOs besides) is spending on agriculture like it has not in decades. So how the money gets spent is important. Is more of what we have already better than trying to grow (and process and transport and sell) our food differently? Can we do better? If so, how?

This blog is prompted by a recent short and angry piece from the CEO of the National Corn Growers Association—Rick Tolman—in the Delta Farm Press. His article drew my attention to another article, this one in the American Enterprise Institute's magazine, The American entitled "The Omnivore's Delusion" written by Missouri farmer Blake Hurst. The title is a play on Michael Pollan, "The Omnivore's Dilemma."

As I said, I am one of Pollan's fans—I think he writes persuasively and cogently; even if I do not always agree with him and find that he makes some issues too easy. So I was curious to see what Blake Hurst had made of it. Hurst writes well, which is always a pleasure. He makes some good points, too. But in the end, he fails to give his critics' point of view their due and thereby fails to persuade. Those who agree with him, people like Rick Tolman, are happy. But those who thought that conventional agriculture was the problem before will not change their mind after reading the piece. Sorry, but driving a tractor is no longer any kind of claim to special wisdom. The question on how we, as a planet, feed ourselves and the world deserves a lot more thought, humility and openness to debate. 

Rightly or not, farmers are having to fight hard to be heard, because they are not where the money is. They are not where the subsidies stick (they flow right back out the farm door), and they are outnumbered 440:1 (at a generous estimate) by the eating population (in the U.S. that is—in much of the world, those who grow food outnumber those who do not). As the most recent Farm Bill showed, the fight is no longer among farmers and between farmers and grain traders, or between food companies and consumers. The debate now engages doctors and public health experts, environmentalists and biologists, parents and school boards, anti-poverty organizations and churches, groups against racism, trade unions and a whole slew of more organizations. 

Hurst has his argument with Michael Pollan, but Pollan is just the journalist here—a smart, rhetorically astute, journalist. Behind Pollan are the people that inspired the stories that make Hurst angry—and Hurst's retort does not answer them. Because they, too, are farmers—some of them in a long line of farmers, and some of them new to the land. They are food workers, some of them living and working in conditions that have inspired latter day Upton Sinclairs to write about their condition (Eric Schlosser is just one for instance). And then there are the others—thousands of them, who, for myriad reasons, care about what we eat, how we grow it, and whether we can do better. 

Hurst opens with an attack on a man (nameless) who he overhears holding forth on all that ails the food system. The trouble for Hurst is, whether or not the man's diatribe is well informed, that man has a significant stake in what Hurst does. It is not a symmetrical relationship—Hurst would not presume, he tells us, to tell the man how to run his real estate or tax accountancy firm. All well and good. But actually, the man in question, just like every one of us, is directly involved in Hurst's business. We eat the food he grows, we pay to clean up the mess agriculture makes, we pay the costs of a grossly inefficient and market distorting farm bill—so we have a voice. Like it or not, agriculture in the United States is not "just another business." And with the somewhat hallowed ground of "feeding the world" comes a whole lot of necessary public oversight and meddling that is not optional, but just the way it is. 

There is a lot to respond to in Hurst's article, but let me focus on just one point: 

Hurst equates organic production with a return to 1930s technology. This would be news to people like Joe Salatin, whose farm Pollan is so enthused about in Omnivore's Dilemma. As Farhad Mazar with Nayakrishi Andolon in Bangladesh explained to me, organic production in his community is not about worshipping the past, but combining traditional knowledge with modern science, and respecting certain basic principles (e.g., do not use pesticides that kill the life you want to preserve on the farm, or that harm the farmer and the farm workers). Rather than organic agriculture being a vision that is frozen in time, or a movement inspired by romantic city dwellers trying to get in touch with Little House on the Prairie (as Hurst implies), it is more like Robert Frost's "The Road Not Taken," where the majority of U.S. farmers were pushed one way (industrial, increasingly concentrated, ever less diversified and ever more dependent on external inputs) and a few—now again on the ascendent, but still only about 1 percent of the total—chose to think about productivity per acre, not per plant; to think about how a symbiotic production cycle could be maintained among the sun, the rain, the plants and the animals (something Salatin's farm, as described so vividly in Pollen's book, brings alive). Alternatives to conventional agriculture are not historic relics. They are the future, and our present. 

The questions are: Do we know enough? Can we make it work well enough? Can we bring about the simultaneous changes required (in storage, transportation, distribution, processing, retail and standards) to make this a revolution now, or will it be more incremental and hesitant and messy? It will surely involve biology and genetics, but maybe not biotechnology to promote the use of particular pesticides and herbicides. It will surely involve the market, but maybe also functioning competition laws, and a radical reassertion of the public interest in food that is healthy for the planet and people alike. 

Farmer Hurst may not like what he hears about agriculture as he flies about the country, but he might want to pay a little more attention to the science and politics behind it. If Michael Pollan was it, he can ride his tractor in peace. Thankfully, Pollan is a sign of the times. Hurst might want to turn his attention to the President, for instance, and reflect some more.

—Sophia Murphy

August 04, 2009

Free Trade and Agriculture—a Bad Idea

The July–August issue of the Monthly Review features IATP's Sophia Murphy and her essay "Free Trade in Agriculture: A Bad Idea Whose Time is Done;"  an examination of the original promises of free trade in agriculture and what actually happened—particularly to developing countries.

The essay also outlines alternative agriculture trade strategies that could help address hunger, build sustainable local foods systems and improve a trading system full of widening disparities.

The full issue of the Monthly Review is also worth checking out. Titled "The Crisis in Agriculture & Food: Conflict, Resistance, & Renewal," it includes articles by Walden Bellow, Miguel Altieri and Peter Rosset among many others. 

—Andrew Ranallo

July 20, 2009

At it again: the G-8 talks food

I doubt you missed it, even if you only caught a headline out of the corner of your eye: the G-8 leaders gathered for three days, July 8-10, (in what looked like a splendid meeting room) in L'Aquila, Italy (63 miles east-north-east of Rome). They meet every July, and every year I hope the very expensive habit will somehow have died a quiet death. No luck so far, but reportedly Angela Merkel of Germany agrees with me. I see that as a positive sign that change is nigh. Not that Merkel's proposal is all that useful—it sort of misses the point about exclusion. But it is better than just 8.

—Sophia Murphy

July 10, 2009

The Coming Carbon Bubble

Matt Taibbi at Rolling Stone has a written an explosive article on the exploits of Goldman Sachs. The article charts the bank's remarkable political influence, and its role in creating a series of inflationary bubbles (the Great Depression, tech stocks, housing and food/fuel), while somehow always emerging intact and lavishly compensating its employees.

Last year, IATP documented how Wall Street speculators, including Goldman Sachs, drove up agriculture commodity prices and contributed to the global food crisis. Taibbi reports on how Goldman is positioning itself once again to take advantage of the new U.S. carbon market established in the climate change bill passed by the House of Representatives on June 26.

Taibbi writes, "The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance."

—Ben Lilliston

July 08, 2009

Land Grabbing

When the sharp rise in food prices hit in 2007, countries and corporations began looking for land around the world that could produce both food and biofuels. The focus of so-called "land-grabs" has been on countries in Africa, South America and Asia. But, different from past forms of colonialism, much of the land investment is being led by southern countries or companies based in the southern hemisphere. In a new article in Foreign Policy in Focus, IATP's Alexandra Spieldoch reports on the extent of global land grabs and analyzes their potential effects on food production and hunger around the world.

—Ben Lilliston

June 25, 2009

A Glimmer at UN on Global Financial Crisis

IATP's Steve Suppan is blogging from the U.N. Conference on the World Financial and Economic Crisis in New York.

Yesterday, at the opening plenary, government delegates agreed to adopt an outcome document that is the result of more than four months of intense and sometime bitter negotiations. According to the United Nations, another 100 million persons could lose their jobs by 2010, as a result of an economic crisis triggered by the deregulation of the U.S. financial services industry. Most of these jobs will be lost in countries without unemployment insurance, creating conditions for political instability in dozens of developing countries. This situation led the U.S. Director of National Intelligence Dennis Blair to tell the U.S. Senate committee on intelligence in February that the economic crisis had replaced terrorism as the number one U.S. national security threat.

IATP's President Jim Harkness participated in the initial meeting in October 2008 that launched the preparation of the negotiations process. IATP provided input on regulating commodity price volatility to the Commission of Experts advising the President of the General Assembly on issues to be addressed in the outcome document. IATP also contributed to a U.N. Conference on Trade and Development symposium that was part of the high-level conference (HLC) preparations.

Most of the ideas of the Commission of Experts to provide short-term economic stimulus to developing countries and to enhance the U.N.'s role in global economic governance were cut in the long and sometimes brutal negotiations. The United States and the European Union wish to keep economic governance in the hands of the World Bank and International Monetary Fund, where they have effective veto power over all decisions. The U.S. and EU proposed that the outcome document should only register the impact of the financial crisis on developing countries and welcome the work of the G-20 in proposing policies and promising financial resources for the IMF. The U.S.and EU wanted no commitments to consider the creation of new governance instruments and funding to complement the IMF and World Bank, both of which failed to warn member countries of the dangers of financial industry deregulation and liberalization through the World Trade Organization and free trade agreements.

However, the outcome document provides for the creation of a working group of the General Assembly, advised by a panel of experts "to follow up on issues contained in this outcome document." This diplomatic achievement may seem like a weak solution to the economic crisis that has spread from Wall Street around the world. But many, including the mainstream media, dismissed even the possibility that the United Nations could agree on any terms of a document to establish a new framework for economic governance and to gather resources that would not be provided as loans by the IMF or the World Bank. The outcome document establishes that possibility.

At the first HLC multi-stakeholder dialogue today, IATP was among five non-governmental organizations selected to comment on the HLC outcome document and the opportunities it presented to involve U.N. agencies and civil society organizations in longer term financial institution reform and to implement short-term stimulus packages to prevent an economic breakdown in developing countries. So many government delegates wished to speak that IATP did not have a chance to do so. But Roberto Bissio of Social Watch, a long-time IATP ally, welcomed the outcome document and pointed to opportunities it presented for investing to protect the world's most vulnerable populations. Beverly Kneen of Jubilee South emphasized the need to direct non-debt generating money to developing countries by closing tax evasion loopholes, illegal capital flight, and repudiating illegally contracted debt, rather than allowing an IMF and World Bank-controlled debtors' crisis.

There is much to  be done at the conference before the General Assembly formally adopts the outcome document on June 26. IATP will continue to work with groups from around the world to ensure that the challenge of the financial crisis to development, including rural development and food security undermined by deregulated commodity markets speculation, will be met.

—Ben Lilliston

June 24, 2009

Separating the wheat from the chaff

Remember when the cost of a loaf of bread rose rapidly last year due to skyrocketing wheat prices? A new Senate report says excess speculation by financial investors with no connection to actual wheat markets drove up prices for profit. These speculators were aided by lax enforcement from government regulators. The findings by Senate investigators are consistent with what we found in our report last year on the role of commodity speculation in the global food crisis.

Commodity futures markets have traditionally brought together buyers and sellers in a market, like the Chicago Board of Trade (CBOT), to bid, offer and finally settle on a price for the delivery of a certain quantity of a commodity (say, wheat) at an agreed time and place. The contract enables commodity sellers, such as grain elevator operators, to avoid sudden price drops and commodity users or traders to avoid sudden price increases, e.g., due to tight supplies, crops failures or logistical bottlenecks. Both buyers and sellers use futures contracts to “hedge” their price risk.

The report, by the Senate Permanent Subcommittee on Investigations, focused on the disruptive role of commodity index traders who have no connection to the real-world wheat market. Instead, these speculators were interested in buying low, driving up prices, and selling high for a spectacular profit. The Senate report found that commodity index traders increased their holdings from 30,000 wheat contracts in 2004 to 220,000 contracts in 2008. In each year since 2006, these commodity index traders held between 35-50 percent of wheat futures contracts.

What was the effect of all this new outside money entering the wheat market? The gap between prices on the CBOT and actual cash prices paid at grain elevators grew from about 13 cents per bushel in 2005 to $1.53 in 2008—a ten-fold increase. In other words, what was happening on the CBOT had little connection with actual supply and demand.

The Commodity Futures Trade Commission (CFTC) is supposed to prevent excess speculation by restricting traders to no more than 6,500 wheat contracts at a time. But the Senate report found that the CFTC allowed some commodity index traders to hold up to 10,000, 26,000 and even 53,000 contracts at a time.

Let's hope the Senate report spurs action. It makes a number of strong recommendations for reform, including limiting commodity index traders to 6,500 contracts (and potentially decreasing the number to 5,000). House Agriculture Committee Chair Collin Peterson has already introduced legislation to toughen regulations on commodity markets.

The United Nations is holding a summit on the global financial crisis this week in New York. IATP's Steve Suppan is attending and will address attendees today to call for international regulation of commodity exchanges. The chaos caused by big commodity index funds on the Chicago exchange reverberated around the world with higher food and energy prices. Tougher regulations in the U.S. will help global markets, but to ensure that speculators don't simply jump to commodity markets in London or elsewhere with weaker controls, a global approach is needed.

—Ben Lilliston

May 28, 2009

Have We Rejoined the World?

This commentary first appeared in the Huffington Post.

In some ways, it is difficult to critique the new administration without feeling like one is blowing the wind out of the sails at a time when the "global" boat needs support to stay afloat. The Bush administration's unilateral approach to foreign relations isolated the U.S. and made it difficult to work with the global community to solve some of our most difficult challenges. To assess the Obama administration's efforts to re-engage with the world, we will consider four areas where global leadership is urgently needed: reinvigorating the United Nations, climate change, the food crisis, and trade.

One of President Obama's first actions was to appoint a U.S. Ambassador to the United Nations and to give her cabinet-level status. The U.S. also announced that it would seek a seat on the Human Rights Council. Both of these moves are a direct statement to the world that the U.S. is back at the U.N. and ready for global dialogue. These are important symbolic gestures. Yet the administration has not pushed for the ratification of any important treaties or conventions, such as the International Covenant on Economic, Social and Cultural Rights, that most other countries around the world have approved.

The Obama administration has made great strides by publicly recognizing that a climate change agreement is needed. However, this isn't enough. As climate talks proceed, the U.N. Secretary General has indicated that the world cannot wait for the United States. The U.S., as the largest emitter in the world, must act in bold ways to cut greenhouse gas emissions. But the administration has not been forceful enough at the domestic and international levels in pushing for an approach that sets a real cap for polluters, resulting in real greenhouse gas reductions. The administration has yet to sign the Kyoto Treaty, and it is still sorting out its policy agenda in Congress. So far, its proposed emissions cuts are lower than what other countries are promising. The U.S. has made no commitments to provide funds to least-developed, small island, and land-locked developing nations--countries that are urgently preparing for climate change.

In its response to the food crisis, the administration pledged to double its long-term agricultural development assistance to more than $1 billion this year alone. Yet much of this money is earmarked for new technology to increase food production in developing countries instead of addressing the real problems: the need for more access to food and investment in sustainable production methods. President Obama has not come out in support of food reserves--either in the form of a strategic grain reserve in the U.S. or global and regional reserves to address hunger. Meanwhile, the crisis grows.

The U.S. trade agenda is mostly stalled so President Obama is slightly off the hook--for now--although at this point, his trade agenda appears not much different than that of the Bush administration. During the election campaign, Obama expressed support for the renegotiation of NAFTA but has since backed away from this position. He is also working to expand so-called free trade by finalizing the Panama and Colombia FTAs, as well as completing the controversial Doha talks at the World Trade Organization.

In a nutshell, one of the more encouraging aspects of the new administration is that it acknowledges the need to work together at the global level on a variety of fronts. However, beyond the rhetoric, the Obama administration has much work to do to change its relationship with the world. This is the crux of the matter.

—Alexandra Spieldoch