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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.

Founded in 1986, IATP is rooted in the family farm movement. With offices in Minneapolis and Geneva, IATP works on making domestic and global agricultural policy more sustainable for everyone.

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May 2008

May 30, 2008

The Heart of the Food Crisis - Inequity

It is always a pleasure to read Amartya Sen. He is a Nobel Prize winner (1998), has written extensively on famine, hunger, gender issues, human rights and politics. He is a serious if gentle critic of much of the determinism that accompanies proponents of today's globalization policies (those that insist the world has no choice but to open its markets and privatize economic services). He is a professor at Harvard University.

All too rare among economists, he argues convincingly from philosophical and ethical principle, not from some arbitrary imposition of economic "law" (that increased demand will always raise prices, or that lower tariffs will always reduce prices in local markets). He is an empirical economist, preoccupied with what happens when economics mixes with politics and social norms and culture. Among many ideas, he and Jean Drèze proposed ameliorating the situation of widows in traditional Hindu culture, who often find themselves utterly dependent on relatives and all too often neglected or even abused. Their idea was simple: a directed government pension that would provide the widows with some economic independence and the improved social standing that accompanies an income.

Amartya Sen's op-ed in the New York Times earlier this week returns to the argument he made in the first book of his that I read, Poverty and Famines. Namely, that is not just poverty that makes people vulnerable to hunger, but inequitable income growth. The example he gives in his op-ed is 1943 Bengal, when the boom created by a war economy in the city of Calcutta, combined with government policies that bought up food in rural areas to try to keep food inflation down in the cities, resulted in some 2 to 3 million deaths in those rural areas. The boom raised wages in the city, and therefore purchasing power, but wage increases did not reach rural areas. In effect, the rural poor were priced out of the market by the newly richer urban population.

His point cannot be made often enough: food scarcity has a number of causes, some of them out of our control. But, and this is another central thesis of Dr. Sen's work, where there are accountable systems of government, famines do not occur, because governments intervene to make food available to all, if only to avoid riots. Governments will introduce rations or welfare payments or otherwise ensure at least a minimum amount of food reaches everyone, overriding the market's rather rougher system of justice: to the highest bidder the food.

One factor left out of his op-ed (700 words only takes you so far) is oil. Oil speculation is a significant new supply issue that has a profound effect on agriculture. The widely anticipated continued increase in oil prices will leave food prices permanently higher, and more volatile. Oil is a fundamental ingredient in the global food supply, both as an input and as the principle means of powering distribution, storage and processing. A recent Wall St. Journal article highlights the dramatic increase of fertilizer costs (a 65 percent rise for American farmers in the past year), linked to the rising price of oil, as well as the cartels that are common in the industry (and apparently protected by century-old exemptions to anti-trust laws).

Whether or not current prices are justified, we have known for a long time that oil is in finite supply and that we do not yet have technologies to replicate the energy yields from other sources. All of us face big adjustments in the way we live and work. Agriculture is no exception - the premise of the Green Revolution was based on oil to increase yields. That approach, with all the controversy that surrounded it, has run its course. The world urgently needs the new investments described by the IAASTD. Biofuels to meet a European or U.S. mandate might indeed exacerbate all that plagues global agriculture. But creating local energy sources from biomass in developing countries should be a top priority for building resilience in the face of the food crisis. The World Bank has announced a new $1.2 billion program for food and agriculture in the neediest developing countries. If only we could have more confidence it will be spent where it is needed, making the transition to agriculture that is less dependent on water, fertilizers and oil. As Dr. Sen says, first we need to "understand the nature of the problem." As far as World Bank President Bob Zoellick goes, I have my doubts.

Sophia Murphy

May 29, 2008

Organic Food in China

IATP President Jim Harkness is blogging from China through June 14.

After a restful overnight train ride down to Shanghai from Beijing, I was able to check into my hotel and still make it to the opening of the BioFach China 2008 International Organic Trade Fair and Conference.

There are over 300 exhibitors and the organizers expect 10,000 or more people to attend. The crowd today was mostly Chinese, many of them organic producers and people considering converting to organic. Lots of people were simply enjoying the free samples of organic everything: rice, dumplings, honey, walnuts, pork, corn on the cob, milk, tea, fruit and vegetables. Admission was free as long as you filled out a registration form and a variety of non-organic entrepreneurs clearly saw this as an opportunity. Three different men offered me fake Rolexes inside the exhibition! I kept expecting to see knockoff “Organic” brand vegetables for sale. I also met people from as far away as Fiji, Trinidad and Ghana--all of them from government import inspection agencies.

The vast majority of products being exhibited were Chinese-grown and intended for export, but speakers at a workshop being held concurrently with the exhibition pointed out that this is a less and less promising area. No one talked explicitly about the food safety scandals of the past year, but Mr. Chuk Ng of Naturz Organics pointed out that more and more products are being turned back by customs agents in Europe. Mr. Li Xianjun of the China Organic Food Certification Center (COFCC) noted that organics are a shrinking percentage of China’s agriculture exports. Ong Kung Wai, representing IFOAM (International Federation of Organic Movements), said that only 3 percent of all global organic sales are currently outside of Europe and North America (and most of that is probably in Japan). He urged producers in China to focus on “growing” the domestic organic market.

We at IATP also see the potential for organic agriculture in China to help feed their domestic market. Government support for both organic food and food safety are currently almost entirely focused on exports, leaving 1.4 billion Chinese consumers with a deeply compromised and unsustainable food supply. Surveys have consistently shown that China’s urban middle class is concerned about the safety and quality of their food supply and willing to pay more for food they can trust. But an exhibitor, Thomas Lin from Garden Citi Inc, explained to me that the term “organic” is unfamiliar in China, and there is rampant counterfeiting of “green foods.” One of the speakers in the workshop said that there is also a much larger price premium for organics in China than in the West. Here organics are generally three times as expensive as equivalent conventionally-grown products. In the U.S., the difference is closer to 25 percent.

Why is there such a great difference in price? Are there obstacles for organic agriculture in China? Or subsidies supporting conventional agriculture that make it so much cheaper? Tune in again…

Jim Harkness

May 28, 2008

The Mandate of Heaven

IATP President Jim Harkness is blogging from China through June 14.

I was welcomed back to Beijing yesterday by an official “severe air pollution” warning from the city government. Skies have been a sickening yellowish gray, as dust from a sand storm mixes with the city’s smog before covering every surface indoor and out with a thin film of grime. Such storms are common in Beijing in March, but this one is unusually late. On my last trip to China, in April, I got stuck in a typhoon in Hong Kong and was told that they aren’t supposed to hit until July. And January saw the biggest blizzard disaster in decades strand tens of millions of people trying to make their way home for the Chinese New Year.

Of course, these are minor breaches of the natural order compared to the Sichuan earthquake, but all manner of disruptions (including the violence in Tibet and this spring’s stockmarket crash in Shanghai) are assessed here for their cosmic significance. The unanimous judgment of fortune tellers and text-messagers in China is that 2008 is shaping up as the most “inauspicious” year in memory.

I will be blogging from China from now until June 14. On this trip I am lecturing at the Central Party School of the Chinese Communist Party, attending a major organic convention in Shanghai, meeting with rural development experts in Yunnan Province and co-hosting a workshop on U.S. and Chinese agriculture issues with economist Daryll Ray. So stay tuned.

What could possibly go wrong?

Jim Harkness

May 27, 2008

A Global Liability System for Biotech Companies?

The battle over genetically engineered (GE) crops continues to be fiercely fought and shows no sign of easing up. Clashes have taken place on the farm, in the supermarket aisles and at global institutions like the World Trade Organization and the United Nations.

Last week, another shot was fired across the bow of the biotech companies. The 147 countries who are parties to the Biodiversity Convention's Cartagena Protocol on Biosafety agreed to set rules "for liability and redress for potential damage caused by the movement of genetically modified organisms (GMOs)" to native plants or animals. In essence, this new international regime will set rules for holding biotech companies accountable for damages associated with the technology. IATP's Kristin Dawkins proposed ideas for how such a liability regime could work in this 2004 paper.

The agreement is expected to turn into an accord to be approved at a 2010 meeting in Japan. Over the next two years, participants will decide how responsibility for damages will be determined and how damage amounts will be assigned. The agribusiness publication Feedstuffs reports that while the legal details are unclear, the burden of proof will likely be with the injured party and predicts the rules will mean little changes for industrialized countries. However, the new rules might improve legal standing for developing countries in cases where damages occur.

Apparently several major biotech companies were concerned with the agreement. Friends of the Earth International reported on a last minute effort by six biotech companies to push an alternative proposal that would settle damages related to genetic contamination through private compensation with individual countries, rather than a global set of liability rules.

Where is the U.S. in all this? The agreement would not be legally binding in the U.S. because it has not ratified the 1992 Biodiversity Convention and thus is not a party to the Cartegna Protocol. It's hard to imagine the U.S. government supporting such a system. Here in the U.S., we've struggled just to protect farmers who have had their crops unknowingly contaminated with GE material from getting sued by Monsanto.

In September 2006, the Bush Administration and biotech companies won a victory at the WTO by arguing that the European Union's regulatory system for GE crops violated trade rules. Now, the UN-based treaty system answers back.

The battle over GE crops has gone on for over 15 years - and still going strong.

Ben Lilliston

May 23, 2008

British Prime Minister's Plan on the Food Crisis

This week, the UN’s Economic and Social Council (ECOSOC) held a “Special Meeting on the global food crisis” at the UN headquarters in New York. The meeting's goal was to help move the international community towards action in addressing the causes of the food crisis.

Speakers included Malawi President Bingu wa Mutharika, British Prime Minister Gordon Brown, experts Joachim Von Braun and Jeffrey Sachs as well as DuPont Vice President James Borel, among others. UN Member States then had a chance to react, and many did. All the interventions are available on Ecosoc’s dedicated webpage.

Some may, with reason, consider this as only one among too many meetings to discuss the food crisis. International farm leader John Wilkinson recently wrote “it’s time to act instead of talk, it’s time to plant fields instead of having conferences.”

However, the meeting did feature some interesting debates.

Let us focus on Gordon Brown’s intervention. A short one: around four minutes. But an efficient one: in this limited amount of time, he outlined a dozen of measures the world should take to address the food crisis. They included efforts to: encourage sound policies on land tenure and property rights; set up input subsidies; implement price controls on commodity markets; tax regimes for the agriculture sector; build a regulatory environment around agribusiness; invest in research and infrastructure; and stop dumping.

IATP supports many of these same measures as well (we would have added other steps, including the central need to involve farmer organizations). It is encouraging to hear a powerful world leader support efforts to invest in agriculture and address agribusiness' market power, measures that have too often been downplayed over the past decades.

Of course, the details of implementation matter, and there is no guarantee that we would agree with Brown’s plan there. But most puzzling to us, really, is why the conclusion of Gordon Brown’s speech focused on how a rushed Doha Deal will provide a solution to the crisis. In fact, such a rush would make it more difficult to implement the measures he recommends. M. Brown, why don’t you take a look at IATP’s analysis?

Anne-Laure Constantin

May 22, 2008

USDA to Eliminate Pesticide Tracking

One of the main promises made by supporters of genetically engineered crops was that the technology would reduce pesticide use. Unfortunately, the data didn't back up the rhetoric. A backgrounder by the Center for Food Safety found that herbicide use to fight weeds in the U.S. has spiked upwards since 2002 for cotton, corn and soybeans - crops with the highest adoption rate of genetically engineered seeds.

How do we know herbicide use is up? The U.S. Department of Agriculture's National Agricultural Statistics Service compiles data on pesticide use through extensive farmer surveys and breaks it down by crop, pesticide and state. 

The NASS has been gradually scaling back its pesticide reporting program. In the 1990s, NASS issued reports every year. For most of this decade it has been every two years. Now, the agency says it will completely eliminate the program. This is beyond unacceptable.

Pesticide reporting data is absolutely critical to understanding the effect these toxic chemicals have on wildlife and water. We need to understand how these chemicals effect public health, including the health of farmers, people living rural communities and consumers. For example, last month IATP published a fact sheet on the connection between pesticide exposure and Parkinson's disease. And finally, we need to understand the effects in the fieldin areas such as yields and weed and pest resistance.

Yesterday, IATP and 43 other environmental, sustainable farming and health advocacy groups sent a letter to the USDA calling on the agency to reverse its plan to eliminate the pesticide reporting program. The USDA claims the program's elimination is simply a budgetary issue. But certainly the hidden costs to our health and the environment of living in the dark about pesticide use in the U.S. will be much greater.

Ben Lilliston

May 21, 2008

The food crisis and corporate profits

How are global agribusiness corporations doing as the world experiences a food crisis? Very well, thank you!

Just take a look at this four minute video, where GRAIN’s Devlin Kuyek exposes the “structural meltdown of the food system” that is at the source of the current food crisis. According to Kuyek, Cargill is at the moment making $471,000 an hour in profit!

His presentation builds on a recent report in which GRAIN highlights the indecency of agribusiness profits in this time of food crisis.

Anne-Laure Constantin

May 20, 2008

Exporting a Bad Idea on Food Safety

In 2007, 30 million pounds of ground beef was pulled off the U.S. market in 20 recalls because of contamination concerns. The recalls highlighted serious weaknesses in our deregulated food safety system. Over the last decade, we've reduced the number of food safety inspectors and instead rely more on the food industry to regulate itself.

While the U.S. domestic food safety sytem is cracking, we are also importing more food than ever - with imports projected to grow. What is the Bush Administration response to concerns that other countries may actually have weaker food safety systems than the U.S.? Perhaps to no one's surprise, the Administration is pushing a series of proposals, developed along with the food industry, to expand the U.S. deregulation model to other countries..

In a new report issued today, IATP's Steve Suppan analyzes the Bush Administration plan on import food safety and offers some concrete steps for the next Administration to bolster import food safety. See our press release from today below:

Bush Administration Prioritizes Trade Over Food Safety

Minneapolis – A Bush Administration interagency working group is pushing a flawed import food safety system that prioritizes trade considerations over public health, finds a new report by the Institute for Agriculture and Trade Policy (IATP).

The report, “Import Food Safety in the Twilight of the Bush Administration” (at www.iatp.org) by IATP’s Steve Suppan, analyzes the recommendations of the Interagency Working Group on Import Safety – established by the Bush Administration following a series of recalls of contaminated and hazardous pet foods and toys imported from China last year. U.S. food imports are projected to greatly expand in the next decade. About 60 percent of fruits and vegetables and 75 percent of seafood currently consumed in the U.S. are imported.

Many of the IWG’s 14 recommendations and 50 action steps are designed to reduce import inspection and testing and instead emphasize safety certification of foreign export facilities, the report found. The IWG recommendations rely largely on exporters and importers to implement voluntary prevention controls against food and feed contamination. This approach extrapolates internationally the highly criticized U.S. food safety management system whose breakdowns resulted in large meat product recalls in 2007, culminating in the February 2008 recall of 143 million pounds of ground beef.

“The IWG report prioritizes the trade objectives of the food industry, rather than ensuring a safer food supply for consumers,” said Suppan. “Many of the regulatory tools proposed by the IWG have exposed U.S. consumers to unsafe or potentially unsafe food when implemented domestically. The Administration’s proposal was developed with the help of industry to avoid greater rates of physical inspection and testing. This off-shoring and outsourcing of product safety provides another layer of plausible deniability for corporate liability prevention.”

The Bush Administration approach shifts some legal responsibility for U.S. import safety from U.S. agencies and importers to foreign exporters. A new Administration should instead more tightly regulate the importing companies over which the U.S. government has jurisdiction, the report recommends.

“Fortunately, there are steps that the next Administration could take to prioritize public health and greatly improve the safety of our food,” said Suppan. The report’s recommendations for the next Administration include:

• Increasing the number of inspectors at our ports with better inspection technology;

• Allowing regulators to limit the number of ports of entry for high risk products;

• Letting regulators suspend import licenses for repeated failure to comply with food safety and other import rules;

• Working with developing country food safety authorities on training and infrastructure to ensure compliance with U.S. import requirements.

• Incentivizing importer compliance with import requirements by establishing an importer performance bond that would be reimbursable according to the importer’s compliance rate.

The full report can be read at: www.iatp.org

Ben Lilliston

May 19, 2008

Food, Water and Climate Challenges

Food prices rose 4 percent in the United States last year, the highest rise since 1990. All over the world food prices are on the rise. At the spring meetings of the International Monetary Fund and the World Bank finance ministers wanted to focus the world’s attention on food crisis rather than the credit crisis. There are many factors contributing to this current crisis, including the rising price of oil, deregulated agricultural markets, financial speculation and biofuels. Another key factor is climate change, which is affecting
crop yield and food production. It is time for us to get serious about understanding the way climate change affects water resources for food production and conversely the way agricultural water use is leading to climate change.

In January, scientists at the Scripps Institution of Oceanography in the U.S. published an article in the journal Science that said what many climate change experts had already been saying for some time: global warming is responsible for the extreme changes that we see in the hydrological cycle in the western U.S. Moreover, the scientists from Scripps found that up to 60 percent of the climate-related trends of river flow, winter air temperature and snow pack between 1950 and 1999 are human-induced.

While the Scripps scientists analyzed data for the western United States, similar changes have been happening around the world in the second half of the twentieth century. The Fourth Assessment Report of the Intergovernmental Panel on Climate Change (2007) found that “climate and freshwater systems are interconnected in complex ways and that any change in one of these systems induces a change in the other.” The IPCC further concluded that the changes in precipitation patterns and glacier melts are projected to significantly affect water availability for an entire range of socially valued water uses, including human consumption, agriculture and energy generation.

The most dramatic effect of climate change is likely to be on agricultural production. The impact is already manifesting itself in countries such as Australia. The global price of wheat hit its highest level in decades in December, partly due to Australia's drought. Irrigated agriculture accounts for almost 70 percent of world water withdrawals and close to 90 percent of the total consumptive water use (the portion that is lost to the
immediate environment for use). Existing irrigation and drainage infrastructures have been designed for stable climate conditions. They are very likely inadequate to cope with extreme climatic variations in precipitation and reduced water supply reliability and availability, as well as floods. On the other hand, since irrigation accounts for such a large percentage of total water withdrawals, any reduction in irrigation water use (either through introducing water use efficient technologies or through changing agroecological
practices) will go a long way in coping with climate-related water stress especially, in water-stressed regions.

While irrigated agriculture accounts for 40 percent of global food production, the remaining 60 percent of world’s food crops are produced by those practicing rain-fed agriculture. Such agriculture covers more than 80 percent of global agricultural land. In these regions, particularly those without local water conservation measures, crop productivity depends on sufficient precipitation to meet both evaporative demand and soil moisture needs. Any variation in precipitation patterns and temperature increases can affect crop productivity substantially. The IPCC predicts that in some countries, “yields from rain-fed agriculture could be reduced by up to 50 percent by 2020.” This would most certainly affect food security in many communities and nations.

But it is not only that climate change-related water stress will affect agriculture. The converse is also true: current water use patterns and associated practices contribute to climate change. It is noteworthy that the two sectors in the world that use the most water, chemical intensive agriculture and fossil fuel-based energy production, are also the biggest contributors to global warming, which in turn further increases water stress in many regions. For example, agriculture, as it is practiced now, sequesters much less carbon than it used to because of land use changes. A recent report by Greenpeace, “Cool Farming: Climate Impacts of Agriculture and Mitigation Potential,” found that “industrial, chemical-intensive agriculture degrades the soil and destroys the resources that are critical to storing carbon, such as forests and other vegetation.”

There are a number of ways in which national agricultural, trade and energy policies affect both water resources of a nation and climate change at the global level. Let us take a brief look at irrigated agriculture. Irrigation water use increased dramatically in most parts of the world in the second half of 20th century. This was abetted by the building of massive water systems including dams, reservoirs, aqueducts, pipelines and canals that brought water to otherwise water scarce regions. This growth in irrigated agriculture is part of an unprecedented expansion of chemical intensive agriculture that was originally sold as a way to feed the world and also to increase export earnings through commodity-based trade.

The pursuit of export-led growth in agriculture has also been dependent on intensive use of fossil fuel-based chemical inputs, contributing greatly to climate change. In addition, the transport of agricultural commodities around the world and intensive agricultural practices (such as confined animal feedlots and indiscriminate fertilizer-use) also contributes to greenhouse gas (GHG) emissions. According to the World Bank’s 2008 report on agriculture, intensive agriculture directly contributes about half of the global emissions of two of the most potent non-carbon dioxide GHGs: “Nitrous oxide emissions from soils (from fertilizer application and manures) and methane from enteric fermentation in livestock production.” Each account for about one-third of the farm sector's total non-carbon dioxide emissions and are projected to rise with increased meat consumption becoming a norm in emerging economies.

Agricultural practices geared towards growing export-oriented monoculture crops are chemical intensive and have resulted in high levels of pollution in local water systems. In addition, nitrogen (N) used in fertilizers leaches into water courses increasing the indirect nitrous oxide emissions downstream. This model of production has intensified water use, both in terms of the water going into the growing of the commodities themselves, but also in terms of inter-basin water transfers.

Protecting our waters in local watersheds and wetlands and using them judiciously in support of local agricultural systems and livelihood practices, rather than continuing with the current strategy of promoting export-oriented, monoculture, industrial, water-guzzling agricultural systems, is key to reducing the water sector’s direct contributions to climate change. Moreover local practices that conserve and enhance local water availability to ensure resilience of rain-fed agricultural systems are necessary as an adaptation mechanism, to meet climate challenges and to help meet food security goals, two of the biggest challenges for developing countries today. It is time to reevaluate our agricultural policies that promote water and energy intensive agriculture.

We will have to make some major changes in our agriculture systems to address some of the upcoming climate challenges. Doing so will help us cope with extreme changes in the hydrological cycle and resultant food and water crises many communities and nations are sure to face. Effective and sustainable water management in agriculture in support of healthy food systems needs to be part of the climate solution.

Shiney Varghese

May 16, 2008

Growing Minnesota Biodiesel - Responsibly

Minnesota recently passed legislation to increase the biodiesel content of diesel fuel sold in the state from the current 2 percent to 20 percent by 2015. The Institute for Agriculture and Trade Policy, together with Minnesota farm and environmental organizations, worked with legislators to make sure that the mandate, which is the highest in the nation, will not only support the biodiesel industry, but will also specifically benefit Minnesota’s economy and environment and help us move forward towards the next generation of biofuels.

While the merits of mandates are debatable, if they are going to be put in place, they must incorporate provisions to ensure that Minnesota's farmers, economy and environment are the beneficiaries - not just a few multinational processors.

In particular the legislation included:

  • A first–in-the-country palm oil ban (and possibly first in the world - if you know of others, let us know). Virgin palm oil cannot be used to produce biodiesel to meet the mandate, which will help assure that Minnesota does not contribute to environmental destruction and rainforest clearing associated with new palm oil production - a practice outlined in our recent report Biofuels and Global Biodiversity.
  • Focus on Minnesota and Midwest production. The increasing levels of biodiesel content can only go into effect if Minnesota is producing at least 50 percent of mandated production level in-state from feedstocks produced in the US and Canada, assuring that this market share will benefit Minnesota farmers and biodiesel producers.
  • Opening the door for the next generation. Five percent of the mandate needs to be met with biodiesel produced from non-traditional feedstocks (waste oil, algae, etc.), which will help diversify biodiesel production and assist with a shift away from food and feed crops such as soybeans.
  • Assessing the costs and benefits. Reports to the legislature are required annually on price and supply of biodiesel, as well as the impacts of the mandate on the Minnesota biodiesel industry and the use of Minnesota crops and materials used for biodiesel production.

Here is the full text of the bill:

Jim Kleinschmit

May 15, 2008

The WTO Will Not Solve the Food Crisis

If I hear Pascal Lamy say one more time that the Doha Round will help solve the current food crisis, I am going to explode! For months, the WTO chief has used every public opportunity (and then some) to push for the completion of the WTO’s trade round to solve the current food crisis. He is wrong.

The food crisis is the result of a series of circumstances, including alarmingly low stocks for staple foods—wheat, rice, and corn; high oil prices; poor climatic conditions in major food producing areas; and natural resources depletion. On top of this, more and more people can now afford dairy products and meat; and, rich countries have started to use food crops for biofuels to supplement oil consumption.

The WTO has nothing to say about most of these issues. The climate and energy crises are both outside the WTO's mandate and will likely remain that way. The WTO has no control over the oil oligarchy, OPEC, nor over biofuels policies in the U.S. and Europe. Nor does the WTO has a say over how the world plans to address the growing environmental crisis.

Instead, existing WTO agreements and the proposed Doha reforms are likely to intensify the food crisis. Further deregulation and liberalization will make agricultural markets more volatile and will strengthen the position of dominant players, mainly transnational agribusinesses like Cargill, Monsanto and ADM, in food and agricultural markets.

It is time to build a trading system that cooperates with international efforts to secure food for all. Trade agreements must allow governments to reestablish national and regional food stocks. Global commodity markets must be better managed. And it is time to create international competition laws to prevent transnational agribusinesses from abusing their market power. If Pascal Lamy could start proposing these steps we might start getting somewhere in resolving the crisis in our food system.

Carin Smaller

May 14, 2008

Farm Bill a Missed Opportunity

The 2008 Farm Bill to be voted on by the House and Senate this week includes incremental gains for conservation, renewable energy, food aid and healthier, local food systems. However, it fails to reverse decades of deregulation that have increased agricultural market volatility to the benefit of global food corporations, and at the expense of farmers, consumers, rural communities and the environment.

Unfortunately, this Farm Bill does nothing to reverse the trend toward windfall profits for global food conglomerates. These companies have succeeded in pushing an extreme agricultural market deregulation agenda over the past three farm bills, including this one.

Congress dismantled grain reserves, acreage set asides and other market management mechanisms in the 1996 Farm Bill. Since then, agribusiness companies have reaped enormous profits. For example, Cargill’s profits increased nearly 1000 percent from $280 million in FY1997-98 to $2.34 billion by FY2006-07. In April 2008, Cargill reported net earnings of $1.03 billion in third quarter earnings, up 86 percent from $553 million in the same period a year ago.

These same global food corporations saw increased profits when farm prices collapsed by 40 percent after the market deregulation of the 1996 Farm Bill, and they are making even more money now that food prices have risen to crisis levels. Market deregulation in effect privatizes crucial market information, which suppresses price transparency and price discovery. This, in turn, increases the ability of big firms to manipulate prices.

While the debate continues to rage over how many billions in taxpayer subsidies are needed to maintain a legitimate safety net for family farmers, it has been a few big corporations that have been the primary beneficiaries of our commodity programs. Researchers at Tufts University found that industrial animal factories, owned and controlled by these same corporations, enjoyed $35 billion in indirect subsidies by being able to buy feed crops at 20-25 percent below the cost of production – a practice supported by the last two Farm Bills. Unfortunately, these corporate beneficiaries have almost completely evaded scrutiny in the Farm Bill debate.

Two new reports, from the Union of Concerned Scientists and the Pew Commission on Industrial Farm Animal Production, have documented the negative public health, environmental and social impacts of this unsustainable model of industrial meat production. The UCS report calls for strengthening conservation programs and antitrust enforcement; while replacing commodity subsidies with price supports to curtail this multi-billion dollar, cheap-feed subsidy to industrial animal factories.

Another glaring failure of the pending Farm Bill was the lack of political will in the House-Senate Agriculture Conference Committee to strengthen antitrust enforcement. While there were peripheral gains in curtailing the worst abuses of increasingly exploitive contracts against farmers, a majority of the conferees caved-in to the corporate lobbyists on the more substantive market reforms, like the ban on packer feeding, that would have curtailed anticompetitive practices that deny independent farmers fair market access.

This lack of political resolve couldn’t have come at a worse time for independent cattle ranchers. JBS-Brazil has recently launched a takeover of two of the top five U.S. beef packers, National Beef and Smithfield; and the nation’s largest cattle feeder, Five Rivers Ranch Cattle Feeding. If approved by the Justice Department, the merger would make JBS-Brazil—currently the largest beef packer in the world—the largest beef packer in the U.S. as well. Passage of the packer ban would have provided federal regulators with an important tool to potentially block JBS-Brazil from acquiring Five Rivers, and thereby might have mitigated one of the most anticompetitive aspects of the acquisition.

On the positive side of the ledger, the new Farm Bill does contain important bioenergy incentives. One important new program is the Bioenergy Crop Transition Assistance Program, which would provide farmers with financial incentives and technical assistance to accelerate the growing of “Next Generation” bioenergy feedstocks. It is based on the Reinvest in Minnesota Reserve–Clean Energy bill recently passed by the Minnesota Legislature. IATP worked in collaboration with other groups and members of Minnesota’s Congressional delegation to adapt its primary concepts into the Farm Bill.

This new innovative program will help farmers produce ethanol with native prairie grasses and other cellulosic plants, thereby reducing the pressure to grow more corn for ethanol; a prospect that is becoming increasingly controversial by the day. We want to thank Senator Klobuchar and Representatives Peterson and Walz, for their leadership on the agriculture committees in supporting this initiative based on the “Minnesota Model,” and succeeding in getting it included in the final bill.

Although IATP pushed hard to include another provision to require that biorefineries receiving federal support must be at least 51 percent community-owned, that provision was watered down to become one of several criteria that must be considered under the new bioenergy program. However, another provision does require that wages paid by federally supported biorefineries meet prevailing union wages in the region where the plant is located. Like local ownership, this important provision will help keep the wealth generated by the new bioeconomy circulating in rural communities, and not just siphoned off by Wall Street investors.

The Farm Bill agreement would also significantly bolster spending for conservations programs. For example, the bill would allocate $12 billion to a revamped Conservation Stewardship Program, which would help bring an estimated 115 million acres of working farm and ranch lands under improved conservation management practices over the next 10 years.

In supporting local food systems, one important provision would allow local and state governments to provide a “geographic preference” through federal procurement programs for locally grown foods. Another provision would provide funding for new local and regional food supply networks, including $33 million in mandatory federal funding for the Farmers Market Promotion Program. Additionally, the inclusion of a revamped country-of-origin labeling provision, along with allowing the interstate shipment of state-inspected meats, should increase marketing opportunities for independent livestock producers.

Another important provision is the inclusion of the Diversity Initiative, a policy package developed by unified rural and urban agricultural interests of African American, American Indian, Latino, Asian American and other small farmers and ranchers all across the United States. This package redresses outstanding issues of civil rights violations and significant land loss suffered by minority farmers because of inadequate policies at the United States Department of Agriculture, including a $75 million investment in the Socially Disadvantaged Farmer Outreach Program.

In the area of food aid reform, the bill includes a scaled-down pilot program that would allocate $15 million dollars annually to experiment with cash purchases for international food aid. A 2005 IATP report, U.S. Food Aid: Time to Get it Right, outlines the enormous problems in the current program. The report documents how the current program can result in the dumping of surplus commodities on developing countries’ markets in a manner that undermines local farmers, and can therefore harm long-term food production capacity. This pilot project is an important, albeit small, step forward in reforming the current U.S. Food Aid regime.

Finally, the Farm Bill extends the sugar program at a crucial time when it is under siege from the final phase-in of deregulation mandated by the North American Free Trade Agreement (NAFTA). It contains a new program that would use the growing sugar surpluses created by NAFTA and other free trade agreements to supplement corn ethanol production. This program could help stabilize corn prices, but also raises new questions about how much sugar and ethanol imports from outside of North America should be regulated.

Renewal of the Sugar Program, and the accompanying sugar ethanol provision, would provide more time for Mexican and U.S. sugar growers to continue pushing for an alternative agreement for “managed trade” for the sweetener market in North America, rather than simply standing by and allowing unbridled NAFTA deregulation to go forward unabated. We fear that the deregulation of the North American sweetener market will result in the destruction of the U.S. and Mexican sugar industries, which in turn will launch another wave of migration of farmers and workers who would be displaced from the Mexican sugar market that would rival the migration caused by U.S. corn dumping into Mexico in the 1990s.

Despite these incremental gains, the new Farm Bill does little to change the overall unsustainable direction of U.S. commodity policy. Neither the payment caps, nor the experimental revenue insurance program contained in this Farm Bill, challenge the premise of market deregulation. At the same time, the 1996 dismantling of publicly held grain reserves has left regulators without one of the most important tools to stabilize rising food prices in times of extreme market volatility such as we are experiencing today.

The so-called “commodity reforms” will do nothing to reverse trends toward increased market concentration, speculation and manipulation, indirect cheap feed subsidies to industrial meat production, increasingly volatile agricultural markets, or rising food prices.

It‘s time to rethink the fundamental assumption from the Enron era that market deregulation solves all problems. We need to reconsider an appropriate level of government intervention to mitigate inevitable market failures, such as those we are now experiencing with high levels of damaging market volatility.

For starters, Congress should consider how to best go about re-establishing strategic grain reserves to stabilize commodity prices, and to secure some predictability of feedstock availability for investors in the new bioeconomy. Additionally, Congress should hold hearings to review and, when appropriate, block pending and future mergers like JBS-Brazil; to explore the role that corporate speculators are playing in causing increased volatility in commodity markets; and to identify additional agricultural market reforms to increase price transparency and curtail damaging commodity speculation and price manipulation.

R. Dennis Olson

May 09, 2008

Fair Trade and Volatile Markets

Earlier this week, IATP met with leaders of coffee farmer cooperatives from Latin America who sell in the certified Fair Trade market. In this case, they sell to Cooperative Coffees, a fair trade, green bean importer. Peace Coffee - a 100 percent, organic and fair trade company owned by IATP - is a founding member of Cooperative Coffees and hosted the farmers.

The representatives came from farm cooperatives in Bolivia, Peru, Mexico, Columbia and Guatemala. The challenges they described brought on by rising prices of all types of commodities were similar. Like other sectors, the coffee market has also been extremely volatile in recent months.

"In our lives we have to deal with changes all the time. But we haven't had any kind of contingency plans in our country for these changes," said Carlos Reynoso, of Manos Campesinas in Guatemala.

Policarpio Ali Cruz, from FECAFEB in Bolivia, told us that the price of gas there is about $8 a gallon, and the country is experiencing a 17 percent increase in inflation from last year. Despite the fact that the country exports oil, its citizens are still paying a high price.

Cruz described the results of U.S. aid policies in Bolivia over the years. Unfortunately, the story is similar in many developing countries around the world who have become dependent on imports. "Donated U.S. flour has eradicated wheat producers in Bolivia," said Cruz. "There are now plans for government support to try to bring back wheat producers."

Wilman Sotelo from Fondo Paez Cooperative in Columbia told us, "The volatility in prices has to do with global commodity exchanges." He pointed to speculation of commodities in global markets as a source for rising prices. Sotelo explained that one of the strengths of the fair trade system is more direct relationships with buyers, "so that we can get out of this system of commodity markets. We are building strong organizations where people are aware and think long-term, rather than getting taken in by a little more price" in the short-term.

Elmer Pena Silva, of CENFROCAFE in Peru, pointed to the damage caused by the devaluation of the U.S. dollar. "In spite of the fact that prices for coffee have been at high levels, the farmers are receiving less value," said Silva. He called for a more open-pricing system in commodity markets that would include more open contracts, rather than secretive, private contracts that allow for big buyers to manipulate the market.

The response to rising commodity prices was similar among these fair trade producers."The dialogue with our producers is to encourage more sustainable practices, protecting the forests and water and using less fertilizers," said Reynoso.

Sotelo emphasized the need to diversify further what cooperatives grow to include more food as a response to the volatile prices.

The meeting brought home once again how rising commodity prices, particularly oil and food, are affecting everyone - even within a fair trade movement built on economic and environmental sustainability.

Ben Lilliston

May 08, 2008

Presidential Candidates and Food Prices

We've been hearing a lot from Presidential candidates on rising gas prices. But what about rising food prices? What is their plan to address increasing volatility in U.S. agriculture markets? And how will the candidates reform trade and aid policies to help countries around the world facing food shortages get the immediate help they need, as well as strengthen their own food production systems?

In a new commentary titled "Will the Food Crisis Finally Get the Attention of Presidential Candidates?" IATP's Alexandra Spieldoch and Dennis Olson offer some advice for the next Administration:

"Some have called for more laissez-faire policies that would support expanded trade as a response to the current food crisis. This approach is a dangerous one, particularly for net-food importing countries that lack food reserves and production capacity, making them the most vulnerable to price fluctuations that we are experiencing today."

Last month, IATP's Anne Laure Constantin outlined additional concrete steps to address the food crisis at the international level. Look for more from IATP on the food crisis in the coming weeks.

Ben Lilliston

May 06, 2008

Biofuels and Biodiversity

The biofuel sector has grown so rapidly around the world, we are all still coming to grips with its impact - both good and bad - on the farm and food economy. A new report by IATP's Dr. Dennis Keeney and Claudia Nanninga finds that the first generation of biofuel feedstocks is exacerbating many of the environmentally-destructive practices of the current industrial model of agriculture. Specifically, the biodiversity of several of the major biofuel-producing countries is being threatened as feedstock production extends onto native vegetation.

Below is a press release from today:

Biofuels Contributing to Changing Land-Use Patterns, Affecting Biodiversity – New Report

Minneapolis – Increasing production of crops for biofuels is exacerbating agriculture’s impact on biodiversity in many parts of the world, finds a new report by the Institute for Agriculture and Trade Policy (IATP).

The report, “Biofuel and Global Biodiversity,” is by Dr. Dennis Keeney and Claudia Nanninga and is available at: www.iatp.org. The paper includes case studies of three regions that have been growing much of the feedstock for biofuels around the world: the U.S., Brazil and Malaysia/Indonesia.

“Ethanol and biodiesel are being overlaid on a broken agricultural production system,” said Dr. Keeney. “Many of the biodiversity impacts of biofuel feedstock production are not inherent to biofuel, but are more a symptom of damaging agricultural production systems and policies.”

The report found that in the U.S., increased corn planting is reducing the diversity of crop rotations and threatening wetlands and acreage set aside for conservation. In Brazil, greater sugarcane production for ethanol is moving into the fragile, diverse Cerrado region, and soy production for biodiesel is contributing to significant destruction of the Amazon rainforest. Perhaps the largest loss of biodiversity is occurring in the rainforests of Malaysia and Indonesia, where palm oil plantations are rapidly being established to feed the growing demand for biodiesel in Europe and elsewhere.

The paper found that the biofuel industry has expanded due to two complementary drivers: the increase in the price of crude oil and national policies to encourage the production and use of biofuel. It concluded that future policy solutions need to focus on:

  • Protecting rainforests and fragile, native ecosystems and indigenous lands – The most significant biodiversity threat is from biofuel feedstock production that extends onto native vegetation;
  • Making sustainability a priority in all biofuel production – Policies should encourage more sustainable production of existing biofuel feedstocks – and accelerate the transition to more sustainable next generation biofuel feedstocks;
  • Moderating price volatility in agricultural commodities – An updated supply management system could stabilize market prices and reduce incentives to encroach on native vegetation;
  • Redesigning our agricultural and energy sectors – Agriculture and energy policies should prioritize local production and use.

“Public policy has been a major driver in the development of the biofuel industry,” said Jim Harkness, IATP President. “In moving forward, smarter policy is crucial if biofuel production is going to protect and enhance – rather than decimate – global biodiversity.”

Ben Lilliston

May 05, 2008

Monsanto and Agriculture Reporting

My old friend Russell Mokhiber at the Corporate Crime Reporter wrote last week about Learfield Communication's recent decision to cancel the show of farm broadcaster Derry Brownfield for comments related to Monsanto on his April 16 show. Brownfield criticized Monsanto for its ruthless tactics in enforcing seed patents with farmers. He quoted from an excellent article in the May issue of Vanity Fair by Donald Bartlett and James Steele, which chronicles the company's heavy-handed legal tactics.

The legal threat for farmers from biotech seed companies is not new. This issue spurred us to publish the report GMO Liability Threats to Farmers in 2001. The Center for Food Safety has documented over 100 cases where Monsanto has sued farmers over patent issues.

But aside from topic of Brownfield's last show, Mokhiber's story really points to a darkening shadow hanging over the dwindling number of farm and agriculture reporters in the U.S. - particularly at farm radio shows, magazines and weeklies. These farm media are heavily dependent on major agribusiness companies for advertising revenue. And as the U.S. agribusiness sector has become further concentrated, the agriculture press is forced to rely on fewer companies for a larger slice of their advertising.

The result is that the mainstream farm press, with a few exceptions, often misses big parts of the story when they cover hot button issues like the Farm Bill, trade agreements or rising agriculture prices. It is impossible to fully cover agriculture without reporting on how big companies benefit from the system. And more importantly, the whole story cannot be told without explaining how farmers' interests are distinctly different from major farm press advertisers like Monsanto and Cargill.

Ben Lilliston

May 02, 2008

May Day in Southern Honduras

IATP Senior Fellow Mark Muller is working in a volunteer program in Honduras through July. He is blogging periodically on his experiences there.

Sometimes it can feel like we work in a little bubble. It's good to get out of that bubble sometimes to see how much others share IATP´s core concerns like keeping farmers on the land, respecting human rights, protecting the Commons, and keeping government and corporations accountable. I spent yesterday at a wonderful May Day celebration in Choluteca, Honduras, where hundreds of people marched in support of these issues. The hundred degree weather didn´t seem to phase people.

It was an impressive merging of labor unions, campesinos, human rights groups, environmentalists and the faith community. Unfortunately, it seems more difficult for these disparate groups to come together in the United States. Here are some photos below of the May Day celebration.

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Mark Muller

May 01, 2008

Parkinson's and Pesticides

A growing body of research links Parkinson's Disease to exposure to pesticides. Last week, the Toronto Globe and Mail reported on research efforts to understand how pesticides used in potato fields cause the kind of brain damage seen in people with Parkinson's.

IATP and the Collaborative on Health and the Environment have published a new fact sheet on the connections between Parkinson's and pesticides and other environmental causes. It was written by Jackie Hunt Christensen, former director of IATP's Food and Health program. The fact sheet outlines the causes of Parkinson's, including detailed information on a number of pesticides that have been strongly linked to the disease in animal studies. It also includes some helpful tips on minimizing your exposure to environmental risk factors for Parkinson's.

The Globe and Mail reports that in response to recent research Ontario announced a ban on sale and use of certain types of pesticides in gardening to reduce health risks. We need more such efforts by governments to assess and reduce the public health risks of pesticide use. 

Ben Lilliston