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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About Think Forward
Think Forward is a blog written by staff of the Institute for Agriculture and Trade Policy covering sustainability as it intersects with food, rural development, international trade, the environment and public health.
April 27, 2010
Exploring the Cuban food system
The latest issue of the IATP Food and Society Fellows’ Digest, Exploring the Cuban Food System, reflects on the fellows’ recent visit to Cuba examining sustainable and urban agriculture systems. As the new digest explains, despite the fundamental differences between the U.S. and Cuba, there was much to learn. As Food and Society Fellows Program Director Mark Muller writes, “The urban food production in Havana was very impressive, and the ingenious ways that people found to grow food provides a model for local foods enthusiasts in the United States.We in the land of plenty can learn something from those who have struggled so much against scarcity.”
Some key topics explored in the issue include:
April 26, 2010
Better agriculture competition workshops
The U.S. Department of Justice and U.S. Department of Agriculture are holding a series of historic workshops throughout this year on the effects of decreased competition in the agriculture sector. In March, we wrote three reports (one, two and three) on the first workshop—held in Ankeny, Iowa—which focused on the effects of market concentration on farmers. Upcoming workshops will be held in Alabama (poultry), Wisconsin (dairy), Colorado (livestock) and Washington, D.C. (price margins).
While the Iowa workshop succeeded on many fronts, a different format could have greatly strengthened the meeting. IATP helped organize a letter to the USDA and DOJ, signed by 40 organizations, outlines a series of proposed reforms for future workshops:
The Iowa workshop was impressive in demonstrating the commitment of high-level officials, like Attorney General Eric Holder and USDA Secretary Tom Vilsack, to addressing competition issues in agriculture; improvements in the workshops' organization would be another step in the right direction.
April 23, 2010
Water and the climate connections
Last week, the Feria del Agua—a water festival and fair—marked the 10th anniversary of the water wars that thwarted attempts to privatize water services in Cochabamba, Bolivia. Celebrations were kicked off April 15 with a parade from downtown Cochabamba to the Complejo Fabril (home of the Cochabamba Federation of Workers).
Nationally, the water wars not only paved the way for blocking privatization attempts of other natural resources in Bolivia, but also helped change the balance of power there, leading to the successful election of its first indigenous president. Globally, the Bolivian water wars called attention to attempts to privatize water in Asia, Africa and elsewhere in Latin America. In their wake, it became increasingly acceptable to claim water as a basic right.
In 2001, IATP used the Bolivian water privatization case study to successfully persuade the UN office of the Special Rapporteur—who was conducting a detailed study towards the formulation the U.N. General Comment 15 on right to water—to remove overt references to privatization as a strategy for ensuring the water supply and sanitation in realizing the right to water. IATP also made the case that the General Comment must include water for farming and other subsistence livelihood practices to help establish the right to adequate food as a necessary component of realizing the right to water.
The struggle for the right to water continues even now in Bolivia. As several bloggers from the international water fair have pointed out, the gains of the water war have yet to reach la zona su—a wide swath of poor communities at the southern edge of the city that are highly organized and militant—some of the principal protagonists of the struggle in 2000 that led to the expulsion of the multinational Bechtel. Hence the need for small, autonomous water committees that continue to serve the needs of the local population. La Feria del Agua was thus not only a celebration of the 10th anniversary of the water wars, but also a public event celebrating the work of these water committees.
Earlier this week, thousands more arrived in Cochabamba to participate in the People's Conference on Climate Change, at the invitation of Bolivian President Evo Morales and civil society groups. In an attempt to draw attention to the fact that water is in the eye of the climate storm, one of the days at the Feria was celebrated as a climate and water day. It was planned as a day to question the political processes that promote market-based solutions as an answer to the water and climate crises, and to advance alternatives. IATP, along with On the Commons and several other groups from around the world that work on water justice issues, came together to develop a fact sheet, “Water and Climate Change: What’s the connection?” and a draft declaration “On the Connection between Water and Climate Justice: Reviving a healthy climate through commons-based water management practices.” These were presented at the Feria. The purpose was to reach out to other constituencies and to show that their struggle is our struggle too—since water permeates climate, forests, agriculture and life itself.
As a participant at the climate forum pointed out to Jeff Conant (read him at Climate Connections), “The most important outcome of this meeting would be a stronger people’s movement on the climate crisis. It’s not about documents, it’s not about policy, it’s about standing up together against the climate criminals.” It is also about showing the world that there is an alternative.
Walking a new path on climate change
IATP's Karen Hansen-Kuhn is blogging from Cochabamba, Bolivia at the World People's Conference on Climate Change and the Rights of Mother Earth.
The Climate Conference concluded today with a dialogue between social movements and governments. Bolivian Foreign Minister David Choquehuanca described the process leading up to the meeting and the central role of indigenous people in the conference and on these issues, as guardians of the balance among peoples and between people and Mother Earth.
He also reported on the overwhelming participation in the conference. More than 35,000 people from 142 countries attended the meetings, 19,000 of them from outside of Bolivia. Some 47 governments were represented.
People from Australia, Malaysia, the United States and Bolivia reported back on the recommendations from the 17 working groups. They included proposals for a global referendum on climate change and the establishment of an international climate court. They insisted on the Kyoto Protocol as the only binding instrument to reduce global warming, and called on governments to review the failure of carbon markets. They held out agro-ecology and small-scale farming as the best way to feed the world while cooling the planet. The complete recommendations will be available on the conference website by April 26.
Venezuelan President Hugo Chavez, as well as the vice presidents of Cuba and Ecuador, responded with endorsements of the proposals. President Morales offered to facilitate sending the recommendations directly to the UN Secretary General, as well as inserting them in the negotiating process at the UNFCCC.
Of course, not all of these proposals fit within the UNFCCC process, but that really isn’t the point. People from around the world came together in Bolivia to confront the impending climate catastrophe. Action is needed at all levels—local, national and international. The World Peoples Conference on Climate Change and the Rights of Mother Earth was an exhilarating step along the way.
April 22, 2010
FoodCorps: Shovel-ready to connect farm and school
In an exciting new project, Debra Eschmeyer and Curt Ellis (IATP Food and Society Fellows) are working to connect farms, schools and the peoplepower that is often lacking when trying to bring them together. Something almost everyone can agree with is schools should offer healthier, fresher foods to students—how to actually do that has been a difficult question for many.
FoodCorps is a hybrid between farm to school and an Americorps service-learning opportunity. According to the press release, “Once launched, FoodCorps will recruit enthusiastic members for a yearlong term of public service in school food systems in communities of need. Service members will build and tend school gardens, conduct nutrition education, and build Farm to School supply chains.”
The value-added in a program like FoodCorps is its multifunctionality. “Beyond increasing access to healthy food in public schools, the program promises to train a new generation of American farmers. FoodCorps can help make farming ‘cool’ again,” said FoodCorps co-creator Curt Ellis. “It’s a chance to get your hands dirty and consider agriculture as a career.”
If you missed the Food and Society Fellow program's webinar about the Food Corps program, it's available to view here. Also, make sure to check out www.food-corps.org for more information and to sign up and stay informed!
April 21, 2010
Bolivia climate conference opens with call for food sovereignty
IATP's Karen Hansen-Kuhn is blogging from Cochabamba, Bolivia at the World People's Conference on Climate Change and the Rights of Mother Earth.
The Conference opened today with a series of speeches by delegations from around the world. Each stressed the urgency of going beyond addressing the symptoms of global warming to taking actions to achieve deeper systems change.
A representative of La Via Campesina spoke on behalf of Latin America, emphasizing food sovereignty as a central solution to climate change. Throughout the day, in different panels and workshops, Via Campesina members stressed locally produced foods and sustainable agriculture grown by small-scale farmers as essential to cooling the planet while reducing hunger and strengthening rural livelihoods.
The opening events concluded with a rousing speech by President Evo Morales. He began with a concise critique of the Copenhagen Accord and the need for all countries to re-commit to the Kyoto Protocol process. However, he echoed the concerns raised by other delegations that market-based solutions will not solve the problems they helped to create.
Then, perhaps straying a bit from his prepared speech, he spoke about the importance of local foods. Too often, he said, multinational corporations promote genetically engineered crops and other technological solutions when the answers are really closer to home. During the food price crisis, wheat became very expensive, and many Bolivians returned to eating quinoa—a local crop that had been neglected for years. Now, he said, the FAO has released a report saying that quinoa is one of the most nutritious grains in the world. He pointed to his own full head of hair and joked that perhaps one reason so many European men are bald is that they eat too many genetically engineered, hormone-laced foods, instead of nutritious, locally grown foods.
It’s hard to talk about climate change without looking at inequality, both within and among nations. And there are no easy answers to either of them. But it just might be that the creative ideas and alliances formed at this conference help us to move a few steps towards fresh new solutions to both.
See Food Inc. tonight
If you haven't already, the Oscar-nominated film Food Inc. is really worth seeing. And lucky for you, it's on 8 p.m., Central Standard Time tonight on PBS. Director Robert Kenner riffs off the investigative work of Eric Schlosser and Michael Pollan to cover our food system, from the field to the meatpacking plant to the supermarket. The film graphically depicts the stranglehold a few big corporations—like Monsanto, Tyson, Perdue and Smithfield—have on our food system. It's a powerful look at people caught in this system, including the poultry contractor, the family who lost a son to food poisoning, and the seed cleaner put ouf business by Monsanto. Viewers will also learn about inspiring stories of how many are fighting back. Finally, Food Inc. is a testament to the power of filmmaking itself, as it often gets to the heart of our industrial food system in ways that even great food writers can't.
April 20, 2010
Farm groups talk climate in Cochabamba
IATP's Karen Hansen-Kuhn is blogging from Cochamamba, Bolivia at the World People's Conference on Climate Change and the Rights of Mother Earth.
Thousands of people from around the world streamed into the World People's Conference on Climate Change and the Rights of Mother Earth (CMPCC) on Monday to continue discussions that started online on a range of issues related to climate justice. The location of the conference itself makes a political statement. This is the ten-year anniversary of the Cochabamba “Water War,” when thousands of local people rose up against the privatization of their water system. Walking into the conference site, the dramatic backdrop of the Andean mountains makes its own statement.
The online discussions were organized into 17 working groups on topics ranging from emissions reductions and finance to issues not on the official agenda, like migration and climate debt. Talks also centered on strategies, including the possible launch of a global peoples’ referendum on climate change. The final documents will help to shape the Bolivian government's positions on climate change and hopefully influence other government delegations arriving later in the week.
More than 900 people registered for the working group on agriculture and food sovereignty (our contribution is summarized here) and, of those, 130 submitted comments electronically. Those talks continued in Cochabamba with presentations by Via Campesina, who asserted that as much as 57 percent of greenhouse gas emissions are associated with industrial agriculture. This includes emissions all along the production chain, including processing, packaging and transport (especially for export). On the other hand, converting to agroecological, locally oriented, smaller-scale production could lower emissions as much as 50 to 75 percent, while advancing food sovereignty, according to Via Campesina.
The working group discussions continued throughout the day, focusing on the need to address the role of agribusiness in climate change, the obstacles created by free trade and the climate challenges facing women, among other issues. Organizers worked late into the night to incorporate comments into new drafts of the position papers to be finalized in the coming days. Whatever the outcome of the papers, these talks have deeply involved farm organizations, raised the profile of agriculture and climate, and led to new ideas moving forward.
Who's regulating nanotechnology?
Nanotechnology and its applications are so small that it can be hard to get your head around, but there are more than 1,000 products with nanomaterials already on the market, so we'd better get a handle on this quick.
Nanoscale science and technology manipulate matter at the level of 1–300 nanometers (or billionths of a meter) and claim a seemingly amazing array of applications for medicine, technology, energy and food. Pulitzer Prize–winning reporter Andrew Sheider's recent investigative series "The Nanotech Gamble" lays bare the potential health and environmental risks and extent to which largely unregulated nanotech products are already on the market, and in the food supply, without our knowledge.
Given the risks and speed with which nanotechnology is entering the marketplace, U.S. states are starting to explore what they can do in light of federal inaction. In testimony before the Minnesota state legislature, IATP's Steve Suppan outlines the regulatory holes at the Food and Drug Administration and the Environmental Protection Agency, which thus far have largely given nanotechnology a free ride. (You can listen to the entire April 14 hearing here.)
On April 15, the University of Minnesota hosted Governing Nanobiotechnology: Reinventing Oversight in the 21st Century. Academics, private industry, public interest representatives and government regulators grappled with the particular regulatory challenges posed by nanotechnology (videos of presentations coming soon).
As Steve points out in his testimony to state legislators, traditional regulation targets pollutants partially in terms of volume: that approach won't work for nanotechnology. "The quantity of nanomaterials that may cause environmental and/or public health harm will be much smaller in volume than what [...] has traditionally been inventoried. Prioritizing when and where to monitor pollutants will be a difficult task because potential risks of nanomaterials are not indicated simply by their size but also by their configuration and shape."
When scientific advancement overtakes our ability to regulate it's time to take a step back. The U.S. government's National Nanotechnology Initiative spent an estimated $1.8 billion developing new nanotech products in 2009. Little more than one percent of that taxpayer investment is dedicated to research to protect consumers and nanotechnology workers from potential environental, health and safety hazards of nanotechnology products. This is an unacceptably nano-sized start to a huge regulatory challenge.
April 16, 2010
People's Conference on Climate Change next week
After official UN global climate talks stumbled again in Bonn last week, another global gathering will take a shot at reaching agreement on a plan to address climate change. Next week, the World People's Conference on Climate Change and the Rights of Mother Earth will run from April 19–22 in Cochabamba, Bolivia. The gathering is expected to attract civil society groups around the world, along with developing country–government representatives, to develop alternative proposals to address global climate change.
Bolivian President Evo Morales is leading the call for the meeting after many developing-country governments were frustrated with the United Nations Framework Convention on Climate Change talks in December, which produced the Copenhagen Accord. Last week's Bonn meeting, the first since Copenhagen, revealed the growing rift between countries who want to continue negotiations based on the Kyoto Protocol and others, led by the U.S., who want to use the Copenhagen Accord as the basis for negotiations. IATP has been critical of the accord and the negotiating process in Copenhagen.
Organizers for the World People's Conference have set up 18 working groups to develop proposals on various aspects of a global climate treaty. IATP's Karen Hansen-Kuhn will report from Cochabamba next week. She is part of the "Agriculture and Food Sovereignty" and "Dangers of Carbon Markets" working groups. You can read Karen's submission on agriculture and climate change. A summary of IATP's concerns about the susceptibility of carbon markets to Wall Street speculators can be read here in English and in Spanish.
More from Cochabamba next week....
Healthy Legacy's take on the Safe Chemicals Act of 2010
This blog entry is re-posted, with permission, from Healthy Legacy, a coalition promoting healthy lives by supporting the production and use of everyday products without toxic chemicals. IATP is a member of Healthy Legacy's steering committee.
The author, Kathleen Schuler, is co-director of Healthy Legacy and an IATP senior policy analyst.
It's finally here—landmark federal legislation to protect families from harmful chemicals. The Safe Chemicals Act, introduced by Senator Frank Lautenberg (D-NJ) and Congressmen Henry Waxman (D-CA) and Bobby Rush (D-IL), will overhaul the way the federal government protects the public from toxic chemicals. Healthy Legacy supports the legislation, but cautions that the bill needs improvement in three critical areas. See Healthy Legacy's press release.
Healthy Legacy is part of the 200 plus–member Safer Chemicals, Healthy Families coalition working to reform the 34-year-old Toxic Substances Control Act (TSCA). TSCA, the law regulating industrial chemicals, including those used in used in consumer products, is broken. Hundreds of toxic chemicals, from lead to cadmium to phthalates to brominated flame retardants, continue to be allowed in everyday consumer products. In 2009 Minnesota became the first state to ban the hormone-disrupting chemical bisphenol A in baby bottles and sippy cups. While this ban is an important step in reducing exposure of young children, strong TSCA reform is needed to address hundreds of other problem chemicals.
Critical reforms in the Safe Chemicals Act include:
The bill should also be strengthened in three critical areas. As currently drafted, the legislation:
The Safe Chemicals Act of 2010 would amend the federal Toxic Substances Control Act, which is widely understood to be ineffective. When TSCA passed, it “grandfathered” 62,000 chemicals in use without restriction or testing. In more than 30 years since then, the U.S. EPA has only required testing for 200 chemicals and only restricted some uses of 5 chemicals under TSCA. The EPA did not even have the authority to ban asbestos, an established carcinogen already banned in 40 countries!
Enacting strong TSCA reform could save billions in health care costs. A new report by some of the nation’s leading public health professionals, entitled The Health Case for Reforming the Toxic Substances Control Act, describes the toll that toxic chemicals are taking on our health and our budget. It summarizes the insidious contribution of environmental toxins to an array of chronic health problems, including cancer, learning and developmental disabilities, asthma, reproductive disorders and Alzheimer’s and Parkinson’s diseases. Chemical exposures are costing the U.S. an estimated $5 billion per year in chronic health care costs.
Healthy Legacy and Safer Chemicals, Healthy Families will continue working to strengthen the bill to assure that it prevents harmful chemicals from creeping into our consumer products. Read up on the Safer Chemicals, Healthy Families platform for reform and analysis of the bill.
Minnesota's own Senator Amy Klobuchar sits on a key committee that will hear the bill. Contact Senator Klobuchar and ask her to advocate for the strongest bill possible.
April 15, 2010
Press release: Biomass Crop Assistance Program needs clarification, improvement, says IATP
Minneapolis – The Biomass Crop Assistance Program (BCAP) must undergo significant revision before the program’s next phase is launched, said the Institute for Agriculture and Trade Policy (IATP) in comments submitted on April 8 to the USDA Farm Service Agency (FSA).
BCAP, a 2008 Farm Bill program, was created to help farmers grow and sell new biomass crops for renewable energy. But the FSA’s implementation of the program has come under widespread criticism for straying far the program’s original intent. The FSA began the initial phase of the program before setting clear rules for qualifying grants, and before it had completed a full environmental impact statement as required under the National Environmental Policy Act (NEPA). As a result, nearly all of the more than $164 million in funding that has been awarded so far has gone to the forest paper and products industries to burn lower-value wood for their own energy needs. But as most of these users were already buying or using biomass for pre-existing energy purposes, BCAP support does not seem to be contributing in any substantial way to new renewable energy production or new supplies of biomass.
“Done right, BCAP could go a long way toward helping farmers transition to growing perennial biomass crops and increasing renewable energy production,” said Jim Kleinschmit, IATP Rural Communities Program Director. “But so far, it appears neither farmers nor energy consumers have seen much benefit from the millions of dollars already spent on this program.”
The FSA is expected to finalize rules for BCAP implementation later this year. IATP’s recommendations for improving BCAP include:
“There’s still time to right the ship on BCAP,” said IATP Senior Associate Julia Olmstead. “The best place to start is to revisit the original intent of the program, and take seriously the numerous constructive comments submitted on how to improve the program.”
IATP’s full comment to the FSA can be viewed here. The BCAP comment period closed April 9. The USDA will announce a final rule later this year.
April 13, 2010
What we don't know about GE crops
After 15 years on the market, and constituting 80 percent of soybeans, corn and cotton grown in the U.S., we still know remarkably little about genetically engineered (GE) crops; and some of what we do know is cause for alarm. This is one of the main conclusions of a report released today by the National Research Council.
First, the headline picked up by the New York Times and others: there has been a rapid rise in weeds resistant to the herbicide glyphosate (also known as Roundup) that could rapidly undercut any environmental or economic benefits of GE crops. Glyphosate-resistant crops allow farmers to kill weeds with the herbicide without destroying their crop. To date, at least nine species of weeds in the U.S. have developed resistance to glyphosate since GE crops were introduced. The other primary type of GE crop is designed to produce Bacillus Thuringiensis (Bt), a bacteria deadly to insect pests. Thus far, two types of insects have developed resistance to Bt. The loss of effectiveness of glyphosate and Bt crops could lead to increased use of more potent herbicides.
"This problem is growing, it's real, and it's going to get worse," said chair of the NRS committee David Ervin, of Portland State University, at a press conference today.
But just as alarming as growing weed and pest resistance is the dearth of research data on so many fundamental issues surrounding GE crops. The NRC report focused on how GE crops are affecting U.S. farmers. The assessment looked at GE crops through the three pillars of sustainability: economic, environmental and social. In the end, the researchers didn't have enough data.
"As more GE traits are developed and incorporated into a larger variety of crops, it's increasingly essential that we gain a better understanding of how genetic engineering technology will affect U.S. agriculture and the environment now and in the future," said Ervin. "Such gaps in our knowledge are preventing a full assessment of the environmental, economic and other impacts of GE crops on farm sustainability."
More specifically, what we don't yet know about GE crops:
The White House and USDA Secretary Tom Vilsack should take a good look at this report. After 15 years, we still can't fully assess whether GE crops are good for U.S. farmers—let alone consumers. Yet, the White House and Vilsack continue to aggressively push for other countries to use GE crops. As IATP's Dennis Keeney and Sophia Murphy wrote last month in the Des Moines Register, GE crops that are widely used in the U.S. don't make sense for the challenges facing Africa, for example.
Given the NRC report's findings, it's hard to justify the enormous amounts of money spent on the development of new GE crops, and harder still to justify pushing the technology on other countries, until we fill in the enormous research gaps that remain.
Obama administration, Congress should put women at the center
A new commentary published today in MinnPost (by IATP President Jim Harkness and Population Action International board member Thomas Lovejoy) asks Congress and the Obama administration to increase funding to improve global health and food security while keeping the issues of women in focus. Malnutrition, and lack of access to health services—especially in regards to maternity and family planning—disproportionately place the weight of neglect on the shoulders of women and families around the world..
"The fates of women and poor communities are inextricably tied to the environment," the authors write. "For example, after decades of neglecting agricultural development in poor countries, over one billion worldwide go to bed hungry each day." The commentary goes on to illustrate why, indeed, women truly need to be at the center of real, sustainable solutions. "Women produce up to 80 percent of the food in sub-Saharan Africa, but have access to less than five percent of land, credit and extension services."
While recognizing and praising the efforts of Minnesota's Betty McCollum (D-4th) and Keith Ellison (D-5th), the commentary asks the Obama administration to work with Congress in advocating for increased funding and better policy solutions that, for the time being, are not enough.
Read the entire commentary here.
April 12, 2010
Challenging the obesity system
This past weekend Dr. David Wallinga, director of IATP's Food and Health program, was featured on Huffington Post. His blog entry, “Challenging the Obesity System,” looks at the obesity epidemic as a symptom of the larger issue of an unhealthy food system.
“As a cheap calorie policy, U.S. farm policy has been a success. Foods high in fats, sugars and calories, such as cooking oils, snacks, fast foods and sugared sodas, are some of the cheapest foods in the American diet,” he writes. “But for public health, U.S. farm policy's focus on a few commodities is outdated.”
What about solutions? Dr. Wallinga offers three suggestions:
Read the full post here and join the conversation. How can public health and food policy come together?
April 08, 2010
Fight for farmworker justice in the Sunshine State
In the latest Coalition of Immokalee Workers (CIW) Campaign for Fair Food initiative, Publix—a large supermarket chain based in Lakeland, Florida—has come under fire. While other food industry giants—including McDonald's, Subway and, most recently, Aramark—have signed agreements, Publix has failed to work with CIW to improve the wages and working conditions of farmworkers in Florida.
In response, the CIW has initiated an Email Action Alert
asking supporters to email Publix CEO Ed Crenshaw and ask that the
supermarket chain work with CIW to establish an agreement to provide
improved wages and working conditions to those that harvest the
tomatoes Publix sells in its produce department. There is also a planned march (April 16–18) that will incorporate pickets and prayer vigils at both a Publix supermarket and the Publix headquarters.
CIW represents tomato workers that have been exploited for decades.
The low wages and poor working conditions, combined with instances of
abuse, have often raised comparisons to modern day slavery—a comparison
that is more than apt. In fact, CIW has aided the Department of Justice
in prosecuting multiple slavery operations which took advantage of
hundreds of farmworkers. IATP Food and Society Fellow Sean Sellers has worked closely with CIW since 2003 and recently went on tour around Florida showcasing these injustices as part of a Modern-Day Slavery Museum.
April 07, 2010
Steeling for a fight: U.S. Senate takes on derivatives
For those who think that headlines and newspapers still matter, this front page news appeared in the March 30 issue of the Financial Times: "Steel prices set to soar." The end of 40 years of forward contracting iron ore annually will be replaced by three-month contracts in the cash markets from which multi-billion dollar financial derivatives contracts in steel will emerge. Steel prices are predicted to rise a third and be passed along to consumers. Price volatility in iron ore and steel will increase. The highly concentrated iron ore mining industry will prosper, as will traders in steel derivatives.
What does this headline event have to do with the ongoing U.S. congressional fight over how to regulate over-the-counter (OTC) derivatives contracts currently traded in unregulated "dark markets?" Furthermore, what does the OTC legislation have to do with agriculture and agribusiness?
Next week the U.S. Senate Agriculture Committee will begin to negotiate its version of the OTC derivatives provisions that will form part of the overall financial reform legislation. The Agriculture Committee oversees the Commodity Futures Trading Commission (CFTC) which regulates the trade in commodity derivatives, such as iron ore futures. The banking committee oversees the regulation of financial derivatives, such as stock and interest rate futures. The Senate will take elements from both committees to incorporate in the final financial reform bill that Senate leadership hopes to move to a vote by June.
On March 25, IATP wrote to the agriculture committee as a member of the Commodity Markets Oversight Coalition and to the entire Senate in a sign-on letter led by faith-based and nongovernmental organizations. Both letters asked Senators to authorize the CFTC to set and enforce limits on the number of futures contracts that any one entity can own in all trading venues during a specific trading period. The lack of these contract trading limits, called "aggregate position limits" in the draft legislation, enabled excessive speculation by financial institutions in commodity markets. In 2008, we reported on how more than $300 billion in speculative money drove extreme price volatility in both agricultural and non-agricultural commodities in 2007–2008.
Most of the excessive speculation took place in unregulated OTC trades, which led to a near meltdown of the global financial system in the last half of 2008, avoided only by a multi-trillion dollar taxpaper bailout. In dark markets, nobody knows which traders have enough reserves to pay up when their "bets" go bad. Wall Street lobbyists have written exemptions in the House of Representatives "Wall Street Reform and Consumer Protection Act of 2009," passed on December 11, 2009. These exemptions to restrictions on OTC trading would leave up 60 percent of the $300 trillion U.S. OTC market still unregulated, according to a March 24 speech by CFTC Chairman Gary Gensler.
Many of the corporations represented by the Wall Street lobbyists are agribusiness firms, such as Cargill, Bunge and John Deere, that belong to the Coalition for Derivatives End Users. Like their industrial brethren, they use dark market instruments to hide debt, manage currency and interest rate fluctuations, and, yes, to manage price risks in physical commodities such as steel, which Cargill trades and John Deere uses. Traders on regulated public exchanges give price information to the whole market. Dark market traders give no information to discover prices, as is required by the U.S. Commodity Exchange Act: they only use public information to create unfair competitive advantage.
On March 4, IATP submitted a comment to the CFTC that rebuts the Wall Street arguments to the Senate banking committee as to why trade in dark markets should continue. The comment is in response to a proposed CFTC rule on aggregate position limits for energy futures trades. The proposed rule, to close what is colloquially known as the Enron Loophole, is open for comment until April 26.
The CMOC and faith-based organization sign-on letters to the Senate argue for very strict limits to any exemptions from trading on public markets. Only bona fide users of commodities would be allowed to hedge risks off-exchange, and then only for commodity derivatives trades and for no other financial purpose. Those specifically exempted trades would require higher capital reserve requirements to prevent failure to pay and would be subject to strict daily reporting requirements, unlike the current six month lag of government reports of disaggregated OTC trade data to the Bank of International Settlements. (Six months is an eternity in the world of derivatives trading and cannot aid regulators to monitor trade flows and types.)
If the Senate allows transnational corporations to continue to trade in dark markets, all consumers of commodities and financial products will be exposed to the systemic risk of the "too politically connected banks" through whom the Coalition of Derivatives End Users members trade. Higher prices for consumer products using steel will seem like the good old days compared to the havoc that another global dark market failure could unleash. According to Simone Johnson, former chief economist at the International Monetary Fund, in the absence of tough regulation of the financial and commodity markets, another global financial crisis could hit within a year.
April 05, 2010
Mini farmers markets coming back in season
It's not even mid-April but the weather in Minneapolis is warming up fast. In a matter of months IATP's mini farmers markets will be back in operation. Our friends at Catalyst have created a video explaining what our Mini Farmers Market project is and how you can get one started in your neighborhood. For more information on the dates and times of the mini markets visit our local foods page!
April 02, 2010
Radio Sustain: Agriculture, food and perspective
If music is the international language, food—and where it comes from—is the international conversation piece. In the newest Radio Sustain, the conversation takes us through four distinct perspectives on the international issues of farming, food, sustainability and land management.
First, IATP's Alexandra Spieldoch discusses her experience attending the first USDA/Department of Justice workshop on concentration in corporate agriculture. What are the workshops' goals? What, if any, changes to policy may result and how will the debate domestically impact the international one over competition, monopoly and overall agribusiness domination?
Then, we sit down with IATP President Jim Harkness to talk sustainability in China. In March, IATP hosted the first International Workshop on Sustainable Food and Agriculture at China's Renmin University. What happened there and how will China feed itself?
Dr. William Moseley, a Geography professor from St. Paul's Macalester College, visited IATP in March and joined us to discuss his recent research on the effects of neoliberal trade policies on livelihoods and food production in the three African countries of Gambia, Cote d'Ivoire and Mali.
Finally, IATP Senior Fellow Dr. Dennis Keeney revisits the 2008 Iowa flooding and discusses how commodity crop production has altered the Midwest landscape. How are crops like soybeans and corn impacting the land's ability to absorb floods and what changes could be made?
Listen to the latest episode here!
On job creation—local fruits and vegetables vs. corn and soybeans
It turns out that foods that are better for you may also be better for farmers and local job creation. A new study by the Leopold Center for Sustainable Agriculture at Iowa State University found that expanding fruit and vegetable production in the upper Midwest could bring significantly more economic benefits than conventional corn and soybean production on the same acreage.
The study, by Iowa State Research Scientist Dave Swenson, looked at the potential for fruit and vegetable production in Iowa, Illinois, Indiana, Michigan, Minnesota and Wisconsin. It identified 28 kinds of fruits and vegetables that farmers are able to grow in the region. Currently, much of the fruits and vegetables in the region come from other parts of the country or even outside the country.
Some key findings on the economic impacts on the region as a whole:
Previous research found that smaller sized farms (50 acres and smaller) are more likely to produce fruits and vegetables than standard-sized farms so it is likely that more, smaller farms would be needed. Researchers assumed that 50 percent of fruit and vegetable production would be directly marketed in-state by farmer-owned stores. Local and regional ownership of the food chain will be essential for maximum job creation.
The study breaks down the numbers by state and metropolitan region so it's easy to get a sense of what your neck of the woods could be doing to create new local food jobs.
The barriers to transitioning toward more fruit and vegetable production in the Midwest are enormous. Farmland is hard to come by as values are seen as a better investment than the stock market. U.S. farm policy greatly incentivizes corn and soybean production in a number of ways, including helping farmers to manage risks and supporting research for those crops. And then there's the lack of infrastructure needed to help local food systems serve a booming market. Despite these barriers, this study gives us a guidepost for the potential economic benefits of a new model for agriculture that produces healthier and more locally grown food.