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.
September 29, 2010
Farmers' new normal
While floods from earlier this summer have receded in Iowa, rivers are bursting in Minnesota from last week's downpour of rain. Flooding, heat waves and other extreme weather over the last few months has had a devastating affect on agriculture in the U.S., Russia, Mexico, Pakistan, China and elsewhere. These weather events are consistent with global climate change—and they are not waiting for a new global climate treaty, or a U.S. climate bill.
In a commentary published in the Minneapolis Star Tribune today, IATP President Jim Harkness writes about the need to include farmers—on the front lines of extreme weather—in developing climate policy. Jim and IATP's Shefali Sharma will be in Tianjin, China next week at the UN climate talks, connecting with more farm organizations concerned about climate change. Read the full commentary in the Star Tribune.
September 28, 2010
NAFTA dumping on Mexican farmers
One of the most dramatic effects of deregulated trade has been an increase in agriculture dumping. In agriculture, dumping takes place when an agribusiness firm exports a crop—say, corn—at a price that is below what it costs the farmer to produce it. Dumping gives agribusiness an advantage in the importing country's market—and often puts that country's farmers out of business, making that country more dependent on imports for its food supply. Trade rules at the World Trade Organization (WTO) and regional trade agreements like the North American Free Trade Agreement (NAFTA) limit what countries can do to protect their farmers from dumping, including policy tools like tariffs or certain types of subsidies.
A few years ago, IATP published a report looking at dumping by U.S.-based agribusiness on world markets for five major crops: corn, soybeans, wheat, rice and cotton. We found a sharp increase in dumping following the enactment of the WTO's Agreement on Agriculture and the 1996 Farm Bill—which stripped away the last remnants of supply-management programs and encouraged U.S. farmers to over-produce.
Earlier this year, Tim Wise at the Tufts University's Global Development and Environment Institute released a new report looking even deeper into the damaging effects of dumping. In this case, the effects of dumping eight U.S.-produced agricultural products on Mexican agriculture after the passage of NAFTA. The numbers are astounding. Prices paid to Mexican farmers were depressed nearly $1 billion a year from 1997–2005 due to dumping. You can find more details at GDAE's website.
Or, check out the video interview we did with Tim at a major meeting of Mexican farm groups last month.
September 27, 2010
Rethinking the fundamentals of food security
After a lull in public attention over the last couple of years, rising food prices are back in the spotlight. A spike in prices triggered in part by the Russian export ban, and a deadly food price riot in Mozambique have rekindled the debate on global food security. The UN Food and Agriculture Organization (FAO) convened a special meeting on global grain prices last Friday, concluding that measures are needed to increase market information and transparency in agricultural trades. Olivier de Schutter, the UN special rapporteur on the right to food, released a new report on the need to address speculation on commodity markets. He called for regulation and the establishment of food reserves, along with a renewed focus on agroecological methods to increase food production in developing countries.
The last food crisis in 2007-08 highlighted some of the underlying problems of the broken global food system: decades of neglect of investment in agriculture; the foolhardiness of relying on trade for food security; and the vulnerability to wild swings in prices caused by deregulated speculation on commodities. World leaders have made some important new commitments to increase spending and attention to agriculture. And there have been some important first steps toward a new approach in the United States.
The recent financial reform legislation increases transparency and puts new limits on commodity speculation. The Obama administration’s Feed the Future initiative and bills under consideration in Congress would increase spending on agricultural development, emphasizing production by small-scale farmers, especially women farmers. The Global Food Security bill sparked a vigorous debate on the kind of research needed to strengthen local food production. Family-farm, faith, environmental and social justice organizations slammed the initial emphasis on GMOs, insisting on agroecological approaches that protect and build upon local knowledge and reduce dependence on imported inputs. Compromise language now broadens the approach to include research on technologies appropriate to local ecological and social conditions, including ecological agriculture, conventional breeding, and genetically modified technology. Of course, how this will all eventually play out on the ground in developing countries is what really matters.
In addition to how food is produced, it is also vital to ensure that people have access to it when and where they need it. Feed the Future and the Global Food Security Act are silent on the question of food reserves. They do provide for some increases in local and regional procurement of food aid. The USAID budget for local food aid expanded to over $280 million last year. This is a breakthrough in U.S. food aid programs, which up to now have overwhelmingly supported in-kind shipments of food purchased in the United States, transported by U.S. shipping companies, and distributed by U.S. agencies and NGOs. Several GAO reports have documented how much more in-kind food aid costs than locally procured food.The USAID humanitarian assistance program is an important step. Unfortunately, it is still dwarfed by the in-kind food aid programs which continue at about $2 billion a year. There is no doubt that food aid saves lives in times of disaster, and that droughts and flooding and the consequent crop failures could become even more frequent as global warming destabilizes production. There will clearly be times when it makes sense to ship U.S. food to respond to a crisis. But the current approach to food aid skips any assessment of whether it would be cheaper or faster to buy food locally or regionally in developing countries. And it is unlinked from the root causes of food crises, including the vital importance of local production of food in markets controlled by local people. The default is in-kind aid because that’s what we’ve always done. Never mind the fact that the U.S. no longer holds public food reserves. Or that nearly all other countries providing food aid made the transition to local and regional procurement years ago.
These first steps towards increased investment in agriculture and experiments with locally procured food aid matter. They just aren’t nearly enough.
By Karen Hansen-Kuhn
September 24, 2010
Trouble Waters' balancing act
The University of Minnesota back-tracked yesterday on its decision to stop the premiere of the documentary “Troubled Waters: A Mississippi River Story” on October 3 at the Bell Museum. IATP, the Land Stewardship Project, and dozen other Minnesota groups called out the U (see our letter and press release) for what appeared to be an attempt to staunch academic freedom. The film explores the connection between agriculture and pollution in the Mississippi River and the Gulf of Mexico. The U’s reasons for trying to stop “Troubled Waters” are still not entirely clear, although Agriculture Dean Allen Levine at one point said the film “vilifies agriculture” and that he considered it unbalanced.Bringing “balance” into the equation when you’re talking about agriculture and the Mississippi is more than a little ironic – our industrial agriculture system is the definition of unbalanced. The way we produce corn and soybeans requires vast quantities of fertilizers, pesticides and herbicides, a lot of which, along with sediment, get washed out of farm fields, trickle into the Mississippi, and eventually wash into the Gulf of Mexico. The end result: a river and its tributaries contaminated with high levels of nitrates, atrazine, and other health- and eco-hazards, and a dead zone in the Gulf the size of Massachusetts (this year).
What’s curious about Dean Levine’s statement is that the film, in fact, highlights the efforts of Minnesota farmers like Tony Thompson who are working hard to decrease their impacts downstream. From riparian buffers, to cover crops, to more perennials, to better calibrated fertilizer application – there are lots of ways farmers can decrease the nutrient load they send down the river. This, one would think, would be exactly the kind of important, “balanced” information the U would want to promote.We’re still waiting to hear if the film will be shown as previously scheduled on Twin Cities Public Television on October 5, and we’ll continue to insist on transparency from the U around this and similar decisions in the future. In the meantime, if you're in town, get your tickets to the show, they’re going fast. See you there.
By Julia Olmstead
September 23, 2010
Time to put food reserves on the table
Agriculture prices have always experienced their ups and downs. But in recent years, those ups and downs have become more sharp and extreme. And the result has been deadly to many of those around the world facing hunger.
Tomorrow the UN Food and Agriculture Organization will hold a special meeting to examine extreme volatility in global grain prices. The meeting was brought on by the recent spike in the price of wheat and concerns that the the world will once again experience escalating food prices - similar to what happened in 2007-2008.
Historically, one of the key tools that communities and governments have used to temper the inevitable swings in agriculture supply has been reserves. Food reserves set aside food in times of plenty and release food in times of scarcity.
Unfortunately, a several decade push toward market deregulation has discouraged the use of reserves. But the recent extreme highs and lows in agriculture prices have spurred a resurgent of interest - not only at the international level, but at the regional and local level too. In our press release today, we call on the FAO to consider the establishment of food reserves. And we issued a new report by Sophia Murphy on how the international trade rules treat food reserves.
So what kind of salmon does Uncle Sam want?
It almost seems preposterous to ask this question, but what type of salmon would you prefer to see on your plate:
But as Paul Greenberg points out in his commentary on Living on Earth, our government is making that choice, and many of us are afraid it isn't going to be the right one. How else can you explain that:
And as Paul points out in the commentary, it is a little ironic that the complete adoption of genetically engineered salmon into the existing farmed salmon industry would increase production by a quarter of a billion pounds of fish annually, and if a future Bristol Bay copper mine failure occurs similar to what happened in China this summer, that could result in the loss of a quarter billion pounds of fish.
Join the Consumers Union and other organizations that are raising concerns regarding FDA's approval process and the lack of labeling of genetically engineered fish. Read Paul Greenberg's new book Four Fish. And seek out sustainably managed, wild fish species. It's far better for your family's health and the marine environment.
This blog post was written by Mark Muller and originally appeared on the IATP Food and Society Fellows Fresh Ideas blog.
September 20, 2010
Dig your farmer: Minnesota celebrates its first annual Farm to School Week
As part of the national Farm to School movement, lunchrooms around Minnesota are pulling out all the stops on their quest for healthy, locally produced foods for the first annual Farm to School Week, September 20–24. IATP and the Minnesota School Nutrition Association initiated the celebration to increase awareness of the benefits of serving locally grown food in lunchrooms.Today, Congresswoman Betty McCollum, who introduced the National Farm to School Act of 2010, will be holding a press conference to discuss Minnesota’s Farm to School efforts. According to McCollum’s press release about Farm to School Week, St. Paul Public Schools purchased over 100,000 pounds of locally grown produce in the first six weeks of the 2009-10 school year.
Free-range turkey, bison, melons, tomatoes, peppers, squash, sweet potatoes, beets, parsnips, wild rice, pumpkins, maple syrup and fresh herbs, among others, are all making appearances on lunch trays around the state, according to the press release. IATP has also developed, and is making freely available, an extensive promotional package to help schools bring attention to their efforts (including the “I Dig My Farmer emblem featured in the picture!).
Sign up for the Minnesota Farm to School e-newsletter by sending an email to firstname.lastname@example.org.
September 10, 2010
World Bank on land grabs: Proceed with care
A much anticipated World Bank report was released a few days ago on a controversial but important issue: foreign direct investment in land, particularly in poorer countries. Dubbed "land grabs" by the critics, a surge in investor interest in buying or leasing land abroad was one of the unexpected but dramatic responses to the surge in food prices in 2007-08. For a while, newspapers were full of stories of big but vague deals between foreign companies and governments of land in some of the world's poorest countries (as well as some not so poor countries). In the most publicized case, in Madagascar, it was a bid for nearly half the country's arable land in 2008 by a South Korean firm, Daewoo, that tipped a country already rife with political dissent into demonstrations that overthrew the government. We have commented on the phenomenon from time to time, and Alexandra Spieldoch and I wrote a chapter on the issue for a book published by the Wilson Center in D.C.
It won't be hard to find fault with the World Bank report. It's a highly politicized issue, and the World Bank has a long and controversial history of financing investment in natural resource extraction in projects that fail to meet appropriate social and environmental standards. Too often, the WB fails to meet its internal standards. The audience of NGOs, in any case, is likely to be skeptical at best.
Without jumping into that controversy here, I think it's worth underlining some of what the report has to offer. First, as the authors say themselves, this is an issue where there has been considerably more talk than action. The report estimates that only 20 percent of the proposed ventures have actually started production, for example. Other data, though some of it only goes up to 2006 and therefore predates the big explosion of interest, suggests that a significant share of the investment is actually domestic. That is, while it's clear that a lot of land has started to change hands, it seems not all of it—in some countries not more than 10 percent of it—is being signed over to foreigner entities.
Second, the report does not pull punches as to the (many) areas of concern that the investments give rise to. For example, the report says:
Many of these same countries face chronic food shortages, are regular recipients of food aid from the World Food Program and have suffered from historically poor governance.
Third, the report makes a few points that need attention, with or without large-scale land deals. First, there is a significant gap between the actual and potential output of much of the world's existing farmland, especially in sub-Saharan Africa. This gap should be narrowed. Second, land rights need urgent attention and regulation in many local, national and international contexts, whether it be the struggles of indigenous peoples the world over, of women confronted with patriarchal customary laws, or of the landless, such as Brazil's landless workers (MST), forcibly occupying abandoned land in the name of their right to survive. Large-scale investments by foreign governments and companies bring attention to a much broader set of struggles for justice related to land. The World Bank report makes the point that, looking ahead, land is only going to get more valuable. In that process, the poor (and otherwise marginalized) will be dispossessed unless direct measures are taken.
There's plenty more to say on this topic, and on the report itself. For now, I think it's worth welcoming this contribution to the debate, not least for shining a carefully documented and thoughtful light on what has been and all too opaque and alarming trend.
September 03, 2010
Speculation and the new price commodity crisis: separating the wheat from the chaff
This blog by IATP's Steve Suppan originally appeared on the Triple Crisis blog.
Wheat prices had been climbing prior to the August 5 announcement of a Russian wheat export ban. Kansas Board of Trade wheat futures contracts had gone from $4.92 a bushel on June 10 to spike at $7.95 a bushel on August 5, prompting a reporter to ask, “How could a Russian drought in the age of instant information escape the world’s notice until the country’s wheat crop was devastated?” This excellent question does not yet have a clear answer.
The wheat price crisis has led the press and even policymakers to focus almost exclusively on the traditional supply-demand fundamentals that ostensibly set prices. It’s as if the press were relieved to point to that old standby, weather, as the culprit for a 50 percent increase in wheat futures prices in a few weeks. For a change from the last three years, excessive speculation in commodities by financial institutions would not be accused of driving price volatility. Furthermore, according to the U.S. Department of Agriculture, unlike 2007-2008, global grain stocks were high enough to supply countries that could afford them. Maybe the specter of speculators increasing hunger might be eluded.
But maybe not. The Financial Times reported on August 4 that Glencore, the largest global commodities trader, had requested the Russian export ban, which was granted the following day. The ban enabled Glencore and other traders to break and “re-price” their relatively lower-price forward and futures contracts. Glencore and other major traders stand to make a killing in the new wheat price environment. So market power, usually a subject for political economy rather than orthodox economics, had a role in moving the fundamentals of price discovery and price transmission.
Glencore and other traders operate under the protection of Swiss banking secrecy laws, safe from the European Commission’s proposed revision of its Market Abuse Directive, about which we have commented. Meanwhile the U.S. Commodity Futures Trading Commission (CFTC) is deliberating how to regulate wheat and other commodity contracts. On August 5, the CFTC’s Agricultural Markets Advisory Committee (AMAC) met to discuss the now three-year old market failure when futures and cash prices for wheat failed to converge as futures contracts (generally 90 days for agricultural commodities) expired. Price convergence is what allows futures prices to be interpreted as reliable price benchmarks for forward contracting of commodities, both by commodity sellers and buyers. The pressure on the Chicago Mercantile Exchange (CME) and other U.S. wheat trading exchanges to solve the price convergence problem was made more acute with the release in June 2009 of a U.S. Senate investigation into wheat prices. The investigation concluded that commodity index fund investors had driven prices by exceeding contract position limits unenforced by the Bush administration CFTC.
CME and other exchange officials had told the CFTC at an AMAC meeting in October 2009 they would redesign the wheat contract to eliminate the price convergence problem, which they attributed to changes in transportation and storage costs and in delivery points (e.g. from Chicago to Toledo, Ohio), rather than to excessive financial speculation in commodities. At the August 5 AMAC meeting, the clearly impatient CFTC Chairman Gary Gensler pressed CME as to when the redesigned contract would finally be ready for review. Six-to-eight weeks was the answer.
The CFTC has a lot on its regulatory plate. Just to implement the Over the Counter (off-exchange, unregulated transactions) trade provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, on July 21 the CFTC announced a schedule for 30 new rules. Among the rules will be one on agricultural “swaps” (OTC contracts) that directly affects wheat futures trading.
Because OTC trades are not reported to the CFTC, e.g. by such firms as Goldman Sachs and Morgan Stanley, until well after their market influence has waned, OTC traders do not contribute price information to fulfill the Commodity Exchange Act requirement of price discovery. Regulated exchanges must report their trade data daily to the CFTC for its weekly Commitment of Traders report, a fundamental regulatory tool for estimating trade trends, including market manipulation. Nevertheless, OTC traders take advantage of exchange-traded price information. For this reason and others, former CFTC commissioner Michael Greenberger testified to the CFTC in 2009 that agricultural swaps are per se violations even of the deregulatory Commodity Futures Modernization Act. If OTC wheat trading collapses as the result of a new rule on agricultural swaps, wheat and other agricultural commodity price volatility caused by so-called dark markets will greatly diminish.
But the CFTC faces a tough fight to implement the Dodd Frank legislation, not only because of the massive Wall Street lobby against enforced regulation, but because of continued efforts to deny that financial speculation played a role in price volatility and to argue therefore that Bush administration rules suffice. The latest denialist gambit, by the Organization for Economic Cooperation and Development, to dismiss excessive financial speculation as a major commodity price driver in 2007-2008 has recently been demolished by a Better Markets Inc. study.
However, no amount of prudential regulation, however well-drafted, closely monitored and stringently enforced, will manage the longer term prospect of climate change induced agricultural supply volatility. True, relatively small infrastructure investments could protect the hundreds of thousands of tonnes of wheat that are rotting outside Indian warehouses or the 40 percent of African agricultural production that rots in the fields for want of basic post-harvest storage facilities and roads for domestic markets. But the biggest Greenhouse Gas emitting countries, financial institutions and even some NGOs are counting on carbon emissions markets to induce investments in low carbon technology. The International Emissions Trading Organization opposes limits on OTC trading, ostensibly to make the market “efficient” by increasing its liquidity. Of course, IETA members (many of the same firms that have speculated on agricultural commodities) want their chance to make a carbon killing too.
September 02, 2010
Flooding might be the ‘wave’ of the future
This commentary by IATP Senior Fellow Dennis Keeney originally appeared in the Ames Tribune. It is republished with permission.
“Living with floods involves two broad activities: better managing the risks and taking steps to reduce our vulnerability, and better managing the landscape to reduce the magnitude and destructive power of floods.” — Connie Mutel, Epilogue, “A Watershed year: Anatomy of the Iowa Floods of 2008.”
In the spring of 2010, The University of Iowa Press published “A Watershed Year: Anatomy of the Iowa Floods of 2008.” Connie Mutel edited this outstanding book. It should be required reading for those concerned with policymaking to address our recurring big floods. But we continue to battle day-to-day and event-to-event. Iowa State University officials talk of shoring up University Avenue in Ames, and the university and businesses clean up the damage. Who’s really hurt are the hundreds who have major property damage; basements, valuables and feelings of security are destroyed.
Are the Iowa cities that sit on large- or medium-sized river basins doomed to relive the experience of large floods regularly? No matter how much infrastructure we build to withstand the onrush of streams and rivers, flooding might be the “wave” of the future. In June 2008, the rivers of eastern Iowa created floods of epic proportions. In August 2010, the rivers of central Iowa did the same. What is going on? After the unprecedented statewide flooding of 1993, Iowans assumed we had seen the worst and returned to business as usual. How wrong can we be?
Rivers are not static. They are constantly eroding and reshaping their channels. When water flowing into the river exceeds the capacity of the channel, rivers use the naturally created floodplain to store the extra water. When rivers are denied access to the floodplain, or structures are built in the floodplain, we have a flood. Floods are natural, part of the water and biodiversity cycles. When we get in their way, damage occurs.
The climate of the Corn Belt is conducive to violent weather: high winds, tornadoes, blizzards, drought and intense rainfalls. The rainfalls seem to be the cause of much of our angst, especially recently. Reasons for the “unprecedented” floods include the possibility of major climate shifts, changes in land use, especially in agriculture, and lax urban building codes and poor storm management. I will take a quick look at these as space permits.
Probably the most sensible way to avoid flood damage is to get out of the way. But cities are not easy to move. Removing homes and businesses is a slow, expensive process, complicated by the private property ownership and by a multitude of government regulations. When public buildings are involved, such as Hancher Auditorium in Iowa City and Hilton Coliseum in Ames, public funds must be used to restore the buildings, diverting resources that are desperately needed for education and research.
A recent news release indicated a new Hancher will be built, presumably out of harm’s way, and Hilton Coliseum and presumably also the Scheman Center will be protected by higher flood barriers (levees), though the latter is not clear.
ISU’s proposed solution—deny the river its flood plain—is not really a solution. No doubt this would lessen flood damage to the ISU complex, but it would certainly increase flooding in other areas of the flood plain with unpredictable results. The river will have its way.
A better alternative, but one that might now be impractical, is to increase storage on the land. Laura Jackson, a professor of biology at the University of Northern Iowa, and I discuss this approach in chapter 24 of the book I referred to earlier. Most of the watershed above Ames is agricultural. It has been altered in ways that lower the retention of water and hasten flash floods. Tile drainage, wetland and prairie destruction, stream channeling, and, of course, the annual corn and soybean cropping all hasten the movement of water through the watershed.
Similarly, Ames, and most other cities, was not designed with floods in mind. Water runoff must be decreased relative to infiltration in both urban and rural landscapes. Our manicured, reconstructed lawns are nearly as impermeable as the concrete they drain into.
Changing our urban and rural landscapes is daunting. Some regions have gone together to plan for flood mitigation. A regional flood control effort for the Story-Boone County region could identify new roads and bridges that could be designed to provide storage and locate flood plains where flood levees could be removed, giving the river a chance to recover its flood plain.
Finally, are flood frequencies and intensity partly a result of climate change? Eugene Takle examined this question in a remarkably clear manner in his chapter of the “Anatomy of the Floods” book mentioned previously. Cedar Rapids’ average annual rainfall has increased more than 9 inches over the past 113 years and now stands at 37 inches per year. More rain is falling in the late winter, spring and early summer and rainfall events are becoming more intense. These trends were predicted by climate models, and they likely will continue in the foreseeable future. Takle writes that “the dice have been loaded toward a higher probability of extreme flood events.” Now with three major floods in 17 years, it would seem public and private decision makers should take heed.
In summary, floods will happen. Climate change will likely cause further increases, and our rural and urban landscapes have been so modified as to make lessening the impacts of floods difficult. History tells us we will recover from the floods, get enough federal aid and insurance money to repair the damage, and move on with little thought to the next flood. We deserve better.
Dennis Keeney was the first director of the Leopold Center for Sustainable Agriculture and is an emeritus professor at Iowa State University. He resides in Ames and can be reached at email@example.com.
September 01, 2010
Great ideas from the Midwest Rural Assembly
Last month, IATP and some of the Midwest's leading rural thinkers and doers got together for the Midwest Rural Assembly in South Souix City, Nebraska. Participants exchanged ideas on how to address the gamut of challenges facing rural communities, including the loss of jobs and young people, inadequate health care and education, and other issues related to rewewable energy, agriculture and natural resources.
At the Midwest Rural Assembly site, we've posted a series of video interviews with many participants, blog reports on the rich discussions and the fantastic photo slideshow below. Look for many of these ideas and initiatives to continue to bloom throughout the rural Midwest in the coming years.