| Jared Bernstein, a senior economist at the Economic Policy Institute testified first about the economic context of the food crisis. Mr.Bernstein spoke about how poverty is higher now than in 2000 and yet the median household income is lower, the decline of real earnings each month since last April, and how the poor pay higher food prices in the face of ongoing job and thus, wage losses. Regarding a temporary solution, Mr.Bernstein said that both an increase in benefits and expansion in coverage of the Food Stamp program are necessary.
Then Josette Sheeran the Executive Director of the U.N. World Food Programme testified. [ A quick background on Ms.Sheeran: she is a former Deputy United States Trade Representative where she helped protect Intellectual Property and played a critical role in the U.S.-Australia free trade agreements. She is also a past member of Moon's Unification Church.] Ms.Sheeran said that 80 percent of the World Food Program's recipients are women and children and how we are all consumers when it comes to food. Ms.Sheeran sited crop loss due to weather, increased conversion of crops to biofuels, and an increased demand for food as causes of the food crisis. Export restrictions and speculation were sited by Ms.Sheeran as making it hard for the WFP to access supplies. Ms.Sheeran concluded her testimony by equating the food crisis with a national security issue (e.g. food riots in about 40 nations) and how imperative food security to instilling democracy around the world.
Susan Berkowitz the director the South Carolina Appleseed Legal Justice Center testified after Ms.Sheeran. She spoke about the food crisis in which low-income households bear the brunt of it by spending the greatest proportion of their income on food, while also being most likely to cut the amount of their income spent on food in order to meet their other living costs. For example, there has been about a $46 increase in the past year on a "thrifty-food plan/bare bones" grocery bill that poor people have not been able to absorb. In South Carolina, there has been a 35% increase in the amount of families utilizing the food bank and among these families, about half also receive food stamps. Mrs.Berkowitz urged the Committee to increase the funding allotment for food stamps and WIC to keep up with inflation and not to wait for the appropriations hearings to reinstate funding for these programs.
A professor of applied economics Steve Hanke from The Johns Hopkins University and the Cato Institute spoke about the Federal Reserve as being the root cause to the global food crisis; and the contribution of the weak dollar that began in 2001. Dr.Hanke stated that if the exchange rate between the dollar and the euro had stayed the same at the end of 2001, rather than declined, then many price increases of foods (e.g. soybeans; corn; coffee; wheat) would not have occurred; moreover, some food prices (e.g. orange juice; lean hogs) would also be lower today than in 2001. After his testimony, Dr.Hanke made additional comments, such as: 'the Federal Reserve will cover up anything,' 'this is about exchange rates and a weak dollar,' and 'I actually agree with [Federal Reserve Chairman] Bernanke in that speculators having nothing to do with the global food crisis.' When asked about solutions to the crisis, Dr.Hanke stated that the U.S. should release some of its Strategic Petroleum Reserve (SPR) through call-auctions, which would decrease oil prices, volatility in the oil market, and increase revenue.
Post-testimony notables:
McGovern questioned the witnesses as to if increasing funding for the food stamp program was a way to resolve the food crisis. Mr.Berstein said that food stamps would be a good and helpful stimulus package for the food crisis, as almost 100 percent of food stamps are spent on food items. Mrs.Berkowitz agreed because food banks are funning out.
McGovern still questioned if food stamps was an appropriate response, as increasing government spending will only exacerbate the government's deficit. Mr.Bernstein thought that it would only make sense to increase food stamp funding if something else was cut out of the budget and reallocated to food stamps.
Representative Barrett from South Carolina talked about the relationship between sugar and the Farm Bill and thus, how that has contributed to the food crisis.
'A farmer from the Mississippi Delta' (aka Representative Marion Berry from Arkansas also a member of the House Committee on the Budget, who only came to speak as a witness and then left) spoke about how there is never any consideration given about the connection between the cost of production and price of food. Farmers make well below their cost of production; taking what is offered to them , which is often dictated by the market and independent of the value of the dollar; how farmers at the mercy of the market and that is how they are treated. 'It gets under my skin how farm programs are criticized as we have had the cheapest food per capita for a long time of any country in the world.' Mr.Berry seemed to express support for 'farmers programs' (e.g. subsidies ?) because they keep food cheap-which is a good thing, especially in terms of people trying to buy food to eat; and how people need to stop criticizing these programs.
Mr.Bernstein expressed his support for subsidies, but also thinks farmers should be able to hedge. Another concern of his was that subsidies are not flexible to price.
Mr.Hanke commented on the importance of having a stable dollar the end of 2001, which would knock $61 of the price of a barrel of oil and thus Mr.Berry's high input cost of oil as a farmer who needs to transport their goods.
Representative Ryan spoke about the Farm Bill and the subsequent Doha failure; seeming to imply that both are further contributions to the food crisis as well as barriers to possible solutions to the food crisis.
Representative Jordan from Ohio proposed the release of Conversation Reserve Program (CRP) lands as a solution to the food crisis and asked the witnesses about their thoughts on this. Jordan believed it did not make sense to have CRP lands in the face of a food crisis. Both Ms.Sheeran and Mr.Bernstein expressed their lack of knowledge about CRP, but both seemed to think that using CRP land as a means to produce food made sense given the current situation.
Representative Spratt's last question was for Ms.Sheeran and is as follows: "one of the criticisms of U.S. trade policy has been to encourage countries to grow for export to build up the foreign currency reserves and have the ability to modernize the economy, as a consequence people have, farmers in poor countries have grown for export instead of growing for their own self-sufficiency are we moving away from that policy and is it a mistake that we are now coming to recognize?"
Part of Ms.Sheeran's response was: "The food crisis has triggered a major debate in the developing world about how they position themselves about food security, many countries did get out of producing their own food, came to depend on regional and global markets, and now are coming up short and can't buy. Countries are really wondering-do they need to hunker down and come up with their own stocks, and hoard (Sheeran brought up hoarding earlier as a problem associated with the food crisis) and not count on global markets or can they count on global markets? And I think this is why Doha was so important to send a signal that global markets can be relied on, that there will be open trade in food. I mean you can't mess around with food right? You either get it right or you have a big problem in your country, so people aren't willing to take a lot of risks and when I meet with leaders in other countries they are wondering if they have to go into a self-sufficiency mode...not every country can produce every type of crop and it is not cost-effective to do so...I was in one country where there was massive hunger and the country next door had a lot of food, but there was a 200 percent tariff between the countries...the world has to look at what kind of global trade structures in food well help reduce hunger and the vulnerability of nations. Right now is the time to do so. The signals are important right now....I think you really hit the nail on the head...we need to be neutrally reliant on each other"
This hearing can be viewed here: http://budget.house.gov/hearin... |
