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Unique US Role in Fixing the LDC Food Poverty Crisis

by: Brad Wilson

Thu Apr 14, 2011 at 12:31:33 PM PDT


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(FYI, LDC = "Least Developed Countries" - promoted by Jill Richardson)

We farm and food activists in the US have a unique responsibility to advocate for solutions to the global food poverty crisis.  We, here in the US, better know some key facts about that crisis, facts that are not as well known in other countries for important historical reasons.  
Brad Wilson :: Unique US Role in Fixing the LDC Food Poverty Crisis
Export Dumping

On average, Least Developed Countries are about 70% rural, so their economies are farm economies.1  Another way to frame this is that "Almost 80% of the world's undernourished people live in rural areas (UN Millennium Project, 2004) and most depend on agriculture ... for their livelihoods."  Farm income is their main source for wealth creation and jobs creation.

Prior to the recent rise in farm commodity prices, there was much discussion of dumping on LDCs.  Farm prices were low. The Institute for Agriculture and Trade Policy wrote a series of documents on export dumping,2 where countries like the US, (the dominant exporter for main commodity crops,) export at a loss, driving down farm prices in LDCs.

More recently, farm commodity prices have risen significantly. For example, (not adjusted for inflation,) the average of yearly average corn prices 2007-2009 is 73% higher than 1981-2005.3  Adjusted for inflation, the average of 2007-2009 yearly average corn prices is 15% higher than 1981-2005.  

These higher prices, following decades of almost nonstop declining prices, drew attention to the food poverty crisis, but little attention has been given in most articles about it to dumping, to the long, preceding period of low prices.4 Only the recent higher prices are typically mentioned, as if they caused the acute crisis for these primarily rural people.

The WTO Response to Dumping & LDC Farmers

Curiously, US export dumping, losing money on exports, was said to be better, more "competitive" and "market driven," more capitalistic, than the alternative of fair trade pricing, though, of course, that's not quite how the spin was framed!

Under the corporate, free trade, neoliberal, (US neoconservative) ideology of the World Trade Organization, a system was set up for the alleged purpose of enabling countries could take other countries to WTO court to stop dumping.  A few years ago, (ie. in the lead up to the 2008 farm bill,) some of these cases made big headlines in the news.  These WTO cases addressed farm subsidies.  Under WTO's free trade ideology, there would be no dumping under free trade, therefore, since prices were low, below costs, that must be caused by subsidies.

Some farm leaders in LDCs heard and believed this ideology.  They knew that their farm prices were low, so, as instructed by the corporate free traders at WTO, they spoke out strongly against farm subsidies in places like the US.   Groups like Oxfam featured farmers from some of these LDC farmers, or brought them to the US, to share this message.5

Why WTO is Wrong

In truth, free markets and free trade do not work for the major farm commodities .  These prices are "inelastic."  The lack "price responsiveness," "timely self-correction on both the supply and the demand side for aggregate agriculture."6  The major farm commodity prices, therefore, have usually been low.

What US Family Farm Justice Advocates Know

The problem of US export dumping was not caused by the presence of subsidies.  Farm prices were lowered by the reduction (1953-1995) and elimination (1996-) of price floors and supply management in commodity programs and the commodity title of the farm bill.7  There were no commodity subsidies in the initial years that price floors were lowered,8 so there is a zero correlation between these policy changes and subsidies for those years (prior to 1961 for corn, feedgrains, wheat; prior to 1964 for cotton, prior to 1977 for rice, prior to 1998 for soybeans). The real solution is not to cap or eliminate farm commodity subsidies, which are always given either after prices are low, or, in the case of direct payments, after they've been low almost every year for (15, 16, etc. up to) 25 years.

The Unique US Role

The US has played a unique role in all of this.  We've been the price leader for major commodities, able to set world prices.9  For corn and soybeans, for example, we've had twice the export market share of the Middle East in oil.

While the Middle East used that market clout to raise oil prices, however, the US used it's even bigger clout to lose money on exports. For example, corn per bushel and oil per barrel were each priced at $2.16 in 1947 ($17.40 in 2010 dollars).   If you plug oil prices into corn acres and yields over the years, you get about $13 trillion more (in 2010 dollars) than corn farmers actually got. (That imaginative scenario would be a lot higher than fair trade levels, of course.  US Family farm advocates generally asked only for about a $1.6 trillion increase, (parity) which would also have brought a lot of money into LDC and other poor (ie. Mexico) corn countries.  (Instead of that $1,600 billion, US corn farmers got roughly $200 billion in compensatory subsidies.)10

US uniqueness can also be seen in US farm policy.  Henry Wallace identified the problem of inelasticity, and created the US policies and programs to fix it nearly 80 years ago.11  Farmers here have had many years of experience with these programs, including more than a decade (1942-1952) of fair trade, living wage, or parity prices.7  

In contrast, during many of those years, Europe was divided into many small countries with little market clout. More recently, starting in the 1960s, Europe has had the Common Agricultural Policy.  CAP policies and programs, which began about a decade after price floors began to be lowered by Congress in the US, were never as strong as US policies and programs had been.12  For example, supply management was weaker, and price floors were never as high.  Price floor programs were more quickly replaced by mere subsidy programs there.

Sustainable Agriculture as Free Trade

Here in the US, as price floors were lowered, sustainable practices like livestock on grass, became less competitive, because feedgrains were available at lower and lower prices, eventually far below costs. At the same time, subsidies compensated farmers without pastures and hay more than those with resource conserving crop rotations.13.  This angered sustainable farmers and turned them away from belief in governmental involvement.  Many of them over the years, like Joel Salatin today, have emphasized libertarianism, free trade, "get the government out."  At the same time, organic markets were growing by 20% per year, and organic commodities did have a problem from lack of price responsiveness, but rather often achieved parity pricing in the market.  These views were reinforced by NGOs like the Center for Rural Affairs, where director Marty strange and others believed, to a significant degree, in free markets and free trade.14  As the sustainable agriculture movement rose to prominence in the 1990s, then, key groups opposed price floors.  This was the key dividing point between, for example the National Campaign for Sustainable Agriculture (including regional SAWGs and the Sustainable Agriculture Coalition) on one side, and the National Family Farm Coalition, on the other.

The Food Movement as Free Trade

Historically, the food movement essentially arose out of the sustainable agriculture movement and not the family farm justice movement.  Most of the food movement came to believe that the presence of subsidies, rather than the absence of price floors (etc.) cause cheap farm commodity prices.  This is the view found in almost all of the leading food policy books and films, and in food blogs and short videos.12.  What this means is that the food movement has mostly believed in free markets as a solution to Commodity Title issues.  This can be seen in the language, in Michael Pollan's talk of "subsidized corn," for example.  It can also be seen in the various advocacy positions, (including those of the National Campaign for Sustainable Agriculture and the Sustainable Agriculture Coalition,) which almost always include no market regulatory mechanisms (no price floors, no supply reductions, no price ceilings, and also no reserve supplies).  

These views were also advocated by major hunger and church organizations.14  While the mainline churches often knew about and supported price floors and supply management during the 1980s farm crisis, they typically did not do so during work on the 2008 farm bill.  Instead, the Religious Working Group on the Farm Bill, for example, emphasized free trade, the elimination of subsidies that "distort trade," with no mention of the market regulatory mechanisms they had supported in past decades.15.

US Responsibility in the Global Food Poverty Crisis Today

While many in the US farm and food movement of today are unfamiliar with our unique history and role with regards to farm prices, policies, and programs, the situation is probably even worse in Europe, where there is much less of a history of farm and food justice.  We can see this in work on a European farm subsidy database, and in the work of European hunger groups, though there are exceptions. We should not expect Europe to be the key leader on the issue of price floor policies.

Here in the US, responsibility falls mainly on those who know about our unique position and history.  This includes the groups of the National Family Farm Coalition, the Institute for Agriculture and Trade Policy, Food and Water Watch, academics like Daryll Ray and Tim Wise and their colleagues, and other family farm justice organizations, like the National Farmers Organization and the American Agriculture Movement, and a few others.16  

Why Have We Failed, Even as We're Almost Won?

In work on the 2008 farm bill, these groups and individuals failed to successfully get the message out.  In contrast, the food movement successfully got the (false) belief that subsidies cause low prices into the mainstream media. In general I think this is a paradigm question. A new dominant paradigm on these issues has emerged.  

In part this is a massive advancement toward victory.  Bill Moyer, in generally describing successful social movements, saw three waves of needed success.17  First there "public awareness of [the] problem" must be won.  We've seen great awareness of many of the problems of cheap farm prices not only in the farm and food movement, but also in mainstream media.  Second there must be "Public Opposition to Powerholder Policies."  We've also seen that, not only in the farm and food movement, but also in mainstream media:  opposition to the Commodity Title of the farm bill.  

On the downside, most of the success of the second wave has been the belief that the presence of farm commodity subsidies is the big problem, not the absence of price floors (etc.).18  This leads to Moyer's third ingredient for a successful movement:  Public support for movement alternatives.  Here we've seen widespread movement support and significant support in mainstream media for the false solution of subsidy reforms.  (One political problem with that solution is that it pushes mainstream farmers away from our movement, because without price floors they've usually needed subsidies. In the past, and in the recent dairy bill, about 2/3 of farmers have supported a return to price floors, fairly implemented, instead of compensatory subsidies.)  At the same time, the needed alternative solution, (price floors, etc.) has not achieved much support either in the food movement or in mainstream media.

In sum, we've mostly won on Moyer's first 2 waves, but failed on his third wave.

A key reason for the failure of our movement, may be that the leading organizations and academics who understand the unique US position and history, have not written well for the actual audience of the food movement.  They haven't written for an audience that "knows a lot" about subsidies "that just ain't so." I tried to illustrate this recently in my diary about Tim Wise at Tufts University and his co authors.19  I think that similar criticisms of not being clear and directive enough for the audience can be made about IATP's otherwise excellent "Fair Farm Bill" series,20 and the work of Food and Water Watch.  I've recently pointed to misunderstandings in online in comments for a recent blog on farm subsidies by Wenonah Hauter, director of Food and Water Watch, for example.21

Least Developed Countries Need Us, (USA)

Paradigm change is tough!  Knowledge of facts or anomalies typically is not sufficient to cause paradigm change.22  Misunderstandings between differing perceptions can be hard to clear up.  Tensions easily arise. Movement activists are typically very nice people who don't want turf fights. This may be especially true when, as in the food movement, many of the leading activists are women. (There may be "Mars" vs "Venus" factors involved.)  There can also be significant grief when highly meaningful paradigms, (which surely the subsidy paradigm has been,) are threatened, or break up, or are transformed.  We can become immersed in pathos.  (Note:  there is also significant grief in being the messenger.)  Finally, as Rollo May argued in The Courage to Create, the gods become angry when paradigms are changed, and we experience "an inexplicable guilt feeling," and anxiety.23 He gives an example from myth when Prometheus, after stealing fire from the gods, would periodically have his liver eaten by the vultures, as a symbol of these stresses. His liver would grow back again at night, however, providing a basis for us to continue this work on a renewed basis.

On the other hand, far away from the "sight" of most US citizens, LDC farmers live on $2 per day.  We must be responsible.  WE must hash this question out. We must face our grief and our interpersonal tensions, trusting that in our guts we'll be periodically renewed in this work. We must fulfill our unique responsibilities as US farm and food justice advocates.

Notes

1. UN ESA, http://esa.un.org/unup/index.asp

2. http://www.iatp.org/iatp/publi... (search the page for dumping).

3. USDA data from "Crop Production: Historical Track Records," http://usda.mannlib.cornell.ed... adjusted for inflation.

4. I've recently collected a number of links to articles of this nature, and may publish it online.

5. Land Stewardship Project, "African Rural Leader Says Uncapped Subsidies Have Negative Impacts Here & Abroad," 4/15/05, http://www.landstewardshipproj... Oxfam America, "Fairness in the Fields: A Vision for the 2007 Farm Bill,"  p. 10, http://www.oxfamamerica.org/pu...

6. Daryll E. Ray, Are the five oft-cited reasons for farm programs actually symptoms of a more basic reason, APAC, October 27, 2006 #325, http://agpolicy.org/weekcol/32...  Cf. Brad Wilson, "Michael Pollan Rebuttal 1,"  and http://www.youtube.com/user/Fi...

7. Brad Wilson, "Michael Pollan Rebuttal 1," (see note 5) and Michael Pollan Rebuttal 2," http://www.youtube.com/user/Fi...

8. "Farm Income:  Data Files:"  "Government Payments:" "United States by Program, 1988-2009," http://www.ers.usda.gov/Data/f...

9. Daryll E. Ray, Rethinking US Agricultural Policy:
Changing Course to Secure Farmer Livelihoods Worldwide, APAC, 2003, pp. 24-26.

10. For corn data see note 3. For oil data see InflatinData.com, http://www.inflationdata.com/i...  For constant dollar data I use a GDP deflator.  See, for example, http://www.measuringworth.com/...  For subsidy data I used figures for corn I used feedgrains figures for years up to 1994, as in note 7, and then for 1995-2009 I used summary data from EWG's farm subsidy database, http://farm.ewg.org/progdetail...

11. Daryll E. Ray, "Agricultural Policy for the Twenty-First Century and the Legacy of the Wallaces,  Agricultural Policy Analysis Center, Department of Agricultural Economics University of Tennessee, http://agpolicy.org/pubs/RayLe...

12. On these matters, see links from IATP in the content box "Food Crisis Primer" under the heading "European CAP Subsidies, and the following blogs by Brad Wilson:  http://www.zcommunications.org... http://www.zcommunications.org... http://www.zcommunications.org...

13. Brad Wilson, "Farm Program Penalties for Resource Conserving Crop Rotations," Iowa CCI, 1994.

14. See, for example, my content box (links to blogs and videos) on "Movement/Media Reviews," and some of my other blogs at http://www.zcommunications.org... and here.  You can also google "FireweedFarm" and the names of movement leaders (Pollan, "Robert Kenner", "Marion Nestle", "Daniel Imhoff", and you may also see my comments there.

15. See Marty Strange, Family Farming; Marty Strange, Center for Rural Affairs, "The Great Trade Debate."

16. On hunger organizations, see, for example, Bread for the World, "Healthy food Farms and Families," Hunger 2007, pp. 29, 71, https://secure3.convio.net/bre... Oxfam America, "Fairness in the Fields: A Vision for the 2007 Farm Bill,"  p. 3, http://www.oxfamamerica.org/pu...

17. The Religious Working Group on the Farm Bill, "Faith groups advocate Farm Bill reforms," Tuesday, April 17, 2007, http://www.churchworldservice....  Note also the conservative, free trade support for these hunger and church positions, as in "Left-Right. Coalition Opposes Subsidy Lobby Bill, Supports Kind-Flake Fairness Amendment," http://www.mulchblog.com/2007/...

18. See links here:  http://www.zcommunications.org...

19. See chart 3 here, http://asen.org.au/files/2008/... and more links at note 16.

20. A major source for mainstream media views related to this discussion can be found in a collection of about 500 mainstream media pieces at the Environmental Working Group here, http://www.ewg.org/farmeditori... and here http://www.ewg.org/content/cli...

21. Brad Wilson, "Philpott & Bittman are wrong about Tim Wise," Apr 12, 2011

22. http://www.agobservatory.org/i...

23. "No Quick Subsidies Fix for Food System,"  http://www.huffingtonpost.com/... http://www.commondreams.org/vi... http://www.dailykos.com/story/... http://civileats.com/2011/03/3...

24. Thomas Kuhn, The Structure of Scientific Revolutions.

25. Rollo May, The Courage to Create, New York, Bantam, 1975, pp. 22-26.

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