Unique US Role in Fixing the LDC Food Poverty Crisis

by: Brad Wilson

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

Philpott & Bittman are wrong about Tim Wise

by: Brad Wilson

Tue Apr 12, 2011 at 14:58:24 PM PDT

Paarlberg Says Farm Subsidies Don't Give Us Cheap Junk Food. I Disagree.

by: Jill Richardson

Tue Apr 05, 2011 at 16:36:16 PM PDT

Any complaint that food prices are too low might seem bizarre today, since world grain prices hit their highest levels in 30 years in 2008 and are now back up again. Yet this did not stop columnist Mark Bittman from reminding his New York Times readers that the price we pay for corn, soy, chicken, pork, beef, and high-fructose corn syrup is "unjustifiably low" because of farm subsidies.

Nothing could be farther from the truth. Our federal farm programs are designed to supplement the income of farmers, not subsidize the production of food. Most federal farm support programs either give cash to farmers whether they grow more crops or not, or boost farm income by raising crop prices through import restrictions, market controls, or temporary land set-asides, all of which make food artificially expensive, not artificially cheap.

Much of what he says is true. This is typical of Paarlberg, to blend truth and BS seamlessly. Yes, commodity prices are at record highs, and they were in 2008 too. Prior to that, however, they were often quite low (years back, corn got down around $2/bushel... now it's up around $7/bushel). If Paarlberg had consulted researcher Timothy Wise of Tufts University, he would have received data proving that our subsidy system more or less provided savings of billions of dollars to the factory farm industry in the form of underpriced commodities over a recent period.

Mark Bittman: My New Hero?

by: Jill Richardson

Tue Mar 01, 2011 at 23:32:22 PM PST

This week, he's got a column on ag subsidies. He says, "Don't end them. Fix them." HELL YEAH.

Oddly enough, I read his email just hours after getting off the phone with a farmer. A farmer who understands subsidies about as well as anyone can understand them. He's with Bittman: A government-provided safety net for our farmers is needed. And what we've got now stinks.

The complexities of the subsidy system are endless (seriously) and even my farmer friend noted that there are some things that just make sense to nobody. Well, they probably make sense to about 5 very highly paid people on Wall Street or something. Like how the relatively new crop insurance scheme gets financed.

But one thing makes very good sense: Paying farmers a set amount whether they need it or not (the so-called "direct payments" that Obama has proposed cutting for the richest farmers) is stupid.

In the past, we had a pretty smart system. We set a "loan rate" that was a certain amount per bushel. Something that served as a fair price floor (or at least, it was supposed to be fair). When prices dropped, farmers could give the government their crop as collateral in exchange for a loan. Let's say the loan rate is $2/bu and you have 200,000 bushels, then your loan is $400,000. If prices recover, you pay back the loan with a little bit of interest and sell your crop. If prices stay low, you keep the loan money and the government keeps the crop.

But today, we have to consider the rules of the WTO when making our ag subsidy policy. And that old system would violate the rules. Direct payments, stupid as they are, do not violate WTO rules. Which, in my opinion, goes to show how stupid the WTO is. At least for agriculture. Why on earth would we sign an agreement that ties our arms from making good policy?

So on top of our already complex and confusing subsidy policies, we've also got government subsidized crop insurance, which insures farmers against yield loss and income loss. It seems to me that crop insurance is essentially an outsourced, privatized subsidization program. That is, we pay the insurance companies no matter what, and then they pay (or you could say subsidize) the farmers who need it. And they keep a profit, courtesy of the tax payers. What's the sense of that?

Petition Against Cheap Corn

by: Brad Wilson

Sat Nov 06, 2010 at 06:32:37 AM PDT

Those who have read my blogs and comments here and elsewhere will know of my concern that there is a major barrier to winning our policy fight against cheap corn and other farm program crops, against most of the main problems identified in the new food books and films, from high fructose corn syrup, to CAFOs and the global food crisis.  That barrier is a misunderstanding of just what the real policy cause is.

Why is the U.S. Subsidizing Brazilian Cotton?

by: Jill Richardson

Thu Apr 22, 2010 at 21:24:21 PM PDT

The real tragedy here is that we'll end up paying a big chunk of cash to Brazil that could have been used here to (say) improve school lunches.  

Job Opening: Blogospheric Change for Food Justice: No Pay

by: Brad Wilson

Wed Jan 13, 2010 at 04:53:35 AM PST

We've heard similar things about video.  A video from an ordinary person can suddenly go viral.

Recently someone suggested to me through my YouTube channel that Twitter was the place to be:  "I recently came across your zmag blog .... Much of the way that discussions about food/ag are getting moved into the mainstream is via twitter....  the tech has shifted."  It's hard to keep up.

Of course, we've also heard that information on the internet can be unreliable.  It doesn't have the standards of scientific scholarship, or even of the mainstream media of the past.  Information can go viral AND be false, half true and/or technically true but misleading.

So how does this all play out for farm and food justice work within these domains?

How Subsidies are really calculated, sort of

by: Brad Wilson

Wed Jan 06, 2010 at 20:25:17 PM PST

So, here's an example of the farm program for four Iowa farms.    It's based upon two of our farms (which have different historical numbers, and other typical examples).  I've rounded off the numbers and given identical (example) farm sizes.

A Crunch of Jill's subsidy numbers

by: Brad Wilson

Wed Jan 06, 2010 at 15:11:05 PM PST

Ok, as a farmer, I start with cost of production per bushel (ERS full costs):
2008 -$3.68. (That's 54% higher costs than 2003, about 9% increase per year.)

Ok on corn a direct payment of 28 cents per bushel (same as 2003) to make up for the loss. (Well, a fraction of that)
2008: $0.28 x historical prog. yield (which might be 80% of real current yield) = $0.23
And then multiply by a percent of the acreage so it's reduced again.
2008: $0.23 x .833 = .19 (it was 85% in 2003, as Jill showed).

Ok, full costs vs income from direct payments.
2008 - $2.68 + $0.19 = - 2.49

So with a 50% rise in costs you get a slightly less in benefits 2008 vs 2003. Theoretically these are the "good" subsidies, "decoupled." (D. Ray: http://agpolicy.utk.edu/weekco... .) You're not "distorting trade." Everyone supports this, right. It's part of WTO philosophy, supported by Bread for the World and the Religious Working Group on the Farm Bill. Of course, that means farmers get the subsidy even on a rare year above costs, like 2008. Green Box? So don't praise it then turn around and bash it? Ok, the idea is that farmers will almost always lose money, (ie. 1981-2006; ie. Ray, lack of price responsiveness) so it's no big deal, right?

Ok Counter Cyclical payments. You only get it when you need it. Bad!!!? Not decoupled. In WTO theory it distorts Trade. (but see Daryll Ray)

How much for corn? If the market price falls below the Target Price you get it, up to the limit.

Ok, remember the full costs above: 2008 - $3.68. Well if the price falls way down to the Target Price, then you get some compensation. Ok, below $3.68 when prices fall you get 19-20 cents to make up for a drop down to the Target price, a drop of over $1.00.

Target Price
2003: $2.60 2008: $2.63 (as costs went up 50%)

You get countercyclical subsidies down to the Loan Rate.
2003: $1.98 2008: $1.95

So the gaps are: 2008: $2.63 - $1.95 = $0.68 subsidy per bushel of corn?
Well, except it's based upon program historic yield (maybe 80%) and acreage rules.
2008 $0.68 x 80%? = $0.54 x .833 = $0.45 (As Jill showed, it was 85% of acreage back in 2003)

So, if prices crash ANOTHER 68 cents (they've already fallen more than $1.00 and you already got a fraction of $0.28), you get about 45 cents as compensation for the free market losses. If they only crash down to, say, $2.65, you get no countercyclical payment.

Ok, subsidy number 3, Loan Deficiency Payments. You only get them if prices fall all the way down to the Loan Rate. Then you get compensated based upon actual yields. If you don't have a yield, (ie. Crop failure) that's a problem.

Ok, but under some conditions, this is still better than the ACRE program, which substitutes for some of these subsidies.

Ok, if prices crash (there's no price floor or supply management to prevent it), then, on the way down you get some subsidies, here and there. I've translated it into per bushel terms, like 2003 or 2008 farming, even though that's not how it's actually calculated.

Here's another way I crunched it a while back:
http://www.iowafarmertoday.com...

Obama Admin Loosens Eligibility Requirements for Ag Subsidies

by: Jill Richardson

Tue Jan 05, 2010 at 14:40:50 PM PST

Subsidies vs Price Floors in Farm Bill History

by: Brad Wilson

Sat Jan 02, 2010 at 18:39:51 PM PST

Some Brief History of Subsidy Politics

The policies in the gray box (price floors etc.) came out of the New Deal, Roosevelt, evolving through several farm bills and the Steagall Amendment 1941 (banking committee) for farm parity as an economic stimulus (like we need today, instead of losing money on farm exports and driving down world prices, hurting wealth and jobs creation in farm areas including LDCs).

Prior to Roosevelt, for decades farm prices were usually low with many "panics." Coming from Hoover into Roosevelt in the Depression, my family saw 7¢ corn and lost the farm.  During the 1980s farm crisis my mother recalled this time (young teen then):  " My Uncle Clyde wasn't able to get my dad a job in the creamery or anywhere else.  This was the summer of 1932,  and the depression got even worse.  We couldn't pay the rent, so in the fall we had to move up to Aunt Alice's and move into their upstairs!  I felt terrible that we had to move in with relatives.  Now I realize how my folks must have felt!  The most humiliating thing of all was that my mother had to get Stewart to drive her over to Uncle Bill's and ask to borrow some money!  I imagine he said, 'I told you so!'"  

New Deal policies take it through Truman, with no commodity subsidies except a few on cotton in the early 30s.  We had 100% of parity in agriculture overall 1942-52.  Program costs in one estimate were about $13 million in the black, meaning that the government made money on the program through interest on price floor loans.  So with price floors and effective supply management, and with international implementation as advocated by the Africa Group at WTO (and by EU in the 80s) it can work.  So no subsidies were really needed.

Under Eisenhower price floors were lowered, however, lowering market prices, as the NFO rose up to oppose the drops.  Price floors were lowered further decade by decade (Under Republican and Democratic Presidents, but pushed more by Republicans in congress for big business) until they were ended (dropped to zero) in 1996.  One exception was the price spike during the 70s caused by the secret Russian grain deal ("The Great American Grain Robbery").  

Introducing Subsidies

But in the mean time, subsidies were added to quiet down angry farmers. Subsidies compensated for farmer losses (which is rarely mentioned in most recent subsidy discussions).  

Subsidy compensations were part of Nixon/Butz policy.  With the 70s price spike costs raced upward.  Farmers won a rise in price supports (Carter) to address skyrocketing costs, but not back up to parity and not enough to prevent the 80s farm crisis.  The rise of the devastating crisis, in hindsight, occurred under the better farm bill than we've seen since.

Reagan greatly increased subsidies, but lowered price floors even more.  Farmers got more from the government for a lowering of farm income.  Bush senior continued this.

Clinton slightly raised the price floor, and vetoed Freedom to Farm once before signing it in the Gingrich era.  FtoF called for new "decoupled" (Direct Payment) subsidies for a few years, declining and ending for a free market (Hooverism/think 7¢ corn).  This was quickly seen as a way to destroy farming, and bankers joined farmers to win 4 emergency farm bills which added a second kind of (counter cyclical) subsidy.  I think LDP (3rd kind) was an administrative option that Clinton implemented to address the crisis.  So farmers ended with another big increase in subsidies and a total reduction in farm income, since market prices with no price floors, fell even more.  This was massive dumping on LDC farmers, not caused by subsidies, but by zero price floors/supply management.  So CAFOs and processors got the hidden benefits.

Another trend here is that many farm state Democrats continued to advocate for New Deal style programs over the decades of decline.  During the 1980s when farmers were again activated in a large number of groups such a farm bill was formulated and won quite a few votes in congress.  It was known variously as the Farm Policy Reform Act, The Save the Family Farm Act, and the Harkin-Gephardt Farm Bill (Harkin in Senate, Gephardt in House, both Democrats).  Today it continues as the National Family Farm Coalition's "Food from Family Farms Act."  The main groups supporting this bill or similar concepts include the National Family Farm Coalition and its members, the Institute for Agriculture and Trade Policy, Food and Water Watch, the American Corn Growers Association (not the National Corn Growers Association), the American Agriculture Movement, and the National Farmers Organization.  

In 2002 when Tom Harkin became chairman of the Senate Ag Committee he switched sides.  He stopped advocating for price floors and supported a greened up version of the worst Republican Farm Bill since Hoover, a green Freedom to Farm.  That goes for 2002 and 2008 farm bills.  In 1996, however, Harkin and the other Democrats (ie. Gephardt, Daschle, Wellstone) totally rejected this kind of a farm bill.  But all of them followed Harkin in a Green Freedom to Farm.

During the 1980s mainline churches also supported this kind of farm bill.  Today they support some version of a Greened up version of the Republican Freedom to Farm, as do most other progressive groups including the food movement, environmental movement and sustainable agriculture movement.

Sustainable and Organic farmers are a special case.  During the 1990s in trying to stop Freedom to Farm, the family farm movement worked hard to bring in sustainable and organic farm coalitions (SAWGs, NCSA, SAC) but failed and they have consistently supported some version of Green Freedom to Farm (big subsidies, no price floors or supply management).  Their policies provide or would continue multibillion dollar below cost gains for CAFOs and even bigger gains for Cargill (beyond billion in CAFO gains) and ADM.  Sustainable/organic folks have won greener subsidies like organic EQIP and CSP, but at those costs.  Likewise, when Michael Pollan, in Food Inc. and Fresh, speaks of cheap junk foods, Green Freedom to Farm Policies, with no price floors, do not raise the prices on corn, etc.  So when Pollan speaks of "subsidized corn" it's misleading.  The low/no price floors caused the low prices and the cheaper high fructose cory syrup and corn/soy transfats, as can be seen historically.  The subsidies prevent the destruction of farmers.  The bigger the farm, the bigger the losses to be compensated by subsidies.  Again, this is rarely mentioned when bashing farm subsidies.  Of course there are some economies of scale with larger farms, which changes their need somewhat.

So ending, greening, and/or capping subsidies are not policies that address the biggest CAFO benefits, processor benefits, ethanol benefits, exporter benefits against LDC farmers.  By the way, "family farm" advocates and their friends (ie. La Via Campesina with 200 million members) lost over and over on the price floor issue (without much food/consumer/environmentalist/organic help, and still today without help).  So some of them invested in ethanol to try to raise prices (and end processor below cost gains, dumping on LDC farmers).  So they lose money on corn, but then make it on ethanol, or in 2008, made money on corn but lost in on ethanol.  No where have I seen this understood in the progressive community outside of NFFC related groups.

(Least Developed Countries are 70% rural.  The US  has long had huge export market shares of some commodities, bigger than the middle East in Oil, but our leaders tried to get low world prices, not high world prices with it's clout, (clout of well above 50% export market share for corn and soybeans, for example, or up to +80%, but less each decade).

Subsidies vs Price Floors for the 2008 Farm Bill

Today these issues appear to be almost totally unknown outside of NFFC and its friends.  EWG listed 477 mainstream media articles supporting their position in support of a Green version of the Republican Freedom to Farm Act.  The Kind Flake Amendment and probably all others amount to the same.

Sometimes Republicans support Hooverism instead of what we have had  since 1996, which is Hooverism (free markets and free trade) with subsidy protection for farmers in rich countries.  Low subsidy caps are a way to force large farms out of business or to force them to break up.  It would probably be a kind of land reform, like forcibly running them out of business or making them illegal.  Note that in the 90s we had a $50,000 cap and called for $25,000, while well meaning progressives have recently called $200,000 cap a good step.  But these measures have nothing to do with price floors, and do not solve any of the big problems.  

Cargill and DAM (and to a lesser degree, Tyson and Smithfield) are the huge beneficiaries of all the diversionary talk about subsidies, with no mention of price floors.  What they've bought in Congress is policy that blames farmers and leads to no mention that the policies are designed primarily to benefit them, even at the expense of America losing money on farm exports of the major commodities virtually every year for a quarter century.  If you look at the EWG 477 editorials, you'll probably find hundreds of criticisms of farmers (who are merely partially compensated for losses caused by the lack of price floors) for every criticism of these real beneficiaries.  Not also that Cargill, DAM, (processors and exporters) Tyson and Smithfield (poultry hog CAFOs) and the others (ie. Kelloggs).

You can find footnotes for much of this in my Zspace blog articles, as well as many links to online sources.  I am also one place that explores this movement crisis online.  I've seen NO other place online that writes much on these issues, especially in reference to mainline churches, hunger groups (Bread for the World and Oxfam are among the worst on the Commodity Title issues I raise), sustainable agriculture, and the food movement.  (I link a few things from IATP on myths and APAC's Daryll Ray on some media/etc. misunderstandings, however.)  

Further Reading and Links

From my blog see especially my "foodie" and food movement pieces, such as my comparison of the National Corn Growers Association with so called progressives that supposedly hold radically different views:  http://www.zmag.org/blog/view/...

My "Farm Bill FACTs: Commodity Title: A Family Farm View" briefly goes right down a list of the main things I hear in the food movement and among the other groups I see as similarly missing the real issue, and then proves them wrong with online links:  http://www.zmag.org/blog/view/...

If you look around at (http://www.zmag.org/zspace/bradwilson) you'll see where I have footnoted pieces.

New Years Eve Daryll Ray-a-thon

by: Jill Richardson

Thu Dec 31, 2009 at 20:37:37 PM PST

Below I've posted links to the Daryll Ray columns I found most interesting, and I promise they aren't PDFs.

Who Gets All the Subsidy Money

by: Jill Richardson

Mon Dec 28, 2009 at 14:23:21 PM PST

The results? 10 out of 21 members of the Senate Ag Committee comes from the top 10 farm subsidy recipient states. Go figure.

Also interesting is that the #1 rice and #2 cotton state's Senator, Blanche Lincoln, currently chairs the ag committee. Her policy advisor from 2000-2001 (Ben Noble) currently lobbies for the National Cotton Council and the USA Rice Federation. And Monsanto.

An Interview with Our Friend Blanche

by: Jill Richardson

Sat Sep 19, 2009 at 01:44:10 AM PDT

Swine Flu, NAFTA and U.S. farm subsidies

by: Farm Bill Girl

Thu Apr 30, 2009 at 22:20:42 PM PDT

However, the larger connections to U.S. farm subsidy policy, NAFTA have not been adequately understood and explored.