Food Crisis, Trade and GM crops

I like most of what I see here, but I think we need some clarification, at least for readers in the U.S., where I see a lot of certain kinds of misinformation floating around. Note that he’s emphasizing trade liberalization as a huge cause of the food crisis, and he emphasizes trends going back 40 years. Although he doesn’t actually say it, he’s talking about LOW farm market prices here and worldwide, not high prices. So, liberalized trade causing dumping onto world markets (at below cost) is the long term cause. Here in the U.S., recent talk of the “food crisis” usually doesn’t mention the long term low farm prices that have devastated rural areas of the world, only the recent high prices (ie. higher fall 2006-2008) which people in the already devastated areas can’t afford to pay. They can’t even afford prices which are way low, half of costs of production, in many cases. But low, below-cost farm prices hugely fueled the poverty long term. A second factor, emphasized here in the U.S. is that our Commodity Title of the Farm Bill, over that 40 years and on back to 1953, lowered and eliminated price floors and supply management. And since our farm exports, in important cases, have been so huge (even 60-90% for corn and soybeans,) in world markets, this dragged down world prices. Hasn’t the U.S. alone been bigger in corn and soybeans than OPEC in oil? Yet we’ve sought lower prices for our exports below our costs (to subsidize U.S. and foreign exporters, processors and animal factories), not higher prices like OPEC. And unlike OPEC, we’ve increasingly chosen to overproduce, also to drive down prices for what we export. Ok, so in calling for “free trade” as “the only answer to the global food crisis,” Bush, Lamy, and Zoellick are calling for a return to dumping (farm prices below cost). And they’ve got a point. Dumping means lower food prices, especially for the poor. The recent food crisis was caused by rare market conditions (not policy) that ended dumping. But again, that dumping was a huge factor in originally causing the devastating poverty in rural areas world wide (including what are now the main world poverty areas). Note too that he stated: “Some 40 years ago, developing countries were actually exporting foods and had a surplus of US $ 7 billion in food trade.” Dumping was not as bad back then, but it was on a downward trend. The parity ratio statistic illustrates some of this. (I find parity ratios to be consistent with other statistics, including return on equity which is said to be stressful in agriculture below 5% and low stress above 10%, and returns above full costs, as used at ERS.) So 100% of parity roughly indicates a living wage for many farmers. 40 years ago in 1968, overall farm parity was 68% versus 37% in 2006 before most of the price spike. 50 years ago in 1958 parity was 85% and 1942-1952 parity was 100% or more. More specifically, for September 2005, Parity ratios were: Corn 25%, Cotton 26%, Peanuts 27%, Rice 26%, Wheat 32%, Soybeans 32%. So tripling of farm prices roughly brings farmers closer to a living wage. For example, in September 2005 100% parity prices would need to have been: Corn $7.02/bu (about what we’ve finally reached in 2008), Cotton $1.79/lb, Rice $26/cwt, Wheat $10.50/bu (we’re a little under $10 lately), soybeans $17/bu. Ok, he says we’ve seen “food prices, increasing by 300 per cent in the past five years. That’s not all seen at the farm gate! If you tripled 25-32% of parity you would get less than 100%. If you tripled 37% overall you’d get 111%, about what we had 1943-1948, above a living wage. We did a world food meal at our church. One farmer said that the beans and cornbread (middle) meal was what his family ate during the Great Depression. My grandfather, who lost his farm in the Great Depression, bought a farm again during the “parity years.” He also put a down payment on a farm and gave it to my father, who started farming during these years. We had decent prices long enough to recover from the Great Depression and the hunger that went along with it. (My beans and cornbread farmer neighbor built a new brick house back during or following the 1970s price spike.) Another clarification: agribusiness is so dominant it makes profits if prices are low or high. But ADM and Cargill have long favored LOW farm prices. Note that in the the opening paragraph he is saying that free trade (meaning lower prices) will “be a savior for the agribusiness industry.” Surely I’ve got that correctly, though we don’t hear that in food crisis discussions in the U.S. Again, the higher farm prices have hurt not saved agribusiness, at least in the sense that ADM, Cargill and Tyson on the grain output side have to pay a fair price. So no and yes. Monsanto (and Cargill again) on the input side are getting a boon because farmers have more money, and the Mega Corps are taking it. Production costs are skyrocketing, (which lowers parity ratios and raises 100% parity price levels). But this makes organic no-till (10% fossil fuel use?) and grassfed meat, poultry, milk and eggs much more competitive. Ok, he refers to “protection for agriculture in advanced countries.” That needs clarification. The Committee for Economic Development, in An Adaptive Program for Agriculture, called for lowering farm bill price floors to get rid of “excess resources (mainly labor),” one third of U.S. farmers in five years. (see “Crisis by Design” by Mark Ritchie online.) We don’t see that as “protection.” Yes, we’ve gotten subsidies to compensate partly for massive losses. Meanwhile giant animal factories and feedlots took away the bulk of our value added livestock, with their way-below-cost feed grains. And LDC farmers had the same losses without the subsidies. So again, no and yes. (But removing subsidies without adding price floors and supply management, see nffc.org, does nothing for the chronic problem of LDC farm prices.)