November 2008

Friday, November 28, 2008

"Rising prices and food recalls have exposed the myriad challenges facing our global food system," writes IATP's David Wallinga, M.D., in a new commentary. "Signs of an emerging crisis: melamine in baby formula and candies; a rise in obesity and diet-related diseases; air and water pollution from factory farms; and the record-sized `Dead Zone' in the Gulf of Mexico,caused in large part by natural gas-derived corn fertilizers flowing from the Mississippi. And we are likely heading for more changes because our industrialized food system relies on costly and polluting fossil fuels, used intensively in the form of synthetic pesticides and fertilizers as well as for transporting food around the world."

Despite these challenges, Dr. Wallinga gives us 10 steps we can all take to steer our global food system in a healthier direction. Find out what you can do!

Tuesday, November 25, 2008

Food_crisis_confronting_conference Our conference on the Confronting the Global Food Challenge is in full swing. I am too tired to do it justice, but wanted to share the thoughts of Olivier de Schutter, the UN's Special Rapporteur on the right to food. For more details, you can read his pre-conference paper, A Human Rights Approach to Trade and Investment Policies. In his talk, he gave a summary of where we are in relation to the food crisis, the right to food and the Doha Round. He sat next to the Director General of the World Trade Organization (WTO), Pascal Lamy, as he spoke. In short, he contrasted the world of economic assumptions—such as perfect competition—with a world he characterized as “the stubborn world of reality.”

He gave five reasons why free trade is not the answer for governments preoccupied with the realization of the right to food: 1) Free trade increases countries' exposure to volatile prices; 2) Free trade exacerbates the duality of the agricultural system in which the (vast) majority of smallholders are made to suffer while the small number of big farmers take all the benefit from public policy outcomes; 3) Free trade increases the power of commodity buyers, processors and food retailers, at the expense of farmers and consumers; 4) Free trade undermines the viability of small-scale agriculture in much of the world. Many of the costs of larger farmers are assumed by the public, while small farmers’ costs make them less competitive; 5) Free trade worsens greenhouse gas emissions by rewarding industrial agriculture methods.

 

It was a great speech. Set against that of Pascal Lamy, it was all the more impressive. Lamy, among other things, dismissed concerns about speculation by saying that all farmers speculate (as if the worry was farmers, as opposed to the tens of billions in investment funds that have so distorted commodity markets in 2008). The WTO DG made some good points about agriculture’s “special” status, but overall was disappointing in his misunderstanding (whether real or apparent) of the audience’s concerns.

 

You can listen to a number of the presentations, and read backround papers, at our conference web site.

Monday, November 24, 2008

In U.S. political vernacular, the legislative period following an election but before the victorious take office is called a "lame duck" session—defeated members being the "ducks." Often, little legislative progress is made during the "lame duck" interim. What a difference a global financial crisis makes!

On November 13, IATP released a short report, "Commodities Speculation: Risk to Food Security and Agriculture." The report anticipated that the U.S. Senate would take up some time in 2009 to discuss the "Commodity Markets Transparency and Accountability Act" passed by the House of Representatives in mid-September. But on November 20, Senator Tom Harkin, chair of the Senate Agriculture Committee, announced that he would introduce the "Derivatives Trading Integrity Act of 2008" and hoped to hold hearings in December. Rather than allow the continued existence of an unregulated and privatized "shadow" banking system pioneered by the likes of Goldman Sachs, the American Insurance Group and Lehman Brothers, Harkin said in his bill that "every swap, every derivative, every [commodities] future [contract] will have to be traded on a regulated exchange."

Not to be outdone, also on November 20, Representative Collin Peterson, chair of the House Agriculture Committee, held hearings on credit default swaps (CDS), a financial derivative instrument that witness Eric Dinallo characterized as price-risk creating, rather than a risk-reducing transaction. The insolvency of major CDS traders and investors led to the $1.3 trillion and counting congressional bailout of Wall Street investment banks and other financial institutions. Chairman Peterson and ranking Republican Representative Bob Goodlatte rejected a proposed merger of the Commodities Futures Trading Commission (CFTC) and Securities Exchange Commission (SEC). They argued that the CFTC has the legislative authority to regulate CDS and other financial derivatives, and needs only adequate resources to do so. The creation of a new agency would cause delays and loopholes that could further destabilize financial and agricultural markets. Peterson said that committee members would travel to London and Brussels to discuss further how to best regulate financial and agricultural derivatives markets. The Peterson and Harkin bills are likely to get a rapid response from the Obama administration, since CFTC Commissioner Bart Chilton is a member of the Obama transition team for agriculture.

Because, as numerous reports have indicated, commodities speculation has been a factor in exacerbating global food insecurity, new legislation and regulation of U.S. commodity markets could include a food security ombudsperson to ensure that food security has a seat at the regulatory table. Coinciding with World Food Day, on October 16, U.S. Representative Jim McGovern proposed that the next U.S. president create a new office to reduce growing global food insecurity, i.e., a "food czar." Though the proposal has been overshadowed by the global financial crisis, McGovern's proposal has the backing of powerful senators who are proposing more international food assistance in the context of overall U.S. agricultural trade policy. U.S. international food assistance has traditionally not only served humanitarian and diplomatic purposes, but, given the absence of government agricultural inventory management, has also served as a way to dump U.S. agriculture surpluses without increasing raw materials costs to agribusiness. Putting a "food czar" on the CFTC and adding food security criteria to the legislative definition of "excessive speculation" would be one way for Congress to ensure that commodities speculation not continue to make food insecurity worse. 

Thursday, November 20, 2008

Wallinga headshot Today, the Blue Cross Blue Shield of Minnesota Foundation is honoring IATP's own David Wallinga, M.D. with its Upstream Health Leadership Award. They couldn't have found a more worthy recipient.

"Dr. Wallinga is a leading voice for science-based public policies that better protect children from environmental pollutants, especially those that enter the food chain," said Foundation Vice President Joan Cleary. We couldn't have said it better.

David's research has focused on the health effects of chemicals used in pesticides and children's products, as well as the overuse of antibiotics in animals raised for food consumption.  

Also, kudos to the BCBS of MN Foundation for raising awareness about the connection between escalating health costs and our unwanted exposure to toxic chemicals throughout the food chain.

"Since environmental contributors to childhood diseases are largely preventable, educational efforts as well as public policies to protect the health of children by preventing exposures and pollution can provide significant health and economic benefits," said Cleary."Dr. Wallinga's leadership points to upstream causes and solutions, such as developing policies for more rigorous testing of chemicals and products before they enter the market."

Congrats, David!

Monday, November 17, 2008

How would our global food system be different if we started with a human rights perspective that guarantees everyone the right to adequate food? This is the fundamental question asked by IATP's Carin Smaller and Sophia Murphy in a new paper, Bridging the Divide: a human rights vision for global food trade.

Food_crisis_confronting_conference The paper found that current international trade rules set at the World Trade Organization (WTO) conflict with a human rights framework in several ways, including: discouraging state intervention; using exclusively a trade yardstick to measure progress; ignoring the most vulnerable groups; dictating only one economic model; and failing to meet minimum levels of participation and transparency.

A shift toward a human rights framework, based on international law already adopted by nearly all countries of the world, would require some important changes. A human rights approach makes explicit the requirement that available food must be affordable or otherwise accessible to every individual. And as important, reaching such a requirement does not dictate any one way of organizing markets or stimulating economic growth, giving countries the flexibility they need to reach this fundamental goal.

This new paper is part of a series of papers associated with the upcoming conference, Confronting the Global Food Challenge. The conference is being held in Geneva, Switzerland and includes civil society organizations from around the world. You can find additional papers, an agenda and background material in English, Spanish and French at our conference web page.

Friday, November 14, 2008

Between April 2007 and April 2008, the global food price index increased by 85 percent, according to a UN agency. Many reasons for the rise in food prices have been cited, including: the increase in oil prices, growing demand from countries like India and China, climate-related weather events and biofuel expansion. But as agriculture prices have plunged recently, mirroring drops in financial markets, it's becoming clear that the extreme volatility in agriculture commodities is following the volatility in financial markets.

A new report we released yesterday, Commodities Market Speculation: the Risk to Food Security and Agriculture, makes the case that speculation in commodity markets drove agriculture prices up over the last year—way beyond what was justified under supply and demand fundamentals. The report pointed to the speculative role of huge commodity index funds, led by Goldman Sachs and American Insurance Group, who bundled contracts of agriculture and non-agriculture commodities (like oil and metals) in an attempt to drive up prices and gain a profit. The report found that a series of U.S. deregulatory policies opened the door for these giant index speculators to enter and essentially destabilize traditional agriculture commodity markets.

The report draws ever stronger ties between the food and financial crises. Tomorrow, heads of state from the G-20 will meet with President Bush to discuss responses to the financial crisis. IATP's Steve Suppan offers some thoughts for the participants in our press release: “As President Bush and the G-20 meet this weekend, it is important to recognize that many of the deregulatory measures that brought on the Wall Street collapse also contributed to the food security and agricultural market crises. Only prudential regulation and tough enforcement will repair the damage caused by crony capitalism to these markets and the people markets are supposed to serve.”

Wednesday, November 12, 2008

On Saturday, lame duck President Bush will host a meeting of the G-20 to discuss a global response to the financial crisis. There were initially high expectations for the meeting, particularly from France and Great Britain. But, as the Wall Street Journal reported today, expectations have been ratcheted down considerably, partially due to the absence of President-elect Barack Obama, whose participation will be essential for any progress moving forward.

However modest the expectations, participants would do well to read a statement on the meeting signed by more than 630 organizations (including IATP) from 88 countries around the world, laying out a set of clear principles for future global summits:

  • Involve all governments of the world;
  • Meaningfully engage civil society, citizens' groups and social movements in the process;
  • Set a clear timeline for regional consultations with groups most affected by the crisis;
  • Be comprehensive in scope, tackling the full array of issues and institutions; and
  • Be transparent, with proposals and draft outcome documents made publicly available and discussed in advance of the meeting.

It's notable that President Bush rejected suggestions to hold the meeting in New York and to allow the UN to host the meeting. But a UN High Level Task Force on the Financial Crisis, chaired by Nobel Laureate Joseph Stiglitz, would be a better place to structure a response to this global crisis. As IATP President Jim Harkness reported last week, several task force members understand that the financial crisis is not separate from the food and energy crisis. All share common origins and common solutions. President-elect Obama has been relatively quiet about how he would address these issues at the global level. The world is waiting.

Monday, November 10, 2008

Later this week, President Bush will hold a G-20 summit to discuss the deepening financial and monetary crisis besetting the world's markets. Some have likened the November gathering to the historic 1944 Bretton Woods conference.

The impetus for the Bretton Woods meeting was obvious to all—years of drought and famine followed by the Great Depression and World War II had destroyed any semblance of a world economy. As we approach this week's meeting, we need to ask ourselves how the current crisis came about and what lessons we can learn from Bretton Woods.

Economic storms start like other storms. The first drops of rain are very small and dispersed. They are only felt by a few. Just as in the 1930s, the first signs of our current economic storm blew in with a farm crisis. In the 1980s, hundreds of thousands of farm families were driven off the land by low prices and unbearable debts. Foreclosures were rampant. Rural communities were feeling the first drops of rain from a corporate-driven storm to have global markets determine food and agriculture policy. This policy eventually became known as the “Washington Consensus” when it was applied to the developing world.

The peak of the “Washington Consensus” arrived in 1994. It started out as policy prescriptions for financially strapped countries like Mexico and Argentina by the World Bank and the International Monetary Fund (IMF). Eventually the “Washington Consensus” became shorthand for the full neoliberal agenda that called for unleashing market forces and removing all regulation on capital. The pinnacle achievements of this movement of market fundamentalism are the 1994 North American Free Trade Agreement (NAFTA) and, that same year, the transformation of the General Agreement on Tariffs and Trade (GATT) into the World Trade Organization (WTO).

Also in 1994 was the 50th anniversary of the Bretton Woods conference, the world economic summit that gave us the World Bank, the IMF and GATT. As the world’s financial leaders and economists celebrated the globalization of markets, the Institute for Agriculture and Trade Policy celebrated by bringing the surviving participants back to the historic Mount Washington Hotel in Bretton Woods, New Hampshire. The same place where 50 years earlier they had met to ensure that the world would never again experience the kind of worldwide suffering and destruction caused in part by a failed international monetary system.

Book cover As the surviving Bretton Woods participants arrived for the anniversary meeting, it became obvious that this was not going to be a gathering of old timers reminiscing about the good old days of World War II. Most arrived with draft critiques of what went wrong back in 1944 and even more about how the institutions they had labored so hard to create as regulators of national and corporate avarice had been subverted and misused to promote a Cold War agenda.( IATP collected the critiques and published them as The Bretton Woods-GATT System: Retrospect and Prospect after Fifty Years.)

200px-WhiteandKeynes Following the Great Depression and World War II, it was obvious to all the Allies that to prevent a repetition of the chaos that had preceded the war, it would be necessary to regulate international economic activity. All the participating countries had, in one form or another, a market-based system, but all agreed that cooperation on monetary policy was essential. The two major players at Bretton Woods were the United States, represented by Harry Dexter White, and Britain, represented by John Maynard Keynes (White and Keynes in photo to the right). The U.S. held sway over the outcome, with its focus on controlling inflation trumping Keynes’ and others' hope of ending poverty. Mechanisms were put in place to help developing countries maintain stable monetary systems, but with a steady outflow of unregulated loans and grants from the U.S. (including the Marshall Plan and other aid programs), it was only a matter of years before post-war cooperation was replaced by the Cold War, growing national debts and dependency in the developing world.

The end of the Bretton Woods era is linked to Nixon’s decision to decouple the dollar from gold. His financial and monetary programs were the beginning of the economic storm we are drowning in today. When the Bretton Woods era ended, the “Washington Consensus” introduced structural adjustment programs that have recreated the same inequities and chaos that led to the Great Depression and World War II.

At the 50th anniversary of Bretton Woods, a small group of older men and women gathered in New Hampshire to say that a return to unregulated markets would not work. They knew from experience that unbridled capitalism and national competition would lead to misery and war. Few listened then as they called for a new Bretton Woods summit to prevent the collapse of the world’s financial markets.

Today, most of the survivors of Bretton Woods are gone. But if we hope to salvage the world economy from the failed policies of the last 30 years, we must start with their commitment to justice and human dignity over the interests of property and wealth. The Bush summit is unlikely start from that position, but if we can believe President-elect Barack Obama, a brighter day might be coming.

Friday, November 7, 2008

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Thursday, November 6, 2008

"And all those watching tonight from beyond our shores, from parliaments and palaces to those who are huddled around radios in the forgotten corners of the worldour stories are singular, but our destiny is shared, and a new dawn of American leadership is at hand."

These words, excerpted from Barack Obama's acceptance speech on the night of his election are perhaps those that struck me most when I finally was able to play the video of his speech on a jammed youtube.com

Wow, an American president (-to-be, all right) speaking about the rest of the world without mentioning terrorism? Did someone remember this is possible? Few in my generation, for sure! OK, I might be exaggerating slightly. But George W. Bush’s last speech at the UN General Assembly was illustrative: he mentioned “terror” 31 times, but seemed never to have heard about the Millennium Development Goals.

What’s most beautiful about this victory is that it’s the success of hope over fear. U.S. citizens have chosen the only viable path out of the unprecedented crisis their country is facing (the Onion's latest satire highlights how bad times can drive change). But there is also so much to do to fix the way the U.S. relates to the world. And how an Obama administration will go about this is still very unclear.

Reuters gave a go at summarizing Obama's positions on trade. The Congress of South African Trade Unions gave a sobering reaction to Obama’s election.

All in all, it is very clear that this election is historic. Barack Obama's personality and history mean a lot to people all around the world, in Kenya, Indonesia but also in Europe. It is no guarantee, though, that he will bring the change we need. His election is an opportunity. It will take much more to make change a reality.

It will take, first and foremost, a continued effort for democracy to prevail around the world and at the global level. The Obama campaign strategy, and its success in mobilizing millions, is an inspiration to all of us!

P.S: The New York Times has a great video on reactions to Obama's elections around the world.

Anne Laure Constantin - IATP - Geneva

Wednesday, November 5, 2008

President Barack Obama. Incredible! We all need to get used to saying it. It's impossible to overstate what this election means for someone like my father, who grew up in segregated Virginia. The last time we talked, he repeated what I've heard and read from many of his generation: "Never in my lifetime did I believe this could happen."

There has been a lot written about President-elect Obama's positions on issues we care about. Farm Aid breaks down Obama's position on agriculture. (One positive sign: he has actually read Michael Pollan's recent article, Farmer in Chief.) Grist outlines Obama's commitment to the environment and renewable energy. Reuters reports on Obama's position on trade.

But what is said on the campaign trail and what ends up as policy can be very different. In 1992, when Bill Clinton was first elected president, I was living in Washington, D.C. My strongest memory from that time was the incredible parties. They seemed to drag on for days, including an amazing series of free concerts on the mall. People celebrated—maybe a little too much. 

From my perspective, one of the important differences between Clinton and Obama is their organizing philosophy. Clinton's was strictly a top-down operation, and he ran his campaign and his administration that way. His supreme confidence in his own intellectual brilliance (and political calculations) often made it difficult to bring new ideas into his administration, and even tougher to pressure him to do the right thing (i.e. on NAFTA/WTO and the 1996 Farm Bill) when he disagreed with citizens' groups.

President-elect Obama's campaign was revolutionary in many areas, not the least of which was its bottom-up organizing strategy. Republicans openly mocked Obama's experience as a "community organizer," (despite the fact that many of their own troops are led by community organizers, as the Daily Show pointed out). But there is no doubt that Obama's organizing experience on the South Side of Chicago shaped his view about campaigns. His organizing approach is based on bottom-up citizen empowerment and included many people who have previously felt excluded from the political process. He believed listening to the voices of citizens is fundamental, as is talking and listening to those you disagree with. This is our opportunity.

While there is much to be optimistic about what candidate Obama has said, there is no doubt that with the inevitable compromises that come with governing, we will differ with the Obama administration. In the report New Progressive Voices, we outline how the Obama administration can positively re-engage with the world. And in the upcoming book, Mandate for Change, we outline what the Obama administration's farm and food policy should look like. Of course, we are under no illusion that the policy changes we propose will be quickly and easily adopted, ratified through Congress and implemented.

The outcome of yesterday's election has opened a door (closed the last eight years) for new ideas on building community-, people- and environment-centered trade and food systems. But it has only opened the door. Now we all need to do the work that will allow us to walk through that door into a better world.