The Board of the Federal Reserve asked this question, in essence, and 25 questions related to it in an Advanced Notice of Proposed Rulemaking. IATP responded, because while banks generally do not own and trade agricultural commodities, the energy commodities they trade, including fertilizer (occasionally), oil, gas and electricity are agricultural inputs and, hence, affect agricultural prices. (The Fed has posted all comments here.) (On April 22, Barclay’s, which traded agricultural commodities, announced that it would be selling most of its commodity trading division. Greater regulatory scrutiny and declining profits were cited as reasons for the sale.)
Of Minnesota’s 55.6 million acres, 27 million acres are taken up by farmland. Currently, crop production is dominated by summer annuals like corn and soybeans, which need to be replanted each year and grow only in the summer. The consequence of this type of cropping is that for most of the year, no active roots exist in the soil to filter water, reduce runoff, or prevent erosion. Covering the ground with crops for a larger portion of the year by adding winter annuals and perennials to the landscape provides multiple benefits, including diversifying agricultural operations, protecting soils and waterways, and increasing wildlife habitat.
Part of the reason that perennials are not already more widespread on the landscape is that seed suppliers have a vested interest in annual crops. Annuals require farmers to purchase seeds every year, thereby boosting profits for the seed suppliers. These suppliers include large stakeholders such as Monsanto, DuPont, and Syngenta, all of which have the resources to wield powerful influence over farmer decision making. However, increasing ground cover throughout the year is imperative to ensure continued production in the face of climate variability, especially in a state like Minnesota where nearly half of the land is in agricultural production.
The food crisis of 2008 led to a broad agreement in the agricultural development community that the lack of appropriate investment in agriculture had been a key contributing factor to unstable prices and food insecurity. The crisis coincided with an increase in land grabbing in many parts of the world, but especially in Africa. It is in response to these events that the idea of developing some criteria on agricultural investments came up in international policy and governance arenas.
The food crisis also led the United Nations in 2008-09 to reform its Rome-based Committee on Food Security (CFS) to address both the short term food crisis, and the long-term structural issues that led to it. It involved bringing new people to the table where decisions were being made, and this included a new Civil Society Mechanism (CSM).
In October 2010, the newly reformed CFS was faced with a challenge: Should it endorse the international Principles for Responsible Agricultural Investment that Respect Rights, Livelihoods and Resources (PRAI) developed by the Inter-Agency Working Group (IAWG), composed of FAO, UNCTAD, IFAD and the World Bank, or refuse to endorse it in response to the CSM position rejecting the PRAI?
It’s a big week in the agriculture world. Just days before Obama signed the new Farm Bill into law, Agriculture Secretary Tom Vilsack announced the locations of seven regional hubs for climate change adaptation and mitigation. These hubs will attempt to address the risks that farmers increasingly face due to climate change—including fires, pests, droughts and floods—by disseminating research on ways landowners can adapt to and adjust management strategies to build resilience.
This is a notable step forward in climate policy and has important implications for rural communities. Many rural communities tend to view large governmental agencies negatively, especially those agencies that regulate the agricultural activities that dominate many of those communities’ economies. However, farmers feel the direct impacts of extreme weather more than anyone. The climate hubs will help by linking a diverse network of partners, including universities, nongovernmental organizations, federal agencies, state departments, native nations, farm groups and more. Broadcasting climate change research and information from this wide array of sources, including sources that farmers trust and regularly interact with, could make climate change adaptation and mitigation a more accepted and commonly desired goal.
Encouraging action on climate change is paramount not only from an environmental perspective, but from an economic perspective as well. The drought of 2012 cost the American economy an estimated $50 billion between 2011 and 2013. It’s too early to assess the costs of the current drought punishing California, which produces nearly half of the country’s fruits and vegetables. Clearly, the risks posed by volatile weather events have implications not only for farmers, but for the economy and society as a whole.
A Spanish version of this commentary originally appeared in La Jornada.
One of the clearest stories from the NAFTA experience has been the devastation wreaked on the Mexican countryside by dramatic increases in imports of cheap U.S. corn. But while Mexican farmers, especially small-scale farmers, undoubtedly lost from the deal, that doesn’t mean that U.S. farmers have won. Prices for agricultural goods have been on a roller coaster of extreme price volatility caused by unfair agriculture policies, recklessly unregulated speculation on commodity markets, and increasing droughts and other climate chaos. Each time prices took their terrifying ride back down, more small- and medium-scale farmers were forced into bankruptcy while concentration of land ownership, and agricultural production, grew.
It’s hard to separate the impacts of NAFTA from another big change in U.S. farm policy: the 1996 Farm Bill, which set in place a shift from supply management and regulated markets to an accelerated policy of “get big or get out.” Farmers were encouraged to increase production with the promise of expanded export markets—including to Mexico. But almost immediately, the failure of this policy was evident as commodity prices dropped like a stone, and Congress turned to “emergency” payments, later codified as direct payment farm subsidies, to clean up the mess and keep rural economies afloat.
Then, as new demand for biofuels increased the demand for corn, and investors turned from failing mortgage markets to speculate on grains, energy and other commodities, prices soared. It wasn’t only the prices of farm goods that rose, however, but also prices of land, fuel, fertilizers and other petrochemical based agrochemicals. Net farm incomes were much more erratic.
Pete Huff and Dr. M. Jahi Chappell have joined IATP’s staff this fall and together will be leading the organization’s efforts to further a sustainable, diversified and prosperous agriculture and food system.
Pete Huff, IATP’s new director of food systems, will be focusing on advancing healthy and fair food systems in the coming year, including our Beyond the Farm Bill initiative. His background spans the worlds of organic agriculture, market gardening, school food-waste reduction and urban agriculture policy in the nonprofit and local government sectors in both the U.S. and Australia. Learn more about Pete on his staff page.
Dr. M. Jahi Chappell is IATP’s new director of agriculture policy, working on farm policy that supports agroecology and more democratic systems. Most recently, Dr. Chappell served as an assistant professor in the Environmental Science and Justice program of Washington State University Vancouver’s School of the Environment. He is a leading scholar of the food security policies of the city of Belo Horizonte, Brazil, which served as a basis for Brazil’s acclaimed national Zero Hunger programs. He’ll be a featured speaker at the upcoming Borlaug Dialogue as part of the World Food Prize. Learn more about Jahi on his staff page.
Wow. This seems likely to cause a long-term stir, and I’m quite sure vociferous critiques from many quarters (though likely mostly from the usual suspects). University of Canterbury Professor Jack Heinemann and his team have found that
…Relative to other food secure and exporting countries (e.g., Western Europe), the U.S. agroecosystem is not exceptional in yields or conservative on environmental impact. This has not been a trade-off for sustainability, as annual fluctuations in maize yield alone dwarf the loss of caloric energy from extreme historic blights. We suggest strategies for innovation that are responsive to more stakeholders and build resilience into industrialized staple crop production.
In terms of making a splash and what the big, viral attention has been about, though, this excerpt from their abstract buries the lede. In an interview with the journal’s publisher, Prof. Heinemann elaborates:
Our most significant findings were that:
–GM cropping systems have not contributed to yield gains, are not necessary for yield gains, and appear to be eroding yields compared to the equally modern agroecosystem of Western Europe. This may be due in part to technology choices beyond GM plants themselves, because even non-GM wheat yield improvements in the U.S. are poor in comparison to Europe.
Transformative changes are needed in our food, agriculture and trade systems in order to increase diversity on farms, reduce our use of fertilizer and other inputs, support small-scale farmers and create strong local food systems. That’s the conclusion of a remarkable new publication from the U.N. Commission on Trade and Development (UNCTAD).
The report, Trade and Environment Review 2013: Wake Up Before it is Too Late, included contributions from more than 60 experts around the world (including a commentary from IATP). The report includes in-depth sections on the shift toward more sustainable, resilient agriculture; livestock production and climate change; the importance of research and extension; the role of land use; and the role of reforming global trade rules.
The report links global security and escalating conflicts with the urgent need to transform agriculture toward what it calls “ecological intensification.” The report concludes, “This implies a rapid and significant shift from conventional, monoculture-based and high-external-input-dependent industrial production toward mosaics of sustainable, regenerative production systems that also considerably improve the productivity of small-scale farmers.”
The UNCTAD report identified key indicators for the transformation needed in agriculture:
Last week more than 200,000 Colombians converged on Bogota for a nationwide strike to protest free trade, privatization and poverty. According to Common Dreams, the strike began as a protest by campesinos and spread to encompass teachers, miners and other sectors of society.
I have to admit I was surprised to see that farmers had been hit so hard, since prices for grains have been pretty high over the last few years. Back in the early 2000s, when the U.S.-Colombia Free Trade Agreement (FTA)—and the U.S.-Central America FTA, U.S.-Peru FTA, and others—was negotiated, the concern was that U.S.-grown commodities would be dumped by agribusiness at artificially low prices onto foreign markets. This was certainly Mexico’s experience under NAFTA. U.S. corn exports to Mexico quadrupled after NAFTA went into effect, and many small-scale farmers were unable to compete. More than two million Mexicans were driven from their lands.
But that was before the 2008 food price spike, when soaring grain prices sparked food riots around the world and, to some degree, a rethinking of agricultural development policies. Concerns over dumping were replaced by attention to extreme food price volatility and the prospect that prices would continue to increase for the foreseeable future.
This piece is a guest feature from Rod Leonard, former IATP board member and special assistant to U.S. Department of Agriculture Secretary Orville Freeman.
One of the last acts of the Republican majority of the House of Representatives before the August recess of Congress was to propose to cut funding for the food stamp program by $40 billion in the fiscal 2014 budget. These cuts were proposed even after the U.S. Department of Agriculture reported that the inflation adjusted value of food stamps had declined seven percent between 2009 and 2011.
Whether the cruel and harshly punitive action offended the gods possessing larger powers of compassion and morality is not clear, but no one questions that nearly simultaneously the bottom fell out of commodity market prices for corn, soybeans and wheat. The question is whether the two developments in the agricultural economy are related, and whether the stability of the American farm economy may have been fractured, possibly permanently.
These facts are clear:
Before House Republicans decided to shear by half the program that keeps hunger from the door of nearly 48 million people in America, the cash price of corn was hovering near $7.50 a bushel, and briefly climbed above $8.00 a bushel in future markets. Ever since the Republicans sacrificed help for the hungry to appease the austerity gods, the cash price of corn has fallen to nearly $4.60 a bushel and remains below $5 a bushel. Assuming the cash price remains below $5 a bushel through the rest of 2013, the drop in the cash price represents a potential loss in future income for American corn growers of possibly more than $32 billion in 2013 and 2014 income.