Fair trade or free trade? Let your voice be heard on Minnesota’s future!
The Obama Administration is negotiating two new mega trade deals (one with Pacific Rim countries, another with Europe) entirely in secret, with the goal of further expanding the NAFTA-model of free trade. These trade agreements could have major impacts on Minnesota's farmers, workers, small business owners and rural communities. They could limit Minnesota’s ability to support local food and energy systems and grow local businesses. In order to stay up to speed, Minnesota has set up a new Trade Policy Advisory Council (TPAC) to advise the state legislature and Governor.
TPAC wants to hear from Minnesotans: What concerns do you have about free trade? What role could TPAC play in the future? Now is your opportunity to have a say in our future trade policy. Complete the survey and let them know future trade negotiations should be public, not secret. Help ensure the voices of all Minnesotans are heard in the development of trade agreements and that they protect local control and our quality of life. The free trade model has failed for Minnesota and we need a new approach to trade. Help ensure the voices of all Minnesotans are heard before trade agreements are completed, and that they protect local control, our natural resources and our quality of life.
Posted July 31, 2009 by
No part of the U.S. has been spared from the current financial crisis, but rural communities—already among the nations poorest—have been hit particularly hard. Rural unemployment exceeds urban and exurban unemployment, according to a report by the Daily Yonder.
On Monday, August 3, the Daily Yonder's Bill Bishop will conduct a webinar focusing on rural demographics and political shifts in rural districts. The webinar will be from 10 a.m.–11 a.m. CST. Reserve your webinar seat now and learn more about the past and future of rural politics.
Bill's webinar is a lead-in to the Midwest Rural Assembly, scheduled for August 10–11 in Souix Falls, South Dakota. The assembly, sponsored by over 25 Midwest groups, will bring together national, state and local-level policy makers and rural residents to discuss the challenges facing rural communities—and opportunities for change. It will feature USDA Under Secretary for Rural Development Dallas Tonsager; USDA Deputy Under Secretary of Rural Development Victor Vasquez; state rural development directors from Nebraska, South Dakota and Minnesota; U.S. Representative Stephanie Herseth-Sandlin; and Minnesota Secretary of State Mark Ritchie.
The assembly will focus on rural health care, education, sustainable working landscapes, rural technology access and leadership development.
The registration deadline is Monday, August 3—so register and join us in Souix Falls!
Facebook users: Become a fan of the Midwest Rural Assembly.
Posted July 29, 2009 by
The Women, Infants and Children Nutrition program (WIC) is one of the most important government programs for low-income families. WIC's food package provides vouchers for milk, eggs, cheese, cereal and other food items. Now, for the first time in it's 35-year existence, it's getting an overhaul—and that requires retail food vendors who accept WIC vouchers to make fresh fruits and vegetables available.
States have until September 30, 2009, to update their food package and there is some latitude among states in how they will implement the new requirements. Minnesota will implement its new rules on August 1. Those rules take the fruits and vegetables requirement a step further by setting a minimum stocking requirement. Many low-income communities, in both rural and urban parts of the country, do not have easy access to grocery stores. WIC participants are often forced to rely on corner stores without much of a selection of healthy food—particularly perishable items like fruits and vegetables.
IATP is working with the Minnesota Department of Health to publicize the new rules in corner stores around the state. And we are working with food distributors in Minnesota that supply corner stores to make it easier for those stores to stock fresh, high-quality produce. Our press release has the details.
Posted July 28, 2009 by
Earlier this month, IATP reported on the widespread and unnecessary use of antibiotics by the ethanol industry. IATP's Julia Olmstead visited a Wisconsin ethanol plant last week that is using a hops-based alternative to antibiotics to manage bacteria growth in the fermentation process. Watch her video below to learn more.
Posted July 24, 2009 by
Steve Suppan, Senior Policy Analyst with IATP, has responded to New York Times columnist Paul Krugman regarding his recent blog post "Is the threat of speculation a reason to shun cap and trade?" (July 21, 2009) about the American Clean Energy and Security Act of 2009.
The entire commentary is reproduced below or available to view or download as a PDF here.
Krugman on Carbon Derivatives: A Rebuttal
By Steve Suppan
In his eagerness to support climate and energy legislation, Paul Krugman oversimplifies and thereby distorts the opposition to the carbon derivatives provisions in the American Clean Energy and Security Act of 2009 (ACES) as “[…] basically ‘Eek! Markets! Wall Street! Speculation! Bad!’” (“Is the threat of speculation a reason to shun cap and trade?” July 21, 2009). Granted it is only a blog post, and not yet a topic of his very influential and widely syndicated New York Times column; yet given his influence, even his blog merits a rebuttal.
Krugman would have us believe that trading carbon emissions permit derivatives is just like trading a wheat futures contract. Not so. Wheat futures contracts allow market participants to manage short-term (usually 90 days) price volatility, including “bets” that hope to drive down the price of wheat. How will a statutory purpose of ACES—“to reduce green house gas pollution”—be fulfilled if speculators are allowed to drive down the price of carbon below even the price of the emission permits Congress gives away to industry in ACES? The data reporting requirements for ACES indicate that “short only” bets to decrease carbon prices will be allowed.
Following what European traders have done, Wall Street will slice, dice and package the claimed dollar per ton value of carbon-reducing claims made in projects to offset increases in carbon emissions elsewhere. Offset-based carbon derivatives contracts could proliferate on nothing more than the expectation of regulatory approval of projects claiming to offset carbon emissions. As Friends of the Earth’s Michelle Chan testified to the House Ways and Means Committee in March, profits could be taken on offset-based derivatives far in advance of any proof that an offset project has resulted in verifiable greenhouse gas reductions.
Wall Street forecasts at least a $2 trillion market in carbon derivatives within five years. The current estimated value of all agricultural and non-agricultural commodity derivatives traded under Commodity Futures Trading Commission authority is $4–5 trillion. If the forecast is accurate, carbon derivatives could become a major component of commodity index fund formulas. The ACES trader data reporting requirements anticipate that carbon derivatives will be bundled into commodity index funds. Depending on how traders formulate the mix of commodities in the fund formula, it is likely that carbon emissions could become the dominant “commodity” in some fund formulas, displacing oil. Agricultural commodity prices, and to a lesser extent global food security, could be vulnerable to a swing in carbon derivatives prices, as carbon dominant index funds roll over to take profits.
Krugman still believes that speculation was not a major driver of commodity price volatility in 2008; and hence believes that excessive speculation can be easily regulated for carbon derivatives. He bases the former belief on a blog by Scott Irwin at the University of Illinois at Urbana-Champaign, who dismisses a just-published U.S. Senate report on wheat speculation because it incorporates the views of market participants—and benefits too little from Irwin’s own work and that of other U.S. agricultural economists. However, as Christopher Gilbert at the University of Trieste has shown on the basis of CFTC data, index funds controlled about a third of all corn futures contracts from 2006–2008. (The disparity in 2008 futures contracts held by index funds vs. commodity traders subject to CFTC contract holding limits is even more severe; e.g., 1.5 billion bushels in Chicago Board of Trade March 2008 corn contracts held by the Goldman Sachs and Morgan Stanley managed funds vs. 11 million bushels held by users and traders of that commodity.) After demonstrating how the funds could swing the price of corn, Gilbert concludes that the “fund formula is the fundamental.”
In February, the U.S. House of Representatives Committee on Agriculture, convinced that excessive speculation was a major factor in commodity price volatility in 2008, passed a bill to prevent the trading practices that lead to excessive speculation. However, Wall Street has set aside hundreds of millions of dollars to finance a sotto voce lobbying campaign against this and similar bills in the Senate. As a result of this campaign, a future House and Senate compromise to reform the Commodity Exchange Act (CEA) may result in some of the financial service industry practices that have triggered the destruction of much of the global economy.
As Satyajit Das wrote in the Financial Times (“How to design derivatives that dazzle and obfuscate,” July 8), “Financial products must be opaque and priced inefficiently to produce excessive profits.” Although Das writes about financial derivatives, he could just as well be writing about commodity derivatives, which provided the original model for financial derivatives. If the CEA, an underlying legislative authority for ACES, allows the opacity for over-the-counter derivatives that have contributed so much to the present depredations, we could soon live in the worst of all possible carbon-derived worlds. Huge institutional investors, such as pension funds, could be plowing money into carbon derivative offsets, while ACES enriches Wall Street but fails to reduce carbon emissions.
Traditional speculators provide liquidity needed to clear trades in commodity futures markets; but their role must be tightly regulated in order that excessive liquidity not result in the extreme price volatility that has disrupted agricultural and non-agricultural commodity markets. This need for tight regulation is all the greater when it concerns the reduction of green houses gasses. The purpose of ACES should not be to “get carbon prices right” but to achieve the long-term reduction of carbon emissions of which the legion of benefits is ultimately beyond pricing. The carbon derivatives subtitles of ACES do not provide the statutory basis to achieve that purpose. We would suggest that instead of caricaturing the opposition to carbon derivatives in ACES, Krugman dedicate more time to analyzing the bill itself.
Steve Suppan is a Senior Policy Analyst at the Institute for Agriculture and Trade Policy.
Posted July 20, 2009 by
I doubt you missed it, even if you only caught a headline out of the corner of your eye: the G-8 leaders gathered for three days, July 8-10, (in what looked like a splendid meeting room) in L'Aquila, Italy (63 miles east-north-east of Rome). They meet every July, and every year I hope the very expensive habit will somehow have died a quiet death. No luck so far, but reportedly Angela Merkel of Germany agrees with me. I see that as a positive sign that change is nigh. Not that Merkel's proposal is all that useful—it sort of misses the point about exclusion. But it is better than just 8.
Posted July 16, 2009 by
Unnecessary antibiotic use in livestock production is a massive contributor to the growing specter of antibiotic resistance. But in a study released today, we report on a lesser known source of non-therapeutic antibiotic use: the ethanol industry.
For decades, ethanol producers have added antibiotics to the fermentation process to control bacterial outbreaks. The practice attracted little concern until last year, when the FDA began testing samples of distillers grains, a nutrient-rich ethanol co-product that is sold as feed for cattle, dairy cows, pigs and poultry. The testing revealed residues of four types of antibiotics, and the results implied that these antibiotics (erythromycin, tylosin, virginiamycin and penicillin) are moving from the fermenter tanks to our food system.
Unnecessary antibiotic use is the bad news. But our research found some good news, too. Effective, cost-competitive antibiotic-alternatives are widely available and are already used by nearly 45 percent of the ethanol industry. We found that statistic inspiring, and in our new report, we ask the ethanol industry to go a step further and enact a voluntary antibiotics ban. Given the risks of antibiotic overuse, and given the effective, widely available antibiotic alternatives, there is really no good argument the ethanol industry can make against this action.
Read all about it here, and learn why getting antibiotics out of ethanol just makes sense.
Posted July 13, 2009 by
Earlier this week, the green machine known as McDonald’s (I say this with tongue in cheek, of course) announced they’re getting into the alternative energy biz. That’s right—the hamburger chain will soon open an electric vehicle charging station at a restaurant in Cary, NC, with other stations to follow.
Says the press release, “The new McDonald's will deliver yet another new facet of energy conservation by enabling EV drivers to have a place to recharge their vehicles, while enjoying their meal.”
Well, okay, I’m on board with expanding EV charging stations, something we’ll need if electric cars are to become widespread. But the irony here is simply too great to ignore.
This “green” McDonald’s, as they call it, is still a hamburger restaurant, and feedlot beef is the most greenhouse gas (GHG) intensive food we can eat. A 2006 FAO study estimated that 18 percent of GHG emissions come from livestock production, more than transportation. And beef production makes up a Whopper whopping 78 percent of those emissions, even though beef consumption only accounts for 30 percent of meat consumption in the developed world.
Driving a plug-in hybrid electric vehicle will save you on average about 100 grams of CO2 per mile compared to a conventional car, according to a Minnesota Pollution Control Agency study. Cutting out the quarter pounder will net you somewhere around 3,600 grams of CO2, according to low estimates. That’s 20 miles worth of savings, in just one cheeseburger. Puts things in perspective, doesn’t it?
Of course, this works out very well for McDonald’s, which gets to claim even more green-ness than they already do. But for the rest of us, it’s clearly better to skip the burger (or if you can’t give them entirely up, as I haven’t, choose 100 percent grass-fed beef from a rotationally grazed system and eat them sparingly). And, if you can, leave the car at home.
Posted July 10, 2009 by
Matt Taibbi at Rolling Stone has a written an explosive article on the exploits of Goldman Sachs. The article charts the bank's remarkable political influence, and its role in creating a series of inflationary bubbles (the Great Depression, tech stocks, housing and food/fuel), while somehow always emerging intact and lavishly compensating its employees.
Last year, IATP documented how Wall Street speculators, including Goldman Sachs, drove up agriculture commodity prices and contributed to the global food crisis. Taibbi reports on how Goldman is positioning itself once again to take advantage of the new U.S. carbon market established in the climate change bill passed by the House of Representatives on June 26.
Taibbi writes, "The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance."
Posted July 8, 2009 by
I am recently back from an incredibly rich two days in Dunedin, New Zealand. (Take a look—it must be among the Southern-most settlements on the globe, and is home to the yellow-banded penguin, an albatross colony, an imposing statue of Queen Victoria and much else besides.) The conference was the 44th Foreign Policy School of Otago University and focused on the global food crisis. The audience was a mix of academics and students, a big crowd of newly joined employees of New Zealand's Ministry of Foreign Affairs and Trade (dubbed the "baby dips"), with a few journalists, industry representatives, and NGOs alongside.
Posted July 8, 2009 by
When the sharp rise in food prices hit in 2007, countries and corporations began looking for land around the world that could produce both food and biofuels. The focus of so-called "land-grabs" has been on countries in Africa, South America and Asia. But, different from past forms of colonialism, much of the land investment is being led by southern countries or companies based in the southern hemisphere. In a new article in Foreign Policy in Focus, IATP's Alexandra Spieldoch reports on the extent of global land grabs and analyzes their potential effects on food production and hunger around the world.