Posted September 6, 2013 by Dr. Steve Suppan
This question was posed to me after I was detained for questioning at passport control in St. Petersburg, Russia airport. The Group of 20 Leaders’ meeting will take place here on September 5–6. I had arrived for the G-20 Counter Summit organized by the Post-Globalization Initiative, whose name was stamped on my visa as the inviting organization. Nevertheless, this was a question worth asking, if not for the apparent purpose of turning me away at the border.
After producing evidence of my hotel address, Russian contact person, return plane ticket etc., I was allowed to pass and now am free to ponder this question. More free than members of Russian civil society organizations and even Parliamentarians, who, according to the St. Petersburg Times, have been interrogated by the police about whether during the G-20, they would engage in “terrorist activities” in protest of the G-20. Shades of the aftermath of November 2001, when opposition to the World Trade Organization’s Doha agenda was affiliated with “terrorism” by proponents of that agenda. Although the technologies of official surveillance have become more sophisticated, the ideological purposes behind them have not changed so much.
The PGlobal organizers said that fundraising for the Counter Summit was not as difficult as they had anticipated. Finance-led globalization, to invoke the U.N. Conference on Trade and Development analysis, has not been good for most Russians. “Speculation” is a dirty word here, not the least because the government invested state pension funds in the derivatives market and lost heavily, according to Oskana Dmitrieva, an economist and member of Russia’s Parliament. Dr. Dmitrieva spoke on the panel “Confronting Speculation, Illicit Capital Flows and Tax Havens.” According to a Russian colleague, she spoke with unusual frankness for a Russian politician, given that some Russian politicians are the beneficiaries of banking secrecy laws that hide their tax evasion and offshore bank accounts. She said that the Russian government had sunk nearly three trillion rubles into the “virtual economy” of speculative instruments, even though the government had done little research into the risks of these instruments. Some of the money went into mortgage derivatives in Russia’s own subprime crisis
It was my role on the panel to explain the what and how of dark market (over-the-counter derivatives) speculation, and why the G-20 commitment in 2009 to make dark markets transparent had been resisted by governments who sought to restrict regulator access to trading data. While conceding that the global banks rescued by governments had seemingly unlimited budgets to lobby against financial reform, I concluded my presentation with a summary of institutional and civil society sources of support for financial reform. Not the least of these sources is a July 11 agreement between the European Commission and the U.S. Commodity Futures Trading Commission (CFTC) that “the stricter rule applies” in cases of overlapping rules. The official Over the Counter Derivatives Regulators Group summarized the July 11 agreement in its August 30 report to the G-20 finance ministers meeting just prior to the arrival of their bosses.
The questions about my presentation were not entirely new to me, but the answers still unnerve me. For example, why aren’t Commodity Index Funds banned since they have caused price volatility and increases unjustified by market fundamentals, disrupted markets and harmed consumers? I said that in U.S. commercial law it is very difficult to ban any activity that cannot be shown to be inherently fraudulent, even if it is highly damaging. Nor did I have a good answer to the question “When will the global banks finally be regulated as global entities, and not with regulations designed to stop at national boundaries?” Is it anti-globalist to require global banks and corporations to submit to globally effective regulation?
Boris Kagarlitsky, a Counter Summit organizer, said that the meeting brought together the largest group of critics of the “free” but dark market economic order ever assembled in Russia. I was among the 30 international guests who spoke to and with a small but intensely engaged Russian public, thanks to a valiant and skilled group of interpreters. It is difficult to summarize so many speakers and topics but a few themes emerged.
First, there was a huge amount of capital flight from developing countries’ banks to U.S. and European banks, resulting in developing country currencies falling sharply against the dollar. For example, thus far in 2013, the value of the Brazilian real has fallen 14 percent; the value of the Indian rupee by more than 21 percent. Capital controls and performance requirements for investment could stem some of this currency depression but the former are punished by the International Monetary Fund, while the latter are banned in Bilateral Investment Treaties and/or Free Trade Agreements.
Uncontrolled Foreign Direct Investment can have very negative effects on food security, reported Riza Damanik of Indonesia for Global Justice. The Indonesia government evaluates economic health in terms of Gross Domestic Product and invests little to support domestic agricultural production. For example, 99 percent of investment in seed production is foreign. Investment in palm oil plantations has displaced domestic rice production and resulted in environmental damage to forests and forest people when land is cleared for palm oil production, and huge import dependence both for food and agricultural inputs.
Indonesia will host the next World Trade Organization ministerial meeting, December 3–6 in Bali. Riza said that under the WTO, only corporations have rights. At the meetings his coalition and others will organize in Bali, they plan to champion human rights, including the right to food.
However, human rights, financial regulation and trade policy are overshadowed in the mass media whenever the threat of war looms. Venezuelan Edgardo Lander, a fellow at the Transnational Institute, said that the Obama administration’s threat to bomb Syria in retaliation for the Syrian government’s alleged use of chemical weapons against civilians would trigger a wider conflict. He said that the Obama administration’s resort to violence revealed a crisis of “civilizational models” since G-20 governments would bail out banks and defend corporate assets with military force, but do nothing to reduce “the greatest levels of inequality in human history.”
Even though the debate about whether to bomb Syria was not on the Counter Summit agenda, it was added in a prefatory panel. The issue was less whether chemical weapons had been used but whether the U.S. should defy likely Russian and Chinese vetoes in the U.N. Security Council and bomb unilaterally. U.S. military power, and not its control over global finance, was characterized by several Counter Summiteers as the ultimate guarantor of economic imperialism. Professor Samir Amin said that the attack on Syria would be another episode in which the military is used strategically to preserve capitalism, as in his home country of Egypt.
Dorothy Guerrero, of Focus on the Global South, provided a great example of the interconnected analyses of many Counter Summit participants: the G-20 Summit would attempt to present the broken world economy and austerity policies to slash aid to the most vulnerable as “the new normal.” But in her native Philippines, “there is no new climate normal, just climate chaos and more climate change–related migration”. Indeed, she said, if the bombing of Syria triggered military conflict in the Middle East, millions of Philippines working in Middle Eastern countries would return to a country without jobs and services for them.
Most Counter Summit participants consider the G-20 to be an illegitimate venue for global and economic governance, because it circumvents the universal representation of the United Nations. Therefore, those participants would not be involved in the G-20 civil society (C-20) meeting of what Boris Kagarlitsky characterized as the “tame and civilized NGOs.” No doubt, the C-20 process provides less room for the radical thinking typical of the Counter Summit. And no doubt, the G-20 does not represent, nor even try to represent, the demands and needs of more than 170 other U.N. members. But still it is a pity that no G-20 government representative, save for a sole Brazilian finance ministry official, got to listen and respond to Counter Summit participant views on globalization in its varied forms.
Posted September 6, 2013 by Ben Lilliston
In the wake of protests in the Philippines over genetically engineered Golden Rice, a series of articles have appeared in the U.S. mainstream press (e.g., the New York Times) and alternative publications like Slate and Grist, all coming to the vigorous defense of the latest incarnation of this wonder rice designed to prevent malnutrition. Through veiled and at times explicit condescension, the U.S. media consensus seems to be that opposition to this wonder rice is based on scientific ignorance: Why wouldn’t you want to address global malnutrition?
A gaping hole in U.S. coverage is the perspectives of Philippine farm organizations, like the Asian Farmers Association affiliate PAKISAMA, or really anyone from the Philippines who opposes Golden Rice. By not including these voices, these reports miss a fundamental issue at the center of all issues around genetically engineered (GE) foods: power. Who controls the technology? Who controls what farmers can grow, and what people eat? Not coincidently, these questions are also at the center of addressing global hunger.
While most GE crops have virtually no benefit for eaters (they are fed to animals or used as ingredients in processed food or are non-food items like cotton), Golden Rice has always been touted as the exception. Golden Rice, still in the pipeline after more than a decade of research, intends to boost Vitamin A levels in rice and promises to address a number of nutritional challenges, including blindness, for the world’s hungry.
Opposition to Golden Rice needs to be placed in the global context of how the biotech industry has relentlessly and aggressively (with the assistance of the U.S. government) thrust this technology on the rest of the world. Resistance to GE crops is widespread around the world among both developed and developing countries, often led by farmers and aligned organizations. SEARICE (the Southeast Asia Regional Initiatives for Community Empowerment) offers insight by describing the experience of Philippine farmers after the introduction of GE Bt corn: corn farmers lost access to traditional varieties, they can no longer share or exchange seeds with other farmers, and they are paying double the cost for GE seeds for what is largely the same yield, leading to increasing indebtedness.
Farmers have had similar experiences with GE crops all over the world, where legal and policy frameworks (bolstered by global trade rules) empower biotech seed companies over the rights of farmers and communities.
SEARICE writes in their critique of Golden Rice: “The issue on GMO is not on genetic engineering per se, but on how this has been used and is being used to wrest control and access over plant genetic resources on which the farmers’ over time have been the stewards and innovators so that we would have sufficient food to eat and raw materials for the wide range of economic and industrial uses […]. Science and technology then for the farmers should be able to strengthen not supplant their traditional knowledge and it should democratize access to plant genetic resources and not control or monopolize it.”
While Golden Rice supporters argue that it is different than other GE crops—it has a “Humanitarian license” which sublicenses the technology to public research institutions and low-income farmers in developing countries free of charge—SEARICE points out that Syngenta still holds the commercial rights to the Golden Rice patent for some mysterious future use.
Suggesting that we have to pick between supporting Golden Rice or mass malnourishment is a false choice. What if the billions of dollars (and now over a decade of time) spent on developing Golden Rice had instead been invested on a program supporting food sovereignty goals linked to farmer and consumer empowerment, like what Philippine groups are calling for: increased capacity for technical support and farmer-led seed breeding; promotion of the many other locally produced natural food sources of vitamin A; and encouraging the planting of small, bio-intense gardens in homes and communities.
At the heart of efforts to push for GE labeling here in the U.S., to opposition to new GE crops in Europe, the Philippines, Chile or India, is power. Who controls seeds, who controls the research agenda, who controls what happens on the farm, and who controls what we feed ourselves? These are all issues on which the biotech industry hasn’t ceded an inch– they want it all. Power is not an issue the scientific community likes to talk about openly, but journalists can and should.
Posted September 3, 2013 by Patrick Tsai
As controversy over TransCanada’s Keystone XL pipeline has captured most of America’s attention, Minnesotans have been dealing with a different pipeline carrying tar sands bitumen to the United States. On July 17, 2013, the Minnesota Public Utilities Commission (PUC) granted Enbridge, L.P. a 120,000-barrel-per-day (bpd) capacity increase to line 67, the “Alberta Clipper”, from 450,000 bpd to 570,000 bpd.
This is the first of a two-phase capacity increase that Enbridge hopes will reach 880,000 bpd (50,000 bpd more than the projected 830,000 bpd capacity of Keystone XL). The application for Enbridge’s second-phase increase has garnered more attention and activism by Minnesota pipeline opponents, led by MN350. Comments submitted by MN350’s legal team to the PUC point out a number of contested facts found within Enbridge’s Phase 2 application. On September 4, the PUC will make a decision on whether a contested case hearing is necessary as a result of the disputed facts uncovered during the comment period. MN350 has asked the public to “pack the PUC to send the message that the contested case hearing is necessary.” There will also be an event on September 9 in Duluth organized by IEN, Sierra Club, Idle No More, MN ASAP and MN350 to resist the tar sands being transported through northern Minnesota. Contentious debate over tar sands mining and its exportation is not new to environmentalists and trade analysts alike.
Canadian crude has become a longstanding source of energy for the U.S. To keep the flow continuous and secure, the U.S. has strategically negotiated free trade agreements with an eye toward control of future Canadian energy supply and less toward sustained mutual benefit. The result is an agreement that drives energy exports from Canada, guaranteeing the U.S. a high percentage of Canadian oil and natural gas. Under NAFTA (article 605), Canada must maintain the previous three-year proportional average of energy exports of total energy supply (domestic production plus imports) to the United States. This means that if, for example, Canada has exported 50 percent of their total energy supply to the U.S. over the past three years, they must maintain energy exports to the U.S. at 50 percent or higher of their total supply, even if it means allocating more energy away from its own domestic need.
The proportionality clause is unique in that there is no similar clause in any other trade agreement, nor does NAFTA’s other signatory (Mexico) ascribe to it (page 26). Projections by the Parkland Institute show that even a 10-percent decrease in production would cause a domestic shortfall due to trade obligations, leaving Canadians the options of importing oil from other oil exporters or importing their own oil back from the U.S. Under the proportionality clause, reductions in production caused by natural disaster do not release Canada from these trade obligations. Sovereignty can only be described as absent in cases where Canada is unable to provide its own natural resources to its own people in need.
Still other NAFTA provisions can be used to force tar sands bitumen across the border. Articles within NAFTA’s chapter 11, often referred to as investor-state provisions, could potentially be used by TransCanada to push through Keystone XL, avoiding public debate and environmental regulation. Investor-state provisions allow corporations to bring lawsuits against governments if they perceive unfair treatment or loss of projected revenue. As of March 2013, over 100 cases have been brought about using NAFTA’s chapter 11. The threat of costly legal action deters governments from creating laws and regulations that promote regional development and public safety. In order to avoid chapter 11 lawsuits, governments are inclined to dismiss or ignore proposed laws favoring environmental and public protections if they can possibly be misconstrued as impediments to industry.
Trade rules are not the only avenue through which sovereignty is violated. Due to Enbridge’s failure to procure an easement, Enbridge pipelines illegally pass through Red Lake Nation land near Leonard, Minnesota. Marty Cobenais of the Indigenous Environmental Network first discovered this infraction, and has worked to bring awareness of the pipeline and the effects it has on the environment to Northern Minnesota communities. A group of Red Lake members continue to occupy the trespassed land bringing awareness to the issue through the #RLBLOCKADE campaign.
On July 16, 2013, the EU energy commissioner Gunther Oettinger addressed an audience at the Center for Strategic and International Studies in Washington D.C. Mr. Oettinger spoke of the EU’s declining energy production, its increasing energy import dependence, and the hope that through the Transatlantic Trade and Investment Partnership (TTIP) negotiations, a “trans-Atlantic energy trade” can be established between the U.S. and EU, noting the new energy wealth the U.S. has obtained through unconventional fossil fuel resources. From a social justice perspective, NAFTA presents us with a history of failure due to trade liberalization. It is quite clear that if the TTIP and the Trans Pacific Partnership (TPP) pass with articles similar to the proportionality clause and investor-state provisions, what little voice people and their communities have to control and limit unconventional energy extraction will be handed entirely over to industry, trade representatives and corporate-influenced trade tribunals. Heeding the call to renounce the pipeline at the PUC on September 4 is the first step toward resisting unconventional energy extraction and the violations of sovereignty it brings.
On September 4, pipeline opponents won a small victory. The Minnesota Public Utilities Commission voted in favor of a contested case hearing concerning Enbridge's phase 2 application.
Posted August 30, 2013 by Dale Wiehoff
On September 3 and 4, a large-scale international Counter Summit, intended as an alternative to the September Summit of the G-20, will be held in St. Petersburg, Russia. It is taking place at the Международный Деловой Центр, nab.reki Smolenki 2, and is organized by the Post Globalization Initiative. The Summit’s ambition is to develop new principles of economic and social policy which are not based on the Washington Consensus. As part of the Summit, world renowned experts, economists, politicians and social scientists from Europe, Asia, Africa and the Americas will come together for panel discussions, seminars, and public lectures, including Dr. Steve Suppan of IATP. Dr. Suppan will address speculation in commodity markets.
Counter Summits have a tradition of their own. These major international democratic events are commonly held in response to the elites' G-20 and G-8 Summits and represent alternative points of view on the most pressing social issues. The St. Petersburg Counter Summit is especially important in light of the ongoing global economic crisis. It will suggest ways to solve the problems associated with the crisis of U.S. hegemony, "free trade" and the WTO.
Since the 1980s, neoliberal (neoconservative) ultra-market-oriented policy has been implemented throughout the world, the directives of which are largely determined by the G-8 and the G-20. The onset of the 2008 crisis, however, revealed the historical limits of neoliberalism: global capitalism had lost its effectiveness. Populations now face the task of implementing new economic policies and approaches in the social sphere. The Counter Summit ‘s ambition is to aid society in making the necessary decisions, and taking the step from criticizing neoliberalism to pursuing radical change. A transition from a weak to a strong state, from non-intervention in the economy to regulation is maturing. Recognizing the primacy of social, cultural, scientific and technological progress mandates a qualitative change in policy.
The Counter Summit’s task is to define an alternative vision: one of a multipolar world economy, free from U.S. hegemony and the dominance of transnational corporations. The relevance of these issues for Russia has become especially evident since the country’s accession to the WTO has brought to the fore once again the question of whether the domestic economy should develop in line with the Western trade and financial institutions’ recommendations, or focus on its own priorities.
The Counter Summit agenda includes the following topics: problems of financial markets, the policy of IMF and World Bank, the global economic crisis, the problem of debt and budget cuts. The issues of economic regulation, food safety, environmental protection, labor and social rights, changes in the energy sector and the role of government in the economy will also be discussed. In contrast to liberal politics, the Counter Summit’s participants consider the answer to the crisis to be the welfare state and not the commercialization of public goods. They are convinced that the neoliberal era is coming to an end.
The Counter Summit in St. Petersburg will be attended by dozens of scholars and public figures from around the world, including Egyptian economist Samir Amin, American activist Kevin Danaher, Venezuelan sociologist Edgaro Lander, Canadian political scientist Pierre-Yves Serinet, and Head of Ecuador’s Anti-Monopoly Service, Pedro Paez.
Major international organizations that will take part in the Counter Summit include: Focus on the Global South, Global Exchange (U.S.), Attac France, Via Campesina, the Institute for Agriculture and Trade Policy (U.S.), Our World is Not For Sale (OWINFS), the Tax Justice Network, Latindadd, the Brazilian Network on Peoples Integration (REBRIP), the Committee for the Abolition of World Debt, Campagna per la Riforma Della Banca Mondiale, Plataforma Interamericana de Derechos Humanos, Democracia y Desarrollo (PIDHDD), the Centre for Civil Society (South Africa), Globalization Monitor (China), the Institute for Global Research and Social Movements (Russia), Indonesia For Global Justice, and the Institute for Socioeconomic Studies (INESC, Brazil).
The Post Globalization Initiative was launched in Moscow on April 30, 2013, with the participation of the Institute of Global Research and Social Movements (IGSO), the Transnational Institute (TNI), Focus on the Global South, Attac France and other international institutes. The international initiative aims to find new ways for the economy to recover from the failure of the neoliberal project. The initiative’s experts are convinced that 2008 marks the beginning of a new era. The crisis signaled the end of financial globalization (1982–2008) and paved the way for a development based on new economic and socio-political principles.
Posted August 29, 2013 by Sophia Murphy
It’s increasingly difficult to explain to anyone why multilateral trade talks–once so high on the international policy agenda—are still worth our time and attention. Such attention as international trade garners has moved on to the regional and plurilateral deals, such as the Trans-Pacific Partnership (TPP) and the talks between the U.S. and the E.U. Yet at some level it’s obvious that multilateral co-operation matters more than ever. Trade has to be made to work more effectively for a series of objectives, from reducing pollution and natural resource use to supporting livelihoods to building economies that allow a fairer distribution of benefits. At the same time as we support more decentralized and local control over food systems, we know the world also faces problems that require a multilateral framework.
So where is the multilateral trade community focused? Here is the short version:
That diluted agenda includes three “deliverables” (a favorite term in trade circles). They are agriculture, trade facilitation and an agenda for Least Developed Countries (LDCs). In agriculture the G33 proposal to allow developing countries more leeway to spend public money on grain reserves is taking the lion’s share of negotiators’ time, although two other proposals, one on tariff rate quotas and the other on export subsidies, are also on the table. In trade facilitation, the premise is innocuous and even important (if you are going to trade, who wants red tape and rent-seeking?) but the proposals assume a lot about how trade should work, assumptions that reinforce the already huge advantages of existing global corporations at the expense of smaller, national firms. Industrialized countries propose to tie trade facilitation to development assistance. The third agenda, on LDC issues, includes the promise of duty-free-quota-free market access (at one point known as Everything But Arms but in practice not so generous); preferential treatment in the services agreement; clarification on rules of origin (never simple but vastly more complex in an age of global value chains); and, cotton (in particular, ending the U.S. trade distortions that deprive a number of LDCs of potential export markets). (This article from Third World Network provides a good summary of the issues.)
Meanwhile, the trade issues taking most governments’ attention are not on the Doha Agenda at all. The WTO agriculture talks do not address the causes of the global food price crisis. There is no readiness to confront distorting biofuels mandates and subsidies; nor to address natural resource limits and climate change, which is directly affecting production and, combined with low global stock levels and poorly regulated commodities exchanges, increasing price volatility. There is no discussion of the changed context, from one of abundance to one of scarcity, a change that leaves many of the WTO rules impotent. There is no clear idea on how to rebalance rules to reflect the emergence of new dominant trade powers (for example, by re-thinking how to differentiate among countries beyond “developed”, “developing” and “least developed” – not least when some OECD members are still considered developing countries in the WTO rules), nor any discussion of the implications of the replacement of state-trading exporters with an expansion of the existing private grain oligopoly, which has further decreased competition and transparency in grain markets.
And yet multilateral trade talks are important—perhaps more important than ever. The high profile regional and plurilateral deals now in discussion (particularly the TPP and the Trans-Atlantic Trade and Investment Partnership) are full of issues transnational companies want and rich country governments think important: more restrictive intellectual property rights; further deregulation of the laws governing services such as banking; freer rules for foreign investment; harmonization of trade standards to facilitate intra-firm trade. They have nothing to say about balancing interests among countries facing very different levels of economic vulnerability. But the rules they develop could very well circle back to become the new norm for trade rules with other countries, and potentially shape the WTO agenda in future. For all of its failings, the WTO is at least a forum in which all countries have a voice in making those decisions, or in pushing hard for a different course.
It is time that governments undertook another stock-taking exercise (as they did before the Seattle Ministerial), salvaging what is worth salvaging from the Doha Agenda but more importantly looking at what the world needs today from its multilateral trade system. Many food movements are understandably focused on building local production and local markets. Some regions are establishing links that will strengthen food security and improve the possibilities for viable and varied agricultural production. But there is a multilateral agenda that requires attention, from climate change to the regulation of oligopolies in international markets. And there are important benefits for the majority of countries (which are neither industrialized nor yet emerging economics), who are not as easily picked off or marginalized in the multilateral system as they are in the often grossly unequal regional deals between rich and poor countries.
So with low expectations but acutely aware that regional rules alone will not be sufficient, IATP is engaging directly in the agriculture agenda and watching the overall balance of the negotiations to see if and where there is any room to manoeuvre. A narrow range of rich country and rich firm interests has scripted the trade agenda for too long. We wish the new Director General, Brazil’s Roberto Azevêdo, well as he begins his four-year term in September. He has an important and difficult task ahead of him: the establishment of trade rules that better serve the public interest.
Posted August 29, 2013 by Karen Hansen-Kuhn
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.
So, if prices of key global commodities are higher (although not as high as they were in 2008), why are Colombian farmers still being hurt by the trade deals? I contacted Colombian economist Héctor Mondragón, and he explained that the problem is more complicated than just the price of corn. The economy has shifted away from production of coffee and other goods to mining, which, along with the financial sector, has grown dramatically in recent years. The influx of foreign investment and financial speculation that came in after the U.S.-Colombia FTA was ratified in 2011 (along with similar FTAs with the EU, Canada, Switzerland, South Korea other countries) overwhelmed the economy.
Economists call that problem the “Dutch Disease,” as it mirrors the Netherland’s experience in the 1960s when huge economic inflows resulting from discoveries of natural gas disrupted the local economy, shifting economic activity away from manufacturing, in that case. The inflows of foreign investment caused the currency to appreciate, making exports relatively more expensive, and imports cheaper. In the wake of the trade deals, the Colombian currency has appreciated, so once again imports of grains and other agricultural commodities enter the country at prices that are hard for local farmers to beat.
Mondragón explained that there’s also a bit of the “Cyprus Disease,” as those inflows were coupled with deregulation of the financial sector and massive new speculation. But to really understand what’s going on with agriculture, we have to look at what’s happened under what he calls the “Colombia Disease” of speculation on land. That disease, he explains, is characterized by increasingly high concentration of land ownership, and land grabs, together with the decline of large tracts of farmland, with 16.6 million hectares of arable land now standing idle. Land prices have soared, and government land reform programs have favored big businesses—domestic and foreign—over supposedly less efficient small-scale farmers. In many cases, the investors are just holding onto the land in hopes that it’s value will continue to increase, and making it even harder for smaller-scale farmers to access the land they need for production.
"Years ago Colombian farmers lost the markets for wheat, barley and 70 percent of the corn market to imports," he adds. "Now they are dealing with increases in fertilizer prices, measures to prohibit unregistered seeds, scandals around land grabs by big businesses, along with big increases in imports of potatoes and milk, setting off the current strike and those that are sure to follow later this year.”
Financial deregulation, restrictive new patent protections, along with the trade liberalization that has led to surges in food imports, are all central elements of the FTAs Colombia negotiated with the U.S. and other countries. These characteristics are virtually identical to negotiations that are underway now among other countries involved in the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP, or TAFTA, which very much rhymes with NAFTA). Before surging ahead blindly with further free trade agreements that primarily benefit big financial and corporations, we should carefully review the impacts previous agreements have had on the public good, including farmers and food sovereignty, consumers and health, and control over natural resources and the commons. It’s time to break the cycle of deregulation and expansion of trade and financial flows at all costs through trade deals, and begin rebuilding local food and economic systems around the world.
Posted August 28, 2013 by Jim Kleinschmit
Golden Rice’s recent re-emergence in the news reminded me of how long the biotech industry has been touting this “wonder” crop in order to gain approval for genetic modification more broadly. It appears we’re now seeing a similar tactic with the proposed introduction of genetically modified (GMO) American chestnut trees. Once stretching across the eastern part of the United States and memorialized in countless stories, songs and poems, few trees evoke more nostalgia for America’s past than the Chestnut. However, the American chestnut now mostly lingers in our memory, as the more than 4 billion trees—equaling around a quarter of all hardwoods in the Eastern seaboard—were almost completely wiped out when a disease swept through the country in the early 1900s.
Such emotional connections help to explain the fervor behind efforts to reintroduce this American icon, but also the latent danger in such work. One effort has utilized traditional breeding practices to create and introduce a new chestnut hybrid that is resistant to the blight. Until the last few years, the American Chestnut Foundation supported this effort before shifting to support a competing initiative, led by the College of Environmental Science and Forestry of the State University of New York in Syracuse, which takes the more controversial approach of genetic modification. The American Chestnut Research and Restoration Center, through transfer of genes native to wheat into the chestnut, has created a blight-resistant version of the American Chestnut, and is intending—with appropriate regulatory support—to introduce this version into the wild.
This is the first attempt that I’m aware of in the U.S. to introduce a GMO “wild” tree (several orchard fruit trees have already been approved by the USDA). Fear of the impacts on GMO trees on existing, native trees is the most significant, direct concern. However, for those of us who have lived through the GMO battles, we see something more sinister in this push for GMOs to rescue an American icon: like Golden Rice, this could be the “Trojan horse” for an industry-wide push for regulatory approval for a variety of GMO trees. Golden Rice, which has been genetically modified to include corn genes to produce vitamin A, was the first (and often only thing) mentioned by GMO advocates, who for years touted its ability to reduce hunger and disease. The development of the biotech sector over the last 10 years illustrates that the real focus of genetic modification has mostly been on creating commodity crops with herbicide resistance and incorporation of pesticides. Such an approach has generally been more to the benefit of the transnational corporations that sell many of those very same chemicals, rather than to the farmers who grow the crops or the consumers who eat them. Of course, we’re now seeing the long predicted problems with that singular focus: a significant increase in herbicide and pesticide resistance among the very weeds and pests that the GMOs were intended to stop, leading to more use of more toxic alternatives. Meanwhile, we’re still waiting on Golden Rice to reduce global hunger.
This bait-and-switch history around Golden Rice understandably comes to mind now with the GMO chestnut. While even scientists that are skeptical of GMOs acknowledge that the modification of the American chestnut to include a gene from the wheat plant may not be the most risky approach (compared to efforts to introduce insecticides into plants, for example), very real risks do exist both directly and indirectly in taking this new tree out of controlled labs and plots and into the natural environment. If one considers both our admittedly limited understanding of trees and how they interact and work, and how enormous the risk of contamination is for such long-lived species, a basic precautionary and responsible approach would be to exercise extreme caution and patience in introducing something so unknown into the wild where it is impossible to recall.
Other concerns exist about how the GMO chestnut is intended to be used and who is leading the effort. The fact that Duke Energy—the largest energy holding company in the U.S. and a major burner of coal from mountain-top removal mines (with all of the attendant environmental issues)—is a major funder of the GMO effort, based on the chestnut’s ability to be planted on “reclaimed” coal fields as well as its carbon sequestration potential, should give anyone pause. However, a deeper and very real corollary concern exists that the focus on the GMO chestnut is very intentionally tied to its historical and emotional role for Americans, and that regulatory approval for its introduction will also provide the needed precedent to the biotech industry to gain quicker approval for other, less broadly beneficial GMO tree species targeted at the paper, lumber and energy sectors.
In the end, just like with Golden Rice, there are much safer and proven alternatives to this high-risk and relatively low-reward GMO approach. As many critics pointed out in the early Golden Rice debates, native and more nutritious alternative crops and grains already exist that could meet the health needs that Golden Rice was supposedly created to address—what was needed was investment in traditional research and technical support efforts aimed at increasing the production and yields of these crops. Similarly, the blight-resistant chestnut developed by the American Chestnut Society appears to have solved the disease issue without the incumbent regulatory or contamination issues inherent to the GMO variety. At the very moment we’re seeing so many of the predicted problems with GMO agricultural crops emerging, why would we want to introduce a similar risk to our forests?
Posted August 20, 2013 by Rod Leonard
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.
When the potential drop in earnings for wheat and soybeans are included, the overall figure for the heartland of America and the American breadbasket may be a drop of well over $60 billion in potential earnings. Soybeans are down by 16 percent on the futures market since their peak earlier this year, losing $4.25 per bushel, while wheat has declined more than a dollar per bushel to less than $6.50. The actual potential loss could be smaller, depending on the number of farmers that hedged their crops, i.e., sold future harvests to speculators and dealers at market prices that prevailed before the bottom fell out.
This much is also clear: Farming in 2013 will not be as profitable as in 2012. In Minnesota, for example, farm income was 50 percent higher than in 2011. The rise in land values that has seen the price of cropland climb 20 percent in Minnesota—increasing from $4,050 to $4,800 an acre—in 2013, will likely fall back in 2014. Land prices historically have reflected anticipated crop prices. From an historic U.S. average of over $4,000 an acre, the price per acre of choice crop land reached in 2013 to over $12,000 in the cornbelt. But corn prices won't be high enough to pay the mortgages for that land, particularly, as the USDA reported, the costs of farming per acre climbed to a record high in 2012.
The impact of the failure to pass a coherent Farm Bill will not only be felt on the farm, but also throughout the rural economy, as land values decline. Over the past decade—likely to be remembered by many as the golden years of farming in the 21st century—farm debt levels have declined to near record lows reflecting strong balance sheets for most farms. Credit costs for rural borrowers are low.
The fall in the farm economy in 2013 either may be dismissed as a bump in the road or considered the beginning of a mortgage default cascade into depression in the rural economy. Preventing rural depression depends entirely on public policy, on the choices to be made in 2013 and 2014.
For example, the price of corn depends not only on the volume of exports the USDA needs to promote but also on the continued diversion of 40 percent of the corn crop into ethanol production. Without ethanol production, an increase in the yearly supply of corn by 40 percent could send corn prices to crushing low levels of less than $1 a bushel. Ethanol is less an energy program than a subsidy program for corn growers.
Industrial agriculture—i.e., corn, soybean, wheat, cotton and rice—desperately needs new farm legislation to authorize a new system of farm subsidies. A new Farm Bill would continue $20 billion in annual subsidies to industrial agriculture (mostly to fewer than 200,000 farmers) through government subsidies to private crop insurance. Current programs that pay farmers directly, and are rapidly losing public support, would end.
If the House GOP succeeds in its mission to punish nearly 48 million people who rely on the food stamp program (and the 15 million people eligible for the program that don't apply for food stamp benefits or choose to remain at risk of hunger), then farm and food programs, joined together in April 1964, also will end.
The union began when Secretary of Agriculture Orville Freeman finally pushed the Democratic majority of House of Representatives to approve by a narrow 30-vote margin legislation to adopt the statute creating a permanent food stamp program originally proposed in 1961 by President John F. Kennedy. That program is a far cry from the program that today ensures the right of every American adult to choose to protect themselves and their children from hunger. Freeman was intent on linking the capacity to feed a growing nation to a policy insuring that every person, regardless of income, is entitled to share in an abundantly productive agriculture. Within two weeks of the passage of the food stamp legislation, Freeman was able to convince an urban dominated Congress to adopt a Farm Bill establishing supply management as the new post-war policy for American agriculture. Agriculture could maintain remunerative prices for farmers despite a structural tendency to overproduce year after year.
The shape and dimensions of farm policy will continue to change as global agriculture and global demand for food and farm products change, but the central role of government policy is the same today as in 1862 when President Abraham Lincoln created USDA. The 1964 legislation joined farm and food policy at the hip, with food stamps the glue of American food and farm policy.
The effort of the House GOP to perform political surgery to remove food stamps can have only one predictably disastrous outcome: Food stamps will survive. An urban nation will not compel millions of its residents to accept a life dominated by hunger. But, if divorced from food stamps, farm programs, whose benefits largely are delivered to the largest 200,000 farm operations, likely will perish in the ideological bonfire that is the GOP Farm Bill. The political conflagration will inevitably include rural America as well.
Simply put, no food stamps, no farm program.
Posted August 16, 2013 by Andrew Ranallo
As a new policy on the Think Forward blog, we are going to set aside an occasional post to welcome and introduce new staffers to our readers—welcoming them to the organization and highlighting the work they’re taking on in helping further our mission for fair and sustainable food, farm and trade systems.
Over the late spring and summer, IATP has welcomed a group of new staffers in various roles and we’re excited to have them on board as start breaking ground on new work. Their help has already proved invaluable.
Kristen Frank, our new administrative assistant, is the new face of IATP, the voice on the phone, the person at the front desk, a greeter at events, and the one who keeps everyone and everything on the first floor organized.
Yohannes Ghebru is our new finance assistant, in charge of accounts payable and receivable, payroll, and benefits management. In his first few months he has been acquainting himself with IATP’s new accounting software and learning all the ins and outs of the benefits package.
Rachel Grewell is a program assistant working with the Healthy Legacy coalition on Minnesota chemical policy reform and on IATP’s Great Lakes Restoration Initiative, both supporting the production and use of everyday products without toxic chemicals.
Catherine Reagan has joined as a program assistant involved in many and varied pieces of IATP’s current work—one day sorting out Working Landscapes data, the next delivering Minnesota Grown directories to childcare providers throughout the Metro area, the next diving into research about locally grown and processed grains and pulses.
Tara Ritter has joined as a program associate for climate and agriculture. Her first months have been spent compiling resources on rural climate issues, working on advanced biofuels, and updating a paper on agroecological farming practices and their ability to mitigate climate change.
Posted August 16, 2013 by Jim Kleinschmit
Farmers and the insurance industry have one thing in common: they are both on the front lines of climate change. So far, the U.S. insurance industry has been slow to respond to climate induced risk and is well behind its European counterparts who are outspoken leaders for climate action.
In a small sign of progress last month, Minnesota announced that it will join four other states in requiring its insurance companies to report on climate risk. The companies will have to respond to a survey put together by the National Association of Insurance Commissioners that asks how the industry is reducing its own greenhouse gas emissions, altering its investment strategies, or encouraging policyholders to adapt to new climactic conditions (thus decrease reporting company losses).
Minnesota Insurance Commissioner Mike Rothman should be applauded. When IATP met with the insurance commissioner’s staff last year, we encouraged the state to require climate-related reporting of insurers. We were surprised when they told us we were the first to ask them to do such reporting, or indeed, to ask about the climate risk of Minnesota companies. Maybe insurance commissioners in the other 45 states also just need to be asked in order to act.
The social costs of climate change in the U.S. are staggering and difficult to truly assess. A 2008 analysis by Ackerman and Stanton conservatively forecasts U.S. business as usual policies on climate to cost $271 billion by 2025 for repair of hurricane and flooding real estate damage, and energy provision and water provision to increasingly drought stricken areas in the United States. By 2100, the cost to the U.S. economy of the current business as usual policies would likely rise to $1.9 trillion annually, absent a major change in how the government and businesses adapt to climate change and reduce greenhouse gases.
One segment of the industry where we’re already seeing rising payouts is crop insurance. Last year’s drought is expected to result in a record $16 billion in crop insurance payouts. An IATP report last year called on Congress to invest in conservation programs in the next Farm Bill to aid farmers in building climate resilience on the farm, and ultimately to reduce crop insurance payouts in the future. USDA is trying to respond to increased climate risk, based on its own sobering analysis of the risks to agriculture, including creating some new “climate hubs” for direct research on expected impacts of climate change on the sector. Unfortunately, Congress has not yet agreed to treat climate change as seriously as either USDA or the Minnesota Insurance Commissioner.
Responding to a survey about climate change is a good first step to require of the insurance industry. According to CERES, an association that advocates for more sustainable business practices, only 23 of 184 U.S. insurers have comprehensive climate strategies; more than half of those are foreign-owned.
Sure, an industry that exists specifically to reduce risk can and must do more to acknowledge the reality of the problem. Incentivizing climate resiliency with their clients and advocating for strong climate policy that reduces emissions and supports needed adaptation measures are some first steps. If insurance companies cannot induce their corporate clients to reduce their climate-risk exposure, climate change feedback loops governing drought, sea rise levels, ocean acidification, etc., will become unpredictable. As a result, the actuarial tables used to calculate climate-related insurance premiums could become unreliable to the point where companies will not write insurance policies without huge taxpayer guarantees. At that point, we may look back nostalgically to the time when crop insurers paid out a mere $16 billion to cover crop losses.