Posted November 29, 2013 by Sophia Murphy   

TradeWorld Trade Organization (WTO)

Used under creative commons license from mk30.

A statue titled "Peace" sits outside the World Trade Organization (WTO) headquarters in Geneva.

In the category of “praise more fit for a eulogy,” U.S. Trade Representative Michael Froman is reported to have said of the last minute negotiations to prepare a package for upcoming WTO Ministerial in Bali: "It's unclear whether they will succeed or not. We certainly hope they will succeed. But [the WTO] has served a very important function and will continue to serve a very important function as a dispute settlement mechanism either way." (Inside US Trade, November 15, 2013).

Froman seems to be saying it is okay if Bali is a failure—which, given the latest news from Geneva, is a good thing because the meeting has failure written all over it.

There are lots of reasons why the system is failing. The Doha Agenda, adopted in 2001 and still ostensibly the framework for negotiations, should not have been agreed in the first place. Multilateral trade rules are worth getting right, but the Uruguay Round agreements on which the rules now in place are based got far too much wrong.

The trade agenda launched in Doha in 2001 is dead but the corpse is not yet buried. Most developing countries say they want it all still—Doha resuscitated—while the majority of industrialized countries want to salvage the corpse for parts; they’ll take deeper deregulation of services, more restrictive intellectual property rights and the harmonization of regulations for transnational firms, but are happy to leave rotting their promise to finally eliminate export subsidies in agriculture, make real cuts to trade-distorting support, or support disciplines on agricultural exporters that are as stringent as the disciplines imposed on food importers.  

In an era of more responsible global leadership, the gathering of trade ministers December 3–6 at the WTO conference in Bali could have marked a watershed. It is clear now it will not. The question, then, is both whether and when governments can rise above their squabbling over the (many) hypocrisies and inconsistencies in the now almost 20-year old Uruguay agreements (most of which serve industrialized countries and transnational investors) and instead focus on how to rethink trade rules given the demands of the 21st century, including higher and more volatile agricultural commodity prices in the face of financial instability as well as less predictable and more extreme weather.

The challenges confronting governments in relation to international trade in agriculture include the need for:

  1. Recognition of the many forms that price instability takes in different developing country contexts, and the importance of countering that instability, so as to allow farmers to invest in their production and to protect people from food insecurity. International markets are valuable, but in no way can they satisfy the complexity of food security needs. The assumption that governments are even willing to deregulate their markets to the extent of the WTO rhetoric only highlights the hypocrisy of the many OECD countries. These countries protect their agriculture (and their consumers) in a variety of ways that are by definition trade distorting, while constantly limiting developing countries’ ability to do the same.
  2. Disciplines that bring exporter and importer responsibilities into line. Neither side should be able to change their commitments without notice or due warning. The G-20 has recognized the problem but failed to take action.
  3. Full and final elimination of all forms of export subsidies.

Like some of the other innovations in multilateral governance in recent years, any real breakthrough on trade is likely to require a new configuration of countries taking the lead. It is important but not enough to add the so-called emerging countries of Brazil, China and India to the United States and Europe and expect that bloc of countries to advance rules that respond to the needs of the 120 or so LDCs and poorer net–food importing countries. It is from agriculture that the most interesting challenge to the evolving status quo has come, specifically from the India-led G-33 proposal to exempt the purchase of food stocks for food security programmes from limits to spending (see IATP’s discussion of the proposal here). Fundamentally, the proposal is an assertion of the importance of domestic food security programs that extend beyond social safety nets to questions of rural livelihoods and capital formation. It is also an assertion of importing countries’ need for greater stability and reliability in the trade system.

In September 2013, a French economist, Franck Galtier, from a French agricultural research institute called CIRAD, published a short paper with additional proposals for the reform of the AoA rules (see here). Among other things, Galtier writes about the importance of stability for developing countries, especially those that experience significant price volatility linked to uncertain domestic supply and weak and unstable currencies. Franck proposes three reforms in the calculation of the Aggregate Measure of Support (known as the AMS or amber box, it is the part of the agreement that limits public spending on agriculture) as to correct existing biases against developing countries:

  1. The baseline against which spending is measured is set to the average price that prevailed from 1986 to 1988 (28 years ago). The number was part of the political negotiation between the European Union and the United States that effectively eliminated their need to actually cut domestic support, though it did set a ceiling that was intended to stop future increases. Commodity prices have soared since 1988, especially in developing countries. Inflation in developing countries as a group has averaged 5–10 percent in recent years, while it has been below 4 percent on average in industrialized countries. Inflation has rendered the baseline meaningless. Although updating the baseline might allow the OECD countries to negotiate yet more spending room for themselves, that seems preferable to keeping rules that discriminate against poorer countries.
  2. The WTO rules have been interpreted to assume that if a government buys any amount of national production at a price higher than market prices then the price for all production that year will be assumed to have received support. This means that even if purchases are only a tiny share of the total produced or, as is common, if the price intervention only lasts a few weeks or months rather than all year, the subsidy is nonetheless calculated as if the whole crop were bought at the procurement price. The effect is to use up the allowed budgetary support on imagined rather than actual spending. While any purchase at non-market prices will have some kind of effect on the whole market, clearly there are volumes low enough that the effect will be negligible—certainly far different than would be the effect of a price support at the higher rate for the entire crop.
  3. The WTO rules do not allow countries to add back as credit to the AMS the sale of public stocks at below market prices, although such sales are effectively a tax on farmers in exactly the way purchases above market prices provide a subsidy. A country might seek to use both purchases and sales of stocks to support a level of equilibrium in market prices that supports long-term development objectives. Such interventions might avoid the necessity of more disruptive interventions if the market is prone to failure. By only counting the subsidy effects, the rules exaggerate the level of support that public purchases provide to farmers.

The G-33 proposal does not go into such detail. It is instead the latest iteration in the group’s longstanding fight to regain governments’ right to policy space for domestic agriculture and food security priorities. India, the leading spokesperson for the proposal within the G-33, is fighting for the right to be able to buy food from its domestic producers at a reasonably good price and then to use that food for consumer safety nets. The U.S. essentially did this for decades, but then moved away from a direct role in price floors and stopped accumulating stocks. Now U.S. firms and some producer organizations complain that countries such as India will use these tools to limit food imports, depriving them of export markets. U.S. civil society groups have countered that the G-33 proposal is an important first step to reforming unfair rules.

Up until the last minute before Bali, governments have been negotiating the terms of a “due restraint” or Peace Clause. Instead of changing the rules to accommodate the food security spending as the G33 requested, the Peace Clause would instead allow countries to spend more than their AMS limits, under certain conditions, without the threat of trade disputes from other members. It sidesteps everything interesting about the G33 proposal, especially from the perspective of the majority of developing countries who do not have the resources to overspend on their AMS but need to intervene in their agricultural markets. The contention between the G33 and the opponents of the proposal (such as the US) has been whether the Peace Clause should be applicable for a limited time (no more than 4 years) or more open-ended until countries devise an optimal solution. Under this meager concession, many countries that urgently want access to measures to stabilize their food security situations will continue unsupported by the WTO rules. The G-33 proposal got to the heart of the dilemma for trade rules in unstable times; no trade can work without confidence in the trading system. The existing rules do not give countries the confidence they need to take advantage of all trade has to offer. It’s time for rules that do. Apparently that will have to wait until after Bali. But it cannot wait for long.

IATP’s Shefali Sharma will attend the Bali Ministerial and will be reporting on the evolution of this debate.

Posted November 27, 2013 by Ben Lilliston   

IATP joins the Food Chain Workers Alliance and other allies around the country in supporting International Food Workers Week.

As we prepare to gather with family members around the dinner table and give thanks, let’s remember the nation’s 20 million food workers. From the field, to the processing facility to the grocery store, these workers have some of the nation’s most difficult and sometimes dangerous jobs, while often living below the poverty line.

The momentum to ensure food workers are treated fairly is growing, particularly around the need to increase the minimum wage. A recent report by the Food Labor Research Center at the University of California, Berkeley and the Food Chain Workers Alliance shows how raising the minimum wage would particularly improve the lives of food workers, while only increasing food prices by an average of less than half a percent. The Fair Minimum Wage Act in Congress would raise the minimum wage from $7.25 to $10.10 per hour over the next three years. The proposal also includes an increase in the minimum wage for tipped workers to 70 percent of the minimum wage. Better wages for workers help strengthen the economy and the food system. Sign this petition to ask Congress to act!

The Food Chainworkers Alliance’s Joann Lo outlines a number of other policy options to improve the lives of food workers at IATP’s Beyond the Farm Bill website.

IATP joins the Food Chain Workers Alliance and other allies around the country in supporting International Food Workers Week. During the week, a variety of actions are taking place around the country, from those focusing on raising the minimum wage to Black Friday Actions at Wal-Mart. Learn more about events happening in your part of the country.  

Posted November 27, 2013 by Shefali Sharma   

TradeWTOFood securityWorld Trade Organization (WTO)

United States Trade Representative Michael Froman greets stakeholders, including IATP, in July. Photo credit: Office of the USTR.

People in the U.S. may still remember how the streets were shut down in Seattle exactly 14 years ago (1999) as trade diplomats from all around the world gathered for the World Trade Organization’s (WTO) 3rd Ministerial meeting. Back then, there were protests on the streets by citizens who asserted that trade policy could not be made without public debate and behind closed doors because of its implications for everyday concerns such as food, environment, health and other issues that shape our lives. At that meeting, there was a revolt by developing countries as well, who felt that a backroom deal was being made by a few powerful countries that would then be imposed on them as an international agreement. Though the U.S. and other rich countries failed to launch a new trade round in Seattle, they succeeded two years later, in Doha, in the wake of September 11.

Fast forward 12 years and we have a WTO stalemate once more in time for the 9th WTO Ministerial in Bali next week. The conflict proves yet again that trade policy cannot be made in a vacuum, particularly when it comes to critical human concerns such as governments’ obligation to protect their citizens’ right to food.

The controversy pits the government of India against the United States, but in reality, the controversial G-33 proposal (named after the group of developing countries who have tabled it) is about allowing all developing countries the policy space to spend public resources on food stocks to ensure price stability and food security. U.S. opposition to that proposal has focused in part on the argument that this would limit export opportunities for companies wanting to sell in the Indian market. U.S. agribusinesses and commodity groups also complained in an October letter to the US. Trade Representative (USTR) that the proposed creation of food reserves would unfairly advantage producers in those countries.

Thus far, the U.S. government has dug its heels in and even indicated that a failure in Bali is likely unless the G-33 drops its proposal and accepts instead a time-limited deal (called a “Peace Clause”) that would allow governments to support food stocks as an exception to the rules. The implication of such an agreement would be that governments must take steps to end these programs before the time on the deal is up. In response to this unfair stance, some 40 U.S. food, faith-based, nutrition, health, development and economic justice organizations have written to USTR calling on the government to accept the G-33 proposal to change the rules to allow food stocks. The letter highlights “that the current agriculture rules in the WTO (including domestic support) are rigged to support big agribusiness. We do all countries a disservice when we promote only commercial export interests, ignoring the real political (and moral) imperative that governments are responsible for their citizens’ welfare, including their right to adequate and affordable food and fair prices to agriculture producers.”

The letter continues, “The G-33 food security proposal is an important first step in the reframing of global trade rules to promote more equitable and stable markets, especially for countries that face huge food security challenges. The U.S. proposal for a “Peace Clause” to suspend potential challenges to those efforts at the WTO is an unfair and inadequate response to a sensible proposal to explore new options to improve stability in national and global markets.”

The ball is very much in the USTR’s court to do the right thing in Bali next week.

Read the group sign-on letter to the USTR on the G-33 food security proposal. 

Posted November 26, 2013 by Dr. M. Jahi Chappell   

Food AssistanceFoodFood security

Participants play a "Food System Plinko" game at the Minnesota State Fair. Photo credit: K.V. Cadieux

Eric Holt-Giménez, director of the amazing food policy think tank FoodFirst, recently wrote in the Huffington Post that if healthy, organic food is unaffordable, this is a problem of wages and rights, not inherently a problem with healthy, organic foods. Meanwhile, Doug Rauch, the former president of the grocery chain Trader Joe’s is set to open a market “to repurpose the perfectly edible produce slightly past its sell-by date that ends up in the trash . . .  [the market] will prepare and repackage the food at deeply discounted prices.” One could take Rauch’s apparently noble kludge to reinforce the old saw that people only care about price when it comes to food.

This, of course, is nonsense.

One needn’t look so far as the ludicrously luxurious meals available, or even the 1000 percent mark-up we’re ready to pay for a $0.20 cup of coffee to realize this. Surveys show that Americans have a large number of values that they bring with them to their food choices—price being one, but only one. Thus, when we go out and buy food that costs more, say, than the USDA’s “Low-Cost Food Plan” (which allocates between $2.15 and $4 a meal), we are not making economically irrational choices. Rather, we’re attempting to balance price among many other factors. When the argument turns purely to price, what follows is most often an attempt to distract from the more appropriate conversation—a conversation about what kind of food people should have a *right* to access. I would argue that we should correspondingly strive for systems that enable people to make the choices to buy sustainable food affordably, that reflects the real prices—it isn’t a matter of keeping prices down, but constructing a system where the rights and economic access to better choices is present.

This is not to say that no one wants low prices; of course we all like to pay low prices. But at the same time, I’d say we also want fairness (a factor industry surveys tend to, er, “forget” to ask about!). Indeed, I would argue that most people want to think they're paying a fair price based on what something costs, environment-wise and labor-wise.

It is of course true and vitally important to note that many of my fellow Americans depend on low prices for food access. But let’s not get confused—it is one thing to need low prices in order to get access to food. Food is necessary to survive, to say nothing of thriving and overcoming the numerous hurdles placed on low-income Americans. It is quite another thing to say that because many of our fellow citizens depend on low prices—and on essential programs like SNAP (food stamps)—that they, or we, don’t or shouldn’t care about more than price. The choice for people with low incomes should NOT be between survival, sustainability or accepting the exploitation of your fellow human beings. The cuts to these programs, and the fact that profit margins and revenues have been going up, but wages haven’t, points to the huge problems we have with inequality in the U.S. We cannot and must not forget that this is the root problem. Trying to obscure this by insisting that no one should be paying for what our food system actually costs, or that Americans with scarce economic resources should have no choice but to buy food that is bad for the health of the people who make it, and bad for the health of the environment it is made in, is ridiculous. The price isn’t the right focus: wages, inequality and a lack of democratic control are.

But what about the rest of us, those who might have more economic means but still want low prices (expensive coffees and non-Low Cost Meal Plans aside)? Well, it is true that we are inconsistent and fickle enough as humans that we can compartmentalize—we can perhaps conveniently “forget” that some Everyday Low Prices incorporate Every Day Poverty Wages Under Horrible Conditions for workers somewhere. On the other hand, companies from Apple to Walmart and many more intentionally leave the exact working conditions all their products are made under undisclosed. And of course it isn't required, say, to have pictures of the conditions inside the places where products are made—be it meatpacking or garment-making. The supposed "consent" of people to low prices in exchange for all the human and environmental destruction is manufactured and constrained by under-accountable corporations and inadequate oversight. We can’t “consent” to what we don’t know, and saying “well, any consumer’s gotta realize this was made under horrible conditions” is far cry from actually providing the information to consumers, front and center, to say nothing of what our preferences might be for a different food system altogether.

This is why continuing to push for global transparency and accountability is critical toward more democratic, decentralized control of the food system and the economy. There may be a few people who can look at a factory farm and think “I’m still in the mood for industrial pork!” A few people will look at a picture of a workers living in abject poverty in Bangladesh and still buy that pair of capri pants. But this number of people shopping “purely on price” is a much smaller slice of the consumer pie than large corporations currently recognize. And the companies know this as they hide their true practices behind rhetoric of family-owned businesses, strict animal welfare standards, and proud, hard-working, red-blooded Americans. Otherwise, as I used to say to my students, if people truly only cared about prices, you could call your CAFO-ed hamburgers "Grade A Torture-Made Meat," and people would still buy it. But everyone, McDonald’s to WinCo, Safeway to YUM! Brands, does their best to make us think their Fine Meats and Cheeses are produced in nothing but the most idyllic of pastoral settings.

It'll be a long haul, but requiring that companies be up front about their practices and the true costs these practices have on humans and the environment will help make the many alternatives all the more feasible (for example, the estimated externalized—unpaid-for—costs of just our pesticide application in current the food system ranges into the many billions of dollars). People are also hungry for affordable alternatives, and have been embracing them. The changes we're going to see will come from continuing to develop and fight for these alternatives, and from continuing to expose the true costs we're placing on everyone for the artificially cheap prices of food. This isn’t about consumer choice, it’s about consumer sovereignty, citizen sovereignty and food sovereignty.

Photo: From a Food System Plinko game at the Minnesota State Fair. "People are encouraged to vote with (agricultural) tokens for which part they value the most. The tokens (beans) falling through the obstacles on the Plinko board show the web of interconnected processes that are involved in the food system." More information.

Posted November 22, 2013 by Karen Hansen-Kuhn   

AgricultureFree trade agreementsNAFTA: North American Free Trade Agreement

Cover of the TLCAN issue of La Jornada in which this story originally appeared. TLCAN (Tratado de Libre Comercio de América del Norte) is the Spanish translation of NAFTA.

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.

In many ways, the family farmers who had been the backbone of rural economies really did either get big or get out, leaving a sector marked by inequality and corporate concentration. Over the last 20 years, there has been a marked shift in the size of U.S. farms, with the number of very small farms and very large farms increasing dramatically. The increase in the number of small farms is due to several factors, including urban people returning to the land (almost all are reliant on off-farm jobs to support themselves) and the growth in specialty crops for local farmers markets. The number of farms in the middle, those that are small but commercially viable on their own, dropped by 40 percent, from half of total farms in 1982 to less than a third in 2007.[i]

During this process of farm consolidation, corporations involved in agriculture and food production also consolidated. Mary Hendrickson at the University of Missouri calculates the share of production in different sectors held by just four firms. The share of the top four firms (Cargill, Tyson, JGF and National Beef) in total beef production, for example, increased from 69 percent in 1990 to 82 percent in 2012. The story is the same in poultry, pork, flour milling and other sectors, as fewer firms control bigger and bigger shares of total production, making it even harder for farmers to get fair prices or earn a living from their production.

Those corporations take advantage of the rules in NAFTA to operate across borders. U.S. companies grow cattle in Canada and pork in Mexico that they then bring back to the U.S. for slaughter and sale. Along the way, independent U.S. hog and poultry producers have virtually disappeared. Efforts to at least label those meats under Country Of Origin Labeling (COOL) laws have been vigorously opposed by the Mexican and Canadian governments. Meanwhile those factory farms contribute to grow environmental devastation in all three countries.

There is widespread recognition among the U.S. public of the need to change food and farm policies to ensure healthier foods and more stable rural economies, but policymakers in Congress and the Obama administration continue to push hard on the same failed policies. More free trade agreements, including the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), largely cut and pasted from NAFTA, but with dangerous new ideas to limit any remaining restrictions on GMOs and questionable food additives, and to pave the way for even more untested emerging technologies. A “new” Farm Bill currently being negotiated shifts from commodity support to an insurance model, which still locks in place the same advantages for even bigger farms and corporations and the same willful ignorance of the devastating impacts of droughts and flooding caused by climate change.

The wild ride of prices under the NAFTA roller coaster has left us with a food system that is dominated by fewer and bigger corporations. In many communities across the country, people are opting out of the existing Big Food system to rebuild smaller, healthier options that are rooted in local economies and connections between farmers and consumers. Whether those experiences can build up from the local to national agriculture and change policy is a big question, and one made harder by the huge dominance of corporate interests. But rebuilding the system from the ground up, and considering how to make fairer links to farmers in Mexico and elsewhere, is really the only path forward.

[i] Robert A. Hoppe, James M. MacDonald and Penni Korb, Small Farms in the United States, Persistence Under Pressure, USDA Economic Research Service, Economic Information Bulletin Number 63, Feb. 2010, p. 27.

Posted November 15, 2013 by Ben Lilliston   

Industrialized MeatAgribusinessFarm BillLabelingLivestock

Used under creative commons license from USDAgov.

To truly see the power of agribusiness, and its growing disconnect from regular people and farmers, look no further than the current dust-up over Country of Origin Labeling (COOL). Polls say more than 90 percent of consumers want simple labeling indicating what country the meat they are buying comes from. Farm groups like the National Farmers Union and the U.S. Cattlemen’s Association support it because of the marketing advantage it gives to U.S. produced meat and livestock producers. Yet, agribusiness has repeatedly flexed its lobbying muscles to block COOL and now they are at it again as Congress negotiates a new Farm Bill. Why do companies like Cargill, JBS and Tyson care so much about COOL? Remarkably, these enormously profitable global corporations are frightened that if consumers better understood their business model—which pays no attention to what country animals come from—they might have to make some changes.

On October 29, big meat (Cargill, Smithfield, Tyson, JBS, among others) sent a letter (subscription required) to the House and Senate Agriculture Chairs demanding that the Farm Bill “reform” COOL. Soon thereafter, House Agriculture Chair Frank Lucus (R-OK) parroted big meat’s arguments in announcing he wants to repeal COOL to avoid retaliation from trade partners. Senate Agriculture Committee Chairwoman Debbie Stabenow has admitted that COOL is on the agenda for the Farm Bill conference committee. 

Agribusiness efforts to crush COOL behind the closed doors of the Farm Bill conference committee is but the latest in more than a decade-long effort to block consumers from getting even the most basic information about where their food comes from. COOL for fruits, vegetables, meat and fish was first passed as part of the 2002 Farm Bill. Agribusiness successfully delayed implementation until 2009, after the 2008 Farm Bill required USDA to issue and enforce the rules. Once implemented, the meat industry worked with governments in Canada and Mexico to file a World Trade Organization (WTO) challenge against the meat provisions of COOL, alleging discrimination against Canadian and Mexican meat producers.

The WTO case highlights why the meat industry, in particular, doesn’t like COOL. The big meat companies consider all of North America their playground (thank you NAFTA!)  – resulting in livestock crossing borders often several times in their lifetime. So, a cow may be born in Canada or a pig in Mexico, but the animal is finished and slaughtered in the U.S. The WTO ruled that while country of origin labeling is allowed, in the case of meat (where animals may be born in one country, raised in another, and slaughtered in another) it didn’t provide enough information to consumers.

The WTO ruling sent the USDA back to the rule-writing drawing board, where they issued new rules in May, in consultation with the U.S. Trade Representative. Thankfully, instead of weakening the rules, the USDA listened to tens of thousands of comments from farmers, ranchers and consumers calling for stronger rules. The new and improved COOL requires muscle cuts of beef, pork, lamb and goat meat to list the country where the animal was born, raised and slaughtered—and eliminate confusing co-mingled mixed origin labels.

Agribusiness went into a tizzy. Groups representing U.S., Canadian and Mexican meat industries sought a preliminary injunction to block the revised USDA rules. Their case was denied in U.S. District court and is now under appeal. The governments of Canada and Mexico are threatening the U.S. government with additional legal action at the WTO, if COOL isn’t killed in the Farm Bill. And now, agribusiness lobbyists are doing what they do best: working behind closed doors in an attempt to undo COOL during the Farm Bill negotiations.

There is some reason to believe COOL is already affecting the industry. Tyson announced just last month that that it would stop buying Canadian cattle for shipment to U.S. beef plants (though it will continue to buy Canadian feeder cattle that it will finish at U.S. feedlots) because of COOL. Tracking where animals came from was just too costly, says Tyson.

COOL is just one manifestation of a larger battleground for greater food transparency as consumers struggle to have some say in a food system controlled by fewer and fewer corporations. Any step toward greater transparency is being fought tooth and nail by agribusiness; see the tens of millions of dollars companies spent to defeat labeling of genetically engineered foods in Washington State and California.

Of course, not all in the food industry are blocking more information for consumers. More and more voluntary labels are on the supermarket shelves, from “free range” to “raised without antibiotics” to “fair trade.” Food co-ops and Whole Foods are driving many of these changes, as the market grows for consumers who want to know not only where their food came from, but how it was produced. Many farmers targeting local markets are embracing greater transparency, and even larger-scale farmers are recognizing the price premiums offered by the rapidly rising non-GMO market.

The battle for greater transparency in the food system is happening at the state level, in Congress, and even at the international level, both at the WTO and within bilateral trade agreements like the U.S.-EU trade deal. The next litmus test for COOL is the Farm Bill conference committee. Will members of Congress stand up for consumers, farmers and ranchers or cave in to agribusiness? We’ll be watching.  

Posted November 15, 2013 by     Jim Harkness

AgroecologyClimateClimate Change

Used under creative commons license from Nove foto da Firenze.

Some of Typhoon Haiyan's wreckage Tacloban, Philippines.

In the past week, we have had a terrible reminder of what’s at stake in our work with the horrific typhoon hitting the Philippines. IATP Board Member and Director General of the Asian Farmers Association (AFA), Esther Penunia, has let us know that she’s alright, after several anxious days. Some of our earliest work with AFA was working together to build knowledge and capacity on climate change before the Copenhagen talks in 2009, and they continue to be close partners to promote agroecology as a resilient, low-carbon solution to feeding a climate-challenged world.

Esther lives in Manila and was there when super typhoon Haiyan struck last Friday. Esther and her immediate family got through fine, but her sister’s family lives in Tacloban, the hardest hit city. Esther had no news from them for several days. But Tuesday, she reported that her sister and family are safe—despite being in Tacloban at the height of the storm. As Esther told us, “You know how strong you are when being strong is the only choice left for you."

At least 10,000 others were not so lucky.

Haiyan was the strongest tropical storm to make landfall in history. It was almost certainly made stronger by the warming of shallow Southeast Asian seas due to man-made climate change, and its effects were exacerbated by the unusually high degree of sea level rise the region has already experienced in recent decades. The Philippines delegate to the international climate talks in Warsaw issued a strong plea for action, and has gone on a hunger strike to try to spur strong action.

This awful tragedy—more like a crime, really!—is a reminder to all of us that climate change is the environmental, social justice and food sovereignty issue of the next century, no matter who’s in the White House or Congress.

If you want to support the recovery in the Philippines, Esther recommends donating to the Philippine Red Cross.

Posted November 14, 2013 by Dr. Steve Suppan   

FinanceMarketsCommoditiesMarket speculation

Used under creative commons license from CFTC.

Left to right: Former CFTC Commissioner Jill Sommers, CFTC Chairman Gary Gensler.

During the more than three years since Congress passed the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, financial regulators have struggled to draft, approve and implement the rules authorized by Dodd-Frank. No agency has met greater Congressional, Wall Street and corporate resistance to Dodd-Frank rulemaking than the Commodity Futures Trading Commission (CFTC), which has authority over more than 90 percent of the $300 trillion U.S. derivatives market. Derivatives are financial contracts, whose value is derived from the value of an underlying asset, such as wheat, oil or a mortgage interest rate. No single CFTC proposed rule has generated more comments—more than 23,000 and counting—than a rule that would limit financial firm market share of agricultural, energy and metals derivatives.

On November 5, the CFTC approved a nearly 400-page revised position limits rule and consequently withdrew an appeal to defend its original rule at the Washington D.C. Court of Appeals. (For an explanation of the October 2012 district court ruling that gave rise to the appeal, see IATP’s blog.) Position limits attempt to prevent excessive speculation and market manipulation by regulating the market share percentage that any one trader and its affiliates can control of a designated commodity contract. The CFTC also approved a rule on the data aggregation of positions across borders, to prevent regulatory evasion by trading through foreign affiliates. And so begins Round 2 of the position limits fight.

A large share of the price increases and volatility in agricultural, energy and metals contracts in U.S. markets have been attributed to the regulatory exemptions, waivers and exclusions that allowed financial firms to control market share. For example, a 2011 Better Markets study shows that 70 percent of the Chicago Board of Trade’s wheat contracts from 2006 to 2010 were controlled by financial speculators, not by traders or processors of wheat. Commodity index fund speculators, with the long-term investment horizons of their pension fund and endowment investors, bet on prices to increase and induced extreme price volatility as they bought and sold contracts according to the fund formula.

Derivatives prices, historically reliable benchmarks for setting the prices at which farmers sell in advance of harvest to grain elevators, were too volatile to be reliable. Food import–dependent developing countries were unable to forward contract enough basic grains at affordable and predictable prices. This loss of price risk–management capacity contributed to food price riots in more than 30 countries, particularly in 2008-09. Foreign exchange and energy contract price increases and volatility further destabilized these countries, since these contracts are often U.S. dollar denominated. What the U.N. Conference on Trade Development has called the “financialization of commodity markets” has driven price trends even in defiance of supply and demand fundamentals.

The CFTC has applied position limits to agricultural contracts without legal challenge from its inception in 1975. As CFTC Chairman Gary Gensler noted in an opening statement to the November 5 meeting, the Commodity Exchange Act authorized the CFTC’s predecessor to set position limits in 1936. The Dodd-Frank legislation authorized the CFTC to set position limits on all commodity contracts, including contracts traded in the unregulated over-the-counter (OTC) markets, which during the previous decade had become at least eight times as large in value as the regulated futures and options contract market.

The litigation and lobbying campaign to prevent implementation and enforcement of position limits and an associated rule on the aggregation of position data, also approved on November 5, cannot be fully understood apart from the Wall Street campaign to carve out regulatory exemptions to allow as many contracts as possible to remain in the OTC market, “dark” to regulators and the public. OTC contract opacity is key to the huge profits to be made not just in OTC commodities trading but in OTC trading of foreign currency exchange and interest rate contracts, by far the largest share of the OTC universe. For example, according CFTC Chair Gary Gensler, cited in a recent New York Times article, the price fixing of a benchmark interest rate by many of the worlds’ largest banks affected the pricing of $10 trillion in loans.

Why have the banks, and many of their largest corporate clients, as members of the International Swaps and Derivatives Association, challenged the authority of the CFTC to set position limits under Dodd Frank? The reason cannot be simply fear of a loss to the overall bottom line of ISDA members. According to the Office of the Comptroller of Currency, bank trading revenues from commodities trading in U.S. markets for the second quarter of 2013 were reported at $282 million, large enough, but small when compared to the $2.8 billion in interest rate contract trading or $3.1 billion in foreign exchange trading revenues for the same quarter.

In his statement on the revised position limit rule, Chairman Gensler noted that the CFTC was holding its ninth public meeting on position limits, more than for any other CFTC rule, out of a total of 31 Dodd-Frank related meetings. The intense public interest registered by more than 23,000 comments on the position limit rule concerns not just a debate over whether the interests of commodity users and consumers will prevail over those of OTC dealer brokers.

Of course, comments from commodity users and consumers concern their commercial self-interest, and many NGO comments concerned the effect of unregulated markets on prices that affect public policy objectives in food and energy security. But more broadly, the position limit debate is about whether governments will regulate markets or whether the position management, i.e., self-regulation by trading venues, of the past decade will continue. The ferocity of Wall Street opposition to position limits is token of its ferocious resistance, both ideological and commercial, to regulation under Dodd-Frank.

Once the revised position limit rule is posted in the Federal Register, it will be open for 60 days for comments. IATP will be among the many who will comment on revised rule. According to a CFTC fact sheet, the revised rule and the related aggregation standards rule contain new exemptions that will certainly merit comment.

The numerical formulations of the limits and when those limits apply are certainly crucial to the effectiveness of the limits in preventing excessive speculation and market disruption, public policy objectives of the Commodity Exchange Act. But equally important are the standards for aggregating position data, particularly as they apply to transactions executed by foreign affiliates of U.S. parent firms. In other words, if data aggregation standard exemptions enable big financial players’ positions to appear smaller than their influence on price formation and price discovery, then the effectiveness of the position limit rule is diminished, if not negated.

The fact sheet states there will be an exemption from position data aggregation when “sharing information [on positions] would violate or create reasonable risk of violating Federal, state or foreign law or regulation.” As I noted in July, foreign governments have complained that CFTC requirements for regulator access to foreign trade data repositories to verify compliance with CFTC’s cross-border guidance would violate data privacy laws in Group of 20 countries. This exemption, as summarized in the fact sheet, appears to be a concession to that complaint.

Nevertheless, it appears that the CFTC’s justification for the exemption indicates that this will be a narrow exemption subject to a high standard of proof. In the proposed aggregation standards rule the CFTC considers IATP comments on aggregation (footnotes 25, 26, 31 and 32), in the context of reviewing comments on how claims that aggregation would violate local, as well as federal and foreign law, might serve the purpose of regulatory evasion. The CFTC agreed with the comments of IATP and others that local laws would not serve to justify an exemption from aggregation and with IATP’s argument that international law, such as trade treaties, do not contain data sharing prohibitions that would justify an exemption (pp. 19–20).

By framing consideration of the use of the exemption in the context of potential for regulatory evasion, the CFTC shows that contrary to earlier regulatory practice, exemptions will be granted only when they cannot be used to serve the purpose of regulatory evasion.  

It is likely, as Better Markets stated in a press release welcoming the CFTC decision to propose a revised position limits rule, that ISDA will again sue the CFTC to prevent implementation and enforcement of the rule. The seemingly endless resources of Wall Street for litigation and for paying billions of dollars of fines, part of which are tax deductible, and without criminal sanctions, are understandable causes for despair.

However, when as redoubtable a defender of Wall Street as William Dudley, chair of the Federal Reserve Bank of New York, chastises his member banks for lack of respect for the law, it is one of several signs that the more than decade-long reign of regulatory evasion and impunity for violations of the law may be coming to a reckoning. If ISDA and other industry groups challenge the position limit rule again in court, it will be with the backdrop of its members paying billions of dollars of fines for trillions of dollars of price fixing. Even the notoriously conservative Washington D.C. circuit may not find in favor of such plaintiffs.

Furthermore, the announcement by the European Commission that it will permit no further delay in trade data–reporting rules by European Union member state regulators, takes away another Wall Street argument for the death by a thousand cuts to CFTC regulation. European banks will have to report their OTC trades to trade data repositories and the CFTC and other foreign regulators will have access to those repositories to verify compliance with position limit and other rules. No more Wall Street excuses that CFTC rules will put them at a competitive disadvantage with their European counterparts!

Round 2 of the position limits fight begins in an environment more favorable to both transatlantic regulatory cooperation and reduced opportunities for regulatory evasion by OTC traders. 

Posted November 14, 2013 by Pete Huff   

Local FoodFoodFood safety

Used under creative commons license from LizMarie_AK.

Submit a comment by Friday, November 15 to tell the FDA why their proposed food safety rules don't work for small- and medium-scale food producers. 

Access to safe food is something that many of us take for granted.  It is assumed that the jam we pick up from the farmers market or the chicken purchased from the grocery store will have been grown and processed in a way that will nourish, not harm, our health or the health of our family. Behind these and all food purchases is a long line of farmers and processors with the responsibility to ensure that we can be afforded this assumption of safety.

The rise of the industrialized food system has deteriorated this trust through increasingly common breaches. Just In the past two months, outbreaks of Salmonella in industrialized chicken production and E. coli in the prepared food products of national retailers have, once again, made consumers suspicious of the food on their shelves. Too often, these outbreaks are the result of the scale and cost-cutting priorities of the industrial food system, making public health the collateral damage of an unsustainable food systems.

In response, the federal government has begun to update our food safety laws. In 2011, Congress passed the Food Safety Modernization Act (FSMA) into law—the first major revision of the nation’s food safety regulations since 1938. Directed by this mandate, the FSMA directs the U.S. Food and Drug Administration (FDA) to create rules and regulations that focus on produce farms and the facilities that process food—the line in the sand for safe food throughout the country.  This “rulemaking” stage is currently underway, with a public comment period open until November 15, 2013. IATP’s comment to the FDA on the proposed FSMA rules is available online.

In one giant leap, the FSMA proposed rules that significantly extend the powers of the FDA to prevent, remedy and improve food safety issues, predominantly as a reaction to the persistent and emerging food safety concerns of industrial food production. The FDA’s interpretation of the FSMA has resulted in two proposed rules: the Produce Rule, which creates or adjusts standards for produce production; and the Preventative Controls Rule, which creates or adjusts food safety measures for facilities that process food for human consumption. These rules dramatically shape the pathways of food from farm-to-table and could come at the expense those producers and processors not involved in the type of industrial food production that is the source of many food safety concerns.

Both the Produce Rule and the Preventative Controls Rule fail to adequately provide the definition, flexibility and equitable process needed for small- to medium-scale farmers and processors to continue to operate, let alone grow. By creating an industrial “default” in the proposed rules and applying it generally to all produce farms and processing facilities regardless of size or circumstance the FDA is making it burdensome for the good, clean, fair food produced by small and medium farms and food businesses to reach the communities that would benefit from it the most.

Small- and medium-scale producers and processors are typically the parts of the food system tied most directly to their consumers on a local and regional level. As they interact with the people who eat their produce and products, they have vested business and personal interests in ensuring that their products are safe and healthy for their immediate and extended communities. This paradigm typically extends to ensuring the health and safety of the natural systems and ecologies that drive small—and medium-scale produce production, with producers and processors often actively stewarding their soil, water and air in a sustainable manner—typically complying with and moving beyond established organic standards.

In order to transform the FSMA into something that helps, rather than hinders a healthy and balanced food system, the proposed rules should be revised in three main ways:

Allow farmers to continue to use proven beneficial on-farm natural resource conservation, wildlife habitat protection and organic farming practices.

The federal government should encourage farmers to steward their land and natural resources via proven and currently regulated practices. Existing federal standards and conservations programs for manure and compost, agricultural water testing, conservation practices and diversified production should be strengthened—not undermined—by the FSMA rules. 

Encourage, rather than unfairly target, local food and the associated opportunities for small- and medium-scale farmers.

Safe food is in everyone’s best interest, but we can get there without causing the loss of the farms and food businesses vital to healthy local and regional food systems. These decentralized food systems are typically safer, as they do not concentrate food into industrial operations prone to pathogen outbreaks and other public health risks. Further, these local and regional systems provide the fabric of healthy local and regional economies by creating jobs and keeping money in our communities. Burdensome and unnecessary rules will drive small farms and processors out of business. This, without need for explanation, will hurt urban and rural communities alike.

Minimize administrative burden, reduce costs and create due process for farmers and producers.

Running a successful business is no easy feat and the challenge is doubly so for running a food production and processing business. As they are currently written, the proposed FSMA rules do not create a fair regulatory system, underpinned by due process, for farmers and producers. This must be the bedrock of any federal process regardless of its focus. Further, by subjecting small farms and food businesses to excessive costs of compliance, the proposed rules threaten to bankrupt existing businesses and discourage new start-ups. 

The “one size fits all” rules that have been proposed do not protect and enhance the producers and processors critical to resilient and robust regional food systems. The result is burdensome and expensive, with the FDA acknowledging that the new rules will cause some farmers to go out of business, discourage new farmers from starting farms and businesses, and force an increased dependence on off-farm incomes for those who continue to produce and process food. With emerging health and environmental issues related to food production, we need more, not less, producers and processors operating on the small and medium scale serving local and regional markets.

Read IATP’s comment to the FDA on the proposed FSMA rules.

The National Sustainable Agriculture Coalition website offers a chance to get involved. Submit a comment by Friday, November 15. 


Posted November 12, 2013 by Tara Ritter   

Visit for more information.

The annual global climate talks are underway this week in Warsaw, Poland. The agenda for the 19th session of the Conference of Parties (COP 19) to the U.N. Framework Convention on Climate Change (UNFCCC), as the climate talks are formally called, includes discussions on “issues relating to agriculture” with climate change adaptation identified, appropriately, as a primary focus. As anyone who is engaged in farming or in other natural resource related fields or who lives in a rural landscape knows, there are big changes already occurring that are impacting their livelihoods, communities and local economies.  

Despite this focus, it is unlikely that there will be many rural voices at the negotiating table in Warsaw.  That is unfortunate, because in order to succeed, we believe it is essential to involve rural stakeholders in identifying possible policy and on-the-ground solutions. Sadly, the discussions at COP 19 are more likely to revolve around the promotion of carbon markets rather than the real strategies and investments needed to help rural communities, farmers and others to be more resilient and to help slow the pace of climate change.

To focus and strengthen the U.S. rural perspective on both the problems and solutions associated with climate change, IATP and its partners are excited to announce the launch of the Rural Climate Network (RCN). Formed out of the 2011 National Rural Assembly, the Rural Climate Network was born in response to this identified lack of rural engagement in climate policy development, but also out of a recognition for a greater need of collaboration among rural organizations and leaders regarding relevant climate change adaptation and mitigation resources, information and strategies. 

Currently, the RCN website features information on the work of 21 rural organizations from across the country working to address climate change. Relevant resources range from videos of farmers and other rural residents talking about actions they are taking to combat climate change to climate adaptation plans to Neil Young discussing farming and climate change. Our hope is to grow this collection of practical, rural strategies and resources to adapt to and mitigate the current and anticipated effects of climate change, but to do that, we need your help! Read the first issue of the Rural Climate Network newsletter and sign up to receive future issues, email to share stories, resources or organizations that would be a good fit for membership, and keep an eye on the expanding website for new information.  

       Sign up for our free newsletter!