Economists are still struggling to quantify the trillions of dollars of costs to the global economy of collapse and bailouts of the world largest private banks. Three Federal Reserve Bank of Dallas economists “conservatively estimate” $6-14 trillion dollars of damage to the U.S. economy alone from the 2007-2009 financial and commodity market crisis. At the upper end of their estimate, that’s $120,000 for every man, woman and child in the U.S. The global damage caused by the global bank near defaults, publicly funded bank rescues, and fiscal crises that followed the rescues, has yet to be estimated.
International cooperation on the regulation of global banks is required because of the global trading practices and corporate structure of the largest banks, most of which are major commodity traders. For example, according to another Fed study, the seven largest U.S. headquartered bank holding companies have about 5,700 foreign subsidiaries in dozens of foreign jurisdictions. To judge by the geographic distribution of these subsidiaries, the largest banks are structurally transatlantic institutions that require intensive U.S. and EU regulatory cooperation to prevent another 2007-2009 debacle.
It’s a big week in the agriculture world. Just days before Obama signed the new Farm Bill into law, Agriculture Secretary Tom Vilsack announced the locations of seven regional hubs for climate change adaptation and mitigation. These hubs will attempt to address the risks that farmers increasingly face due to climate change—including fires, pests, droughts and floods—by disseminating research on ways landowners can adapt to and adjust management strategies to build resilience.
This is a notable step forward in climate policy and has important implications for rural communities. Many rural communities tend to view large governmental agencies negatively, especially those agencies that regulate the agricultural activities that dominate many of those communities’ economies. However, farmers feel the direct impacts of extreme weather more than anyone. The climate hubs will help by linking a diverse network of partners, including universities, nongovernmental organizations, federal agencies, state departments, native nations, farm groups and more. Broadcasting climate change research and information from this wide array of sources, including sources that farmers trust and regularly interact with, could make climate change adaptation and mitigation a more accepted and commonly desired goal.
Encouraging action on climate change is paramount not only from an environmental perspective, but from an economic perspective as well. The drought of 2012 cost the American economy an estimated $50 billion between 2011 and 2013. It’s too early to assess the costs of the current drought punishing California, which produces nearly half of the country’s fruits and vegetables. Clearly, the risks posed by volatile weather events have implications not only for farmers, but for the economy and society as a whole.
Was it just exhaustion from two-plus years of negotiations that finally produced the Farm Bill that is expected to be signed by the President this week? Or, was it the sense that “it could have been a lot worse” when compared with a mean-spirited, destructive Farm Bill passed by the House of Representatives last year. For whatever reason, there is a sense that a deeply flawed Farm Bill—the terms of which were dictated largely by austerity fanatics from the start—is the best we’ll get under the current political environment.
That’s a problem for all of us. It’s definitely a problem for the growing number of working age Americans who rely on food stamps. This Farm Bill cuts food stamp benefits (about 80 percent of the Farm Bill costs) by $8.6 billion.
It’s a problem for the environment and the urgent need to help farmers shift toward more climate resilient production systems to deal with extreme weather events. The bill cuts about $6 billion from conservation programs, the first time conservation funding has been cut since it became part of the Farm Bill in 1985 (excellent analysis by the National Sustainable Agriculture Coalition). Those cuts reduce the number of acres for the Conservation Reserve Program (which takes sensitive land out of production to protect habitat and wildlife) from 32 million to 24 million acres. It also limits the new acres of enrollment into the Conservation Stewardship Program (which support conservation measures on working farms) to 10 million per year—a cut of 2.8 million acres per year over the next decade.
Farmers, union, environmental and women’s activists gathered in Mexico City last week to take stock of the lessons from NAFTA and plan strategies to confront the next big threat: the Trans Pacific Partnership (TPP). One of the earliest lessons from the NAFTA experience was that people and environments in all three countries were affected. The stories from Mexico, Canada and the U.S. were remarkably similar: environmental destruction, threats to union and community organizing, and, in all sectors, a marked increase in corporate concentration as companies gained new abilities to move different aspects of production across borders in search of lower costs and higher profits.
This has been especially true in agriculture. As part of the multisectoral forum, more than 100 members of ANEC, (the National Association of Rural Commercialization Enterprises, which brings together more than 60,000 Mexican small- and medium-scale farmers), organized a farmers’ forum with international allies. Alberto Arroyo, a longtime leader in the Mexican Action Network on Free Trade (RMALC), explained that Mexico’s dependency on food imports has increased dramatically since the agreement began, from 16 percent before NAFTA, to more than 42 percent today. That situation is even more alarming when we consider that today nearly half of Mexican families, even with two wage earners, can’t afford the “canasta basica” of basic necessities. Adding on to the devastation wreaked on the countryside by the influx of cheap corn under NAFTA, TPP would compel Mexican coffee farmers to compete with cheap Vietnamese robusta coffee.
Food insecurity is a lucrative endeavor for U.S. agribusiness corporations. As a matter of course, hunger has taken a backseat to maintaining a dominant trade position when it comes to U.S. trade negotiations and domestic policy. As long as the U.S. holds its position as the world's largest agricultural exporter, and import-dependent countries continue to be bound by rules that exploit their vulnerability to volatile commodity markets, U.S. agribusiness will profit indefinitely at the expense of the most vulnerable.
In order to address global hunger effectively, the U.S. government will have to acknowledge the effect its current agricultural policy has on global food security and extend the same lenience to allow developing countries the reestablishment of sovereignty in their own food systems without threat of dispute settlement or retaliatory trade sanctions. As it stands, wealth, subsidy classification, export credits and food aid contribute to a system of subjugation and persisting power disparities.
Inequalities in power between nations exist before negotiations begin. Initial positions of wealth determine the degree to which countries can leverage the allowed subsidies outlined within international agricultural agreements to promote food security and rural development. Developed countries’ subsidies comprise the “lion’s share” of global spending supporting agriculture (though they are, in theory, bound by greater reduction commitments under trade agreements). This raises the question, “Given the inequality in initial positions, must [the situation] inevitably result in inequality in outcomes?” (Matthews 2008, 82). Developing countries’ stagnant progress toward food security and rural development, compared to developed countries relative effectiveness, attests to the importance of economic wealth.
The second Rural Climate Network newsletter was released last week, featuring updates on how rural America is responding to the climate challenge. Since the first newsletter, the network has welcomed five new member organizations that represent the diversity of climate work across the country and display how climate change impacts sectors ranging from fisheries to forestry to meat production. The member spotlight this month is Organic Valley, and a featured interview with Sustainability Program Manager Jonathan Reinbold outlines the organization’s views on climate change. Policy that incentivizes this kind of on-the-ground work is critical in supporting the growing rural movement to adapt to and mitigate climate change.
This edition of the newsletter also features a brief interview with Renata Brillinger of the California Climate and Agriculture Network (CalCAN) to better understand how California farmers and ranchers are handling the drought that is currently underway in California. According to Brillinger, “mandated cutbacks in water distributions, along with depletions in available surface water and groundwater, are forcing farmers to dig deeper into their pockets while making tough decisions about crop planting and livestock management.” Some farmers have resorted to pumping groundwater to compensate for the lack of water elsewhere, but that is not a sustainable strategy in the long term should the drought persist and other ideas are needed.
Congress is quietly considering legislation that would speed the passage of two mega trade agreements, and seeks to specifically eliminate government programs that favor “localization.” The bill would give the Obama Administration what is known as “fast track” authority—meaning Congress would surrender its constitutional authority to shape trade agreements negotiated by the president and instead can only vote up or down on the deal.
Why should those working for a fair, sustainable food system care? Perhaps no area of policy has undermined local food systems around the world more than the slew of trade agreements passed over the last several decades. These trade rules cover everything from tariffs, food safety and intellectual property to enshrining corporate rights. They place restrictions on what is allowed in national policies, like the Farm Bill, as well as the state and local level. These deals have heavily tilted the playing field from farmers and consumers toward global agribusiness and food giants like Cargill, Monsanto and Wal-Mart.
Because these trade deals, like NAFTA and CAFTA, have been so blatantly negotiated on behalf of multinational corporations and have contributed to growing income inequality, they’ve been extremely unpopular. This is why the Obama Administration has decided to negotiate these two new trade agreements in secret. That’s right, the Trans-Pacific Partnership (including more than a dozen countries) and the Transatlantic Trade and Investment Partnership (with our biggest trading partner, the EU) is being negotiated entirely behind closed doors. The negotiating text has not been made public, and, amazingly, even many members of Congress are in the dark about what’s happening.
Over 13 years ago, IATP documented the transformation of U.S. hog production in The Price We Pay for Corporate Hogs. In a period of 30 years (1950–1980), the number of U.S. hog farms declined by nearly 80 percent, while the average farm size increased six-fold. Whereas in 1950, 2.1 million independent farmers raised pigs outdoors or indoors with bedded straw or hay (raising 31 pigs a year); at the end of the 90s, a total of 105 farms accounted for 40 percent of U.S. production (50,000 pigs each). By 1999, 50 percent or more of the farmers were under some sort of contractual arrangement and four companies (including Smithfield) controlled 20 percent of the production. In the last decade, this process has only intensified. By 2007, four companies controlled 66 percent of the production, all at great cost to U.S. farmers, consumers, the environment and public health.
On a slightly chilly morning last Saturday in Berlin, more than 30,000 people marched through the city to raise their voices against industrial agriculture and for good food and good farming. This was the fourth year for the Wir Haben Agrarindustrie Satt (We’re Fed Up with Agribusiness) march, and the biggest so far. The day started off with a breakfast led by family farmers from around Germany and the region. They led the march with a caravan of tractors, followed by slow food, animal rights, environmental, trade, development and other activists in a joyous celebration of food justice and local democracy.
The march was the culmination of a series of events during Green Week. We started with a public forum on agriculture and the Transatlantic Trade and Investment Partnership (“TTIP: No We Can’t!”) organized by Martin Haüsling, a Green Party Member of the European Parliament. The German government held its annual Global Forum for Food and Agriculture, which included informative sessions organized by NGOs, academics and corporations on the future of the food system. All great events, but hard to beat the Snippledisco (Disco Soup), where hundreds of people chopped vegetables deemed not quite good enough for the supermarket to pounding music, at once protesting food waste, preparing soup for the demo the next day and just having a great time.
The U.S. trade debate shifted into high gear yesterday with the introduction of Congressional bills to fast track trade deals. If approved, this would give the administration the authority to negotiate trade deals behind closed doors and then submit the resulting agreements to Congress for an up or down vote, with very limited debate and no possibility of amendments. Unions, environmental organizations and many other civil society groups immediately denounced the bill as undemocratic and out of date. Some 151 Democrats issued a letter last week expressing opposition to the bill, so its passage is far from assured.
Even beyond the undemocratic nature of the fast-track mechanism, the bill includes negotiating objectives that should raise alarms for advocates of food sovereignty and international development. It would direct the office of the U.S. Trade Representative (USTR) to eliminate “localization barriers to trade.” Rather than celebrating the emergence of strong local economies, that provision would direct USTR to "eliminate and prevent measures that require United States producers and service providers to locate facilities, intellectual property, or other assets in a country as a market access or investment condition, including indigenous innovation measures." That kind of measure, if enacted in a trade agreement, could easily boomerang back to the U.S. to undermine local content requirements for job creation or even perhaps local foods programs.