The U.S. National Family Farm Coalition, and the international peasant group, La Via Campesina, together support policies at various levels to insure optimum farm prices. Usually this means that farmers need higher prices. USDA-ERs estimates that U.S. prices were below zero vs full costs most of the time 1981-2006. (http://www.ers.usda.gov/Data/CostsAndReturns/testpick.htm) For the sum of corn, wheat, rice, cotton, soybeans, grain sorghum, barley and oats, only 1996, the best corn year, was above zero. Overall the new was several hundred billion below zero. (multiply per acre losses by acres planted using acreage data from here: (Historical Track Record – Crop Production: http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1593).
Occasionally, when there is a price spike, optimum pricing means that prices are too high, as following the secret 1970s Russian grain deal, and starting fall 2006 for some crops (corn, not cotton).
In their document, “Food Sovereignty and trade for the Sao Paulo Conference” (my link no longer works) La Via Campesina emphasized “The damaging effects of farm prices below the costs of production and the international dumping of surplus,” the problem of “dumping, the practice of exporting a product at a price below the costs of production.” Part of the problem is that “The WTO, however, has chosen to define dumping as the practice of exporting at a price below that of the internal market price. This provided the USA and EU, according to 1994 WTO rules, the opportunity to drop their internal price to the world price and provide direct payments to their producers.”
While the U.S. as a whole loses billions on these policies, agribusiness grain buyers (ie. CAFOs, ethanol, food and feed companies) make billions. They aren’t blamed for the subsidies, as their price gains are off the books, unseen. The subsidies compensate US farmers for part (#1) of their losses. That’s unfair to farmers in other countries, and the below cost CAFO grain (multibillions) works to take value added livestock away from small and medium sized US farms. (Tufts University: “Industrial Livestock Companies’ Gains from Low Feed Prices, 1997-2005,” http://www.nffc.net/Learn/Fact%20Sheets/CompanyFeedSvgsFeb07.pdf).
To remedy these problems, the Via Campesina document stated, among other things, that:
1) VC proposes a base for sustainable and mutually supportive farm policies without dumping :
• Farm prices linked with the costs of production
• Supply management at national/continental and international levels
• Border protection against low price imports
Price floors (to keep prices above the costs of production), and supply management at the national level, NOT subsidies, were the key provisions of traditional or New Deal farm programs in the U.S. In fact, except for a few early cotton subsidies, there were no commodity subsidies until 1961 (corn, wheat, barley, grain sorghum), 1964 (cotton), and even 1977 (rice) (and soybeans still later). (USDA-ERS, “Table — Direct Government payments by program, United States, 1933-95,” http://www.ers.usda.gov/Data/farmincome/finfidmu.htm.)
US price floor and supply management policies (and the weakening [1953-1995] and elimination of them [1996-]) are crucial to the price concerns of Via Campesina,. US market shares and other influence is so great that the US prices often set world prices.(#2)
La Via Campesina’s 200,000,000 members are, of course, mainly located outside of the United States. They don’t vote here or have much influence on U.S. politicians. La Via Campesina’s main ally in the U.S. is the National Family Farm Coalition. NFFC’s “Food from Family Farms Act” provides for price floors and supply management to guard against low prices and dumping. FFFA provides for price ceilings that trigger the release of strategic commodity reserves to guard against overly high prices. In this way, NFFC policies seek an optimum range of decent farm prices. NFFC’s farm bill (commodity title) is based upon the traditional, nonsubsidy programs of the New Deal, and the Harkin-Gephardt farm bill of the 1980s and 1990s.
More recently (2009), La Via Campesina has identified these issues in “La Via Campesina Policy Documents.” (http://viacampesina.org/downloads/pdf/policydocuments/POLICYDOCUMENTS-EN-FINAL.pdf) They oppose dumping, but also address the recent price spike. “What are we fighting against? … The dumping of food at prices blow the cost of production in the global economy….” (p. 150)
They state: “Internal market prices have to be stabilized at ta reasonable level for farmers and consumers: for farmers so that they can receive prices that cover the cost of production and secure a decent income and for consumers so that they re protected against high food prices.” (p. 20) They further state:
“In every country an intervention system has to be put in place that can stabilize market prices. In order to achieve this, import controls with taxes and quotas are needed to regulate imports and avoid dumping or low price imports that undermine domestic production. National buffer stocks managed by the state have to be built up in order to stabilize domestic markets: in times of surplus, cereals can be taken from the market to build up the stock and in case of shortage, cereals can be released.” (p. 20)
The document makes an important summary of “false reasons” for “the current inflation of agricultural prices.” It isn’t caused by global shortages, for example. They therefore criticize “all the so-called solutions based on higher agricultural yields by the use of more fertilizers or GMO’s,” as is argued by vested agribusiness interests. They loudly sound the farmers’ warning that “Agricultural prices on the international market could very well lower again in a brutal manner in the months or years to come…” That is, the recent brief price spike could morph into another quarter century of dumping! It’s often overlooked that the quarter century of rural poverty under severe dumping (LDCs are 70% rural) made these few years of high prices devastating.
In further analysis of both sides of farm price volatility, they point to, among other things, the fact that “Control price mechanisms and/or control of production were dismantled.” (p. 155) Additionally, ““Structural Adjustment” policies obliged states to dismantle their food reserves …” among other things. That’s the point I made above. The globally crucial US New Deal programs, for example, were weakened over decades and then eliminated 15 years ago. That’s 3 U.S. farm bills back, and the likely cause of the fact that these policies, so crucial to La Via Campesina, have been missed by most of the food movement, and by churches, environmentalists, and other progressives and leftists concerned with hunger and agricultural issues.
La Via Campesina then calls for “Alternatives for stable and more just agricultural prices.” (p. 157) “At the national level” that includes:
“• Reconstitute public food reserves in each country;
• Re-establish guaranteed mechanisms for agricultural prices;
• Develop a policy of control of production (supply management) to stabilize agricultural prices.”
My purpose in this blog is to focus on these key US policies.(#3) Given that La Via Campesina, 140 organizations worldwide representing 200,000,000 concerned peasants, strongly supports these policies, isn’t it about time that we make sure that everyone in like minded movements within the US learns about the existence of La Via Campesina’s concerns and joins in with the National Family Farm Coalition to vigorously support and win these crucial policy changes right here in the United States. We are, after all, citizens of the world price leader for many of the main farm commodities in the global export market.
In the work on the last farm bill, that didn’t happen. Many groups got side tracked by the corporate “smokescreen” issue of subsidies.(#4) We must do better. Much of my blog, especially my “Farm Bill Primer” and “Food Crisis Primer” was developed for this very purpose. Please help spread the word.
(1) USDA-ERS studies on net above full costs WITH subsidies found a net loss overall for each crop studied: “U.S. corn [rice, barley, grain sorghum, cotton] production cash costs and returns, including direct Government payments and program,“ http://www.ers.usda.gov/Data/CostsAndReturns/testpick.htm)
(2) Daryll E. Ray, APAC, “What is the World Price?” (column 140)
Daryll E. Ray, APAC, “Rethinking US Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide,” p. 11, “US Policy Distresses Farmers Worldwide” and pp. 24-31, “U.S. Prices Matter” (http://agpolicy.org/blueprint.html).
(3) There is, however, much else of great value in these documents!
(4) On subsidies as a “scapegoat:” “Ensure that Farmers Receive a Fair Living Wage,” http://www.zcomm.org/ensure-that-farmers-receive-a-fair-living-wage-by-jerry-pennick-heather-gray). Econometric studies typically find that subsidy reduction or elimination would have very small impacts on most farm market prices, Timothy A. Wise, GDEI, “The Paradox of Agricultural Subsidies,” http://ase.tufts.edu/gdae/Pubs/wp/04-02AgSubsidies.pdf. Dumping amounts are much greater, “WTO Agreement on Agriculture: A Decade of Dumping,” Annex 1, ix-xxii, http://www.iatp.org/iatp/publications.cfm?accountID=451&refID=48532; Daryll E. Ray, “Rethinking US Agricultural Policy,” cited in footnote #1 above, shows that subsidy reduction/elimination did not work as supply management for three countries: secton: “What if We Get Rid of Subsidies,” pp. 37-42.