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Why U.S. Farmers Oppose ‘Free’ Trade


FARM WASHING ‘FREE’ TRADE

There seems to be a lot of “farm washing” of the new ‘free’ trade agreements, the Trans Pacific Partnership, (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).  For example, the public radio program, Here and Now, in a story about how the United Auto Workers oppose TPP, quoted sources claiming that “it’s very clear that U.S. agriculture will” “benefit” from the agreement.  The argument given was that “U.S food producers could be hugely competitive” under the changes.  (Tracy Samilton, “U.S. Auto Industry Fights Against Free Trade Deal,” Here and Now,” 6/3/15.)

Unfortunately, “competive” in the kinds of capitalist jargon that have been applied to agriculture for decades, means losing money on exports.  In fact, for a sum of 8 major farm crops, (yearly average prices x yearly average production amounts, then added together,) U.S. farmers lost money in our increasingly deregulated/’free’ markets every single year 1981-2006, (except 1996).  That’s 25 of 26 years of losses vs full costs, as measured by USDA’s Economic Research Service.  For five of these crops, (wheat, cotton, barley, oats and grain sorghum, but excluding corn, soybeans and rice,) the losses have never stopped, as seen in losses 7 of 8 years, 2007-2014.  For dairy, the same holds, 1993-2014, (excluding 2007, when prices were a few pennies per gallon above full costs).  Farmers don’t benefit from becoming even more “competitive.”

U.S. Farmers have long opposed ‘free’ trade agreements for a very basic reason.  It lowers farm prices!  ‘Free’ trade, based upon ‘free’ market ideology, doesn’t work for the major farm crops.  This is true under most market conditions we’ve had for 150 years, and on into the 21st century.  For a variety of reasons, these crops do not self correct, to balance supply and demand.  The classic supply and demand curve doesn’t represent reality here.  The problem is that these farm crops “lack price responsiveness” (http://agpolicy.org/weekcol/248.html) “on both the supply and the demand side for aggregate agriculture,) (http://agpolicy.org/weekcol/325.html) that is, for the groups of major crops grown in the major farming regions.  This is true under most market conditions we’ve had for 150 years, and on into the 21st century

HOW U.S. FARMERS OPPOSED ‘FREE’ TRADE AT THE FARM AID CONGRESS

In 1986, tens of thousands of farmers participated in caucus meetings where they voted on resolutions and delegates for the United Farmer and Rancher Congress.  The event, also known  as the Farm Aid Congress, was held September 10-13, 1986.  Below is the section of “Delegate Approved Resolutions” related to trade issues.  (See more at http://www.iatp.org/documents/a-report-on-the-united-farmers-and-rancher-congress.)

Note that U.S. farmers supported fair prices for global farmers, not just benefits for themselves.  The U.S. is the dominant exporter and price leader.  We set world prices for major farm crops.  Over the past 60 years we’ve set those prices lower and lower, culminating in the lowest farm prices in history, over and over, following the complete end of most of the New Deal “market management” farm programs in 1996, and under the NAFTA and WTO regimes.  During the years, 1997-2005, corn and soybeans each had 8 of the lowest 9 prices in history (back to 1866 for corn, USDA-National Agricultural Statistical Service), and it was similar for the other major crops.

As dominant exporter and global price leader, preventing imports from lowering U.S. market prices, as seen below, also helps to keep global prices up at fair levels

Note also that farmers supported trade agreements with other countries that effectively manage the markets for the benefit of all, for fair prices for all.

All of this is also covered in the first section of the resolutions, which emphasized the need for fair market prices.  In that section, there was also support for reserve supplies, to protect consumers (including the poor), those feeding livestock, and other farm commodity buyers from prices that spike up above fair levels.

Here are the “delegate approved” resolutins for IMPORTS, EXPORTS, AND FOREIGN POLICY.

WHEREAS, Food imports by the US are valued at over $20 billion each year.

WHEREAS, Some of these imports compete directly against unsold stocks of US-produced crops and livestock.

WHEREAS, Some of these imports are brought into the United States without the same health and safety standards required of US producers.

WHEREAS, Some of these imports are cash crops which are produced by multi-national food corporations on land needed by people in those countries to grow food for their own survival.

WHEREAS, Food imports now exceed exports, deepening our trade deficit.

BE IT RESOLVED, The US must enter into multi-lateral negotiations aimed at achieving “fair trade” among nations, not so-called “free trade” advocated by the grain trading multi-nationals. These negotiations must address health and safety standards, insure that we are not creating more hunger through our imports, and should include the negotiation of import quotes to insure that we will not further increase our unsold stocks here in the US.

BE IT FURTHER RESOLVED, Country of origin of foods must be labeled.

BE IT FURTHER RESOLVED, Imports of competitive products should not be allowed into the United States at less than 110% of parity, and this should supersede multi-lateral agreements.

WHEREAS, Section 22 of the permanent farm law, the 1949 Act, requires the Secretary of Agriculture to protect domestic supply control programs if threatened by imports.

WHEREAS, The domestic tobacco program, historically a successful and self-supporting program, is being destroyed by unregulated tobacco imports by the cigarette corporations.

WHEREAS, The Secretary has failed to apply the provisions of Section 22 as required by law to protect domestic commodity programs.

BE IT RESOLVED, The Secretary must enforce the provisions of Section 22, for all program crops similarly threatened.

BE IT FURTHER RESOLVED, Provisions in the General Agreement on Tariffs and Trade which protect domestic supply management programs from unrestricted imports must be maintained and strengthened in the upcoming round of negotiations.

WHEREAS, The United States is an important market for the agricultural production of many developing nations who rely on these exports for foreign exchange earnings in order to service their foreign debts.

BE IT RESOLVED, The US should participate in international commodity agreements to help assure fair world market prices for the products of the developing countries in order to maximize export earnings.

WHEREAS, US agricultural exports are estimated at $24 billion in 1986, roughly 10% of our overall food and fiber production.

WHEREAS, Although exports are a relatively small percentage of overall US production, they are an enormous percentage of the total world exports, roughly 75% of world soya trade, 70% of corn, and nearly 40% of wheat.

WHEREAS, US domination of world trade means we set world prices for most basic commodities, primarily thru domestic price and production policies. When we set farm prices below the cost of production, it forces down world prices, reducing foreign exchange earnings of other exporters.

WHEREAS, The intentionally lowering of world prices by the US forces other countries around the world to increase their production just to service their foreign debt, thereby reducing the market for US exports.

WHEREAS, The lowering of US farm prices results in a reduction in US export earnings, due to the relatively inelastic nature of world food markets, further worsening our nation’s trade deficit.

WHEREAS, The current two-tiered price support program of target prices and CCC loans is an enormously expensive system of export subsidies, costing over twice in taxpayer dollars as the total value of the exports being subsidized. For example, in 1986 US taxpayers will pay over $6 billion to subsidize corn exports only worth $3 billion.

BE IT RESOLVED, Domestic US farm policies should not be allowed to set world market prices artificially below the cost of production, and we should enter into multi-lateral negotiations with all major exporters and importers of our major export products on issues of price, quality, market shares, and carryover stocks.

BE IT FURTHER RESOLVED, Farm exports should be measured in price per unit of production, total dollars earned and volume.

WHEREAS, The reputation of the US as a reliable supplier to the world market has been seriously harmed by our use of political embargos.

WHEREAS, The blending of foreign matter into our grain by US exporters has also caused tremendous damage to our reputation.

WHEREAS, These two factors are the most serious impediments to US farm exports, not “high prices” as grain exporters try to tell us.

BE IT RESOLVED, There must be a total end of political embargos, and we must stop the intentional contamination of high quality grain and all agricultural and food products with foreign matter as first steps to re-establishing us as a reliable, quality supplier.

WHEREAS, Third World development assistance by multi-lateral agencies, such as the World Bank and the IMF, are often based on austerity measures, which reduce the potential market for US goods in affected countries, and on the replacement of farming to meet local food needs with cash crops for exports, often in direct competition with US farmers.

BE IT RESOLVED, The US should not participate in multi-lateral agencies who impose austerity measures which deliberately lower the standard of living or which encourage the displacement of food crops grown for local consumption with cash crops grown for export.

BE IT FURTHER RESOLVED, US resources should not be used to encourage increased export competition for the purpose of bailing out multi-lateral banks.

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