Editor’s Note: This piece is continued from the July/August PNL. Footnotes available at www.foodfirst.org or by calling SPC.
“Free” Trade: The nail in the coffin of food security
The spread of Free Trade Agreements (FTAs) and the rise of the World Trade Organization (WTO) ended any aspirations to food security the Global South might have had. The WTO was formed in 1995 for the global enforcement of market-led economic development. The WTO’s Agreement on Agriculture (AoA) restricts government power to establish agricultural policies. The WTO’s “disciplines” (areas of enforceable deregulation) include domestic supports, export subsidies, market access, tariffs, and quotas—all the mechanisms needed by nations to regulate their farming sector and ensure a stable food supply. The WTO has a number of obscure rules kept in colored “boxes” that allow the US and EU to exempt their subsidies from WTO disciplines. This dualist system privileges northern grain, seed and chemical companies seeking to dominate southern markets.
Similarly, Free Trade Agreements (FTAs) enforce “free” trade agreements within regional trading blocs. Since their inception, the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA) have led to the destruction of millions of rural livelihoods in Latin America, driving a million people a year to the US in search of work. For example:
the calculus of northern subsidies
• $1 billion/ day
• EU subsidy/cow ≈ $2 ≈ daily wage of world’s 3 billion poor
• 6x greater than OECD’s development assistance
• Removal could return more than 5X all development assistance to 3rd World
Agrofuels: A poor idea, badly implemented, at the worse possible time
The renewable fuel targets of the US Energy Acts of 2005 and 2007 mandated the consumption of 4 billion, 7.5 billion, and then 36 billion gallons a year of agrofuels.9 This obligatory market—sweetened with tariffs and subsidies that prop up half of ethanol’s wholesale market price—has led to an “agrofuels boom.” Between 2001 and 2007, the amount of corn used in US ethanol distilleries exploded from 18 million tons to 81 million tons. In 2007, the jump in ethanol production more than doubled the average annual growth in demand for the world’s grains that took place between 1990 and 2005.10 At this rate, half of the US corn harvest will be diverted to ethanol production by the end of 2008. As more corn is planted, it displaces wheat and soybeans, increasing their market price. Since US corn accounts for some 40% of global production, US agrofuel expansion impacts global markets for all food grains, and exacerbates food-price inflation worldwide.
The agrofuels boom collapses the food system with the energy economy. Ever since the “Green Revolution”, cheap oil has driven a fuel-intensive industrial food system. Rising petroleum costs make industrial farming more expensive, and raise the cost of transporting food the 1200-2000 miles it often travels through the global food system. At this writing, the price of oil is a record $120 a gallon. Freight costs are up 80% since 2006 and fertilizer prices spiked 150%.11 Now, thanks to agrofuels, food not only depends on oil, it competes with fuel.
In addition to food-fuel competition in the global north, the proliferation of agrofuel plantations throughout the Global South is further displacing small-scale farmers. Since small landholders make up one-half to two-thirds of the population in southern countries (and still produce almost half of the food), the agrofuels boom not only threatens this sector’s livelihood security, it reduces their contribution to national food security. The fuel produced will do nothing to alleviate the energy crunch in the Global South either, as agrofuels are primarily for export to northern countries.
Just how much agrofuels affect food prices depends on who is talking. President Bush says it’s responsible for about 15% of the rise in costs. The US Department of Agriculture claims 20%.12 The World Bank asserts that the 60% rise in corn prices from 2005-07, “is largely because of the US ethanol program, combined with market forces.”13 What is clear, is that both direct and indirect effects of agrofuels on the food system are global, profound—and highly destructive.
The Balance of the Agri-foods Industrial Complex
The expansion of industrial agri-foods crippled food production in the Global South and emptied the countryside of valuable human resources. Today three companies, Archer Daniels Midland, Cargill, and Bunge control the world’s grain trade. Chemical giant Monsanto controls three-fifths of seed production. Unsurprisingly, in the last quarter of 2007, even as the world food crisis was breaking, Archer Daniels Midland’s profits jumped 20%, Monsanto 45%, and Cargill 60%. Recent speculation with food commodities has created another dangerous “boom.” After buying up grains and grain futures, traders are hoarding, withholding stocks and further inflating prices.
|Food sovereignty: As demonstrated by this food activist outside a biotech conference, one of the keys to stabilizing our food system is reclaiming our local food sovereignty. Photo: unknown|
Food Sovereignty: Fixing the Food System to Solve the Food Crisis
World leaders are scrambling to address the political fallout from the waves of protest sweeping the planet. US president George Bush recently requested $770 million in food aid from Congress. But the corporate agenda behind the president’s call became apparent when he then called on other countries to ease trade barriers on agriculture and to lift bans on genetically modified foods.14
The official prescriptions from the US, the World Bank and the CGIAR for solving the world food crisis call for more of the same policies that caused the crisis in the first place: e.g., more free trade and more Green Revolutions (now read: gene revolutions). Expecting the institutions that built the current food system to solve the food crisis is like asking an arsonist to put out a forest fire.
To solve the food crisis we need to fix the food system. That entails re-regulating the market, reducing the oligopolistic power of the agri-foods corporations, and re-building agroecologically resilient peasant and smallholder agriculture. We need to make food affordable by making sustainable family farming viable. These tasks are not mutually exclusive—we don’t have to wait to fix the food system before making food affordable or farming viable. In fact, the three need to work in concert, complementing each other. Farm and food advocates are suggesting four essential steps:
Step 1: Reactivate the peasant sector in the Global South
Taking agriculture out of the WTO and re-negotiating Free Trade Agreements to favor the smallholder-peasant sector will be important parts of decreasing dependency on international markets. In the immediate term, the World Food Program (WFP) needs $755 million to close its funding gap and make emergency food available. The WFP should buy as much food locally as possible from smallholders at fair prices, then distribute or sell at accessible prices to people who are too poor to buy it on the open market. This avoids “dumping” cheap grains from abroad and reduces the costs of relief, allowing more people to eat. If accompanied with a strong rural support system of production credit, transport, marketing and distribution, this will rebuild local food systems as it extends relief. Because small landholders represent 80% of the world’s poor, this strategy will help most of the hungry feed themselves and produce a surplus for others.
Step 2: Moratorium on Agrofuels
United Nations Special Rapporteur on Hunger, Jean Zeigler has called for an immediate 5-year Moratorium on Agrofuels. In both the US and Europe, campaigns are underway to roll back the renewable fuels standards that force consumers to buy agrofuels at the pump. Joachim von Braun, director general of the International Food Policy Research Institute, the policy arm of CGIAR stated, “Our models analysis suggests that if a moratorium on biofuels would be issued in 2008, we could expect a price decline of maize by about 20% and for wheat by about 10% in 2009 and 2010.”16 Without mandatory targets, the agrofuels global house of cards falls flat. A 5-year Moratorium on the targets will halt the agrofuels expansion and give us time to research alternatives and for an informed public debate on the future of our food and fuel systems.
Step 3: Rebuild national food economies
Decades of letting the global market allocate food resources has crippled national food economies, pitted northern farmers against southern farmers in a race to the bottom, and unleashed a “speculative frenzy” in food commodities. According to Via Campesina,
“Countries need to set up intervention mechanisms aimed at stabilizing market prices. In order to achieve this, import controls with taxes and quotas are needed to avoid low-priced imports which undermine domestic production. National buffer stocks managed by the state have to be built up to stabilize domestic markets: in times of surplus, cereals can be taken from the market to build up the reserve stocks and in case of shortages, cereals can be released.”17
An essential step—at home and abroad—is to re-establish national grain reserves. The National Family Farm Coalition (NFFC) claims, “We are just one drought away from possibly seeing $10/bushel corn or $20/bushel wheat with absolutely no plan in place to deal with such a calamity.” A sign-on letter to Congress drafted by NFFC and signed by over 30 US farm and food organizations, states, “The United States needs to have a long-term vision for preserving our food security and food sovereignty – much more than simply answering agribusiness’s pleas for cheap commodities. A prudent reserves policy that stabilizes commodity prices would reduce controversial farm subsidy payments by ensuring prices do not collapse....”18
Step 4: Prioritize Agroecology
The International Assessment of Agricultural Science and Technology (IAASTD) recently released the results of an exhaustive four-year international consultation with over 400 scientists. The IAASTD calls for an overhaul of agriculture dominated by multinational companies and governed by unfair trade rules. The report warns against relying on genetically engineered “fixes” for food production and emphasizes the importance of locally-based, agroecological approaches to farming. The key advantages—aside from its positive environmental impact—is that while creating a market surplus, it provides both food and employment to the world’s poor.19 On a pound-per-acre basis, these small family farms have been more productive than large-scale industrial farms.20 And, they use less oil, especially if food is traded locally or sub-regionally. These alternatives, growing throughout the world, are like small islands of sustainability in increasingly perilous economic and environmental seas. As industrialized farming and free trade regimes fail us, these approaches will be the keys for building resilience back into a dysfunctional global food system.
Eric Holt-Giménez is the executive director of FoodFirst/Institute for Food and Development
Policy. Loren Peabody is an intern at Food First.