Blog for Rural America

A Call with the White House!

Dan Owens — Wed, 14 May 2008 13:16:04 -0700

I do believe I've hit the pinnacle of my profession. Yesterday I got an email inviting me to participate in a "White House Farm Bill Bloggers Conference Call". Evidently, they haven't read the many blog posts we've posted in direct conflict with stated White House positions, and seem to think that we'll just be on board with whatever they say since we support the upcoming White House veto. Even though I suspect participation could put me under surveillance for decades, when El Presidente needs me, I'm there.

I'm on the call right now, and some dude from the White House just got done with an overview of the process so far. Pretty dull and predictable. Now Chuck Conner, deputy USDA secretary (and former Acting Secretary) is talking specifics, and I, as always, am ready to cast a skeptical eye. Mucho paraphrasing to follow. Highlights:

Chuck Conner mentions the increased loan rates, but does not mention that payments tied to those rates are not being made to high prices. he also doesn't mention their primary objection there is WTO-related.
Chuck mentions record farm income nationally and how that means subsidy spending should be cut, but fails to mention that USDA's own proposal asked for a dramatic increase in direct payments, which are paid no matter what and are about $5 billion per year right now- most of all farm subsidies paid right now. However, direct payments are nominally considered "WTO-friendly", so the Bushies would like to increase the payments.
Now he's going on and on about a $200,000 income limit, which we have noted is weak and ineffective. Of course, the higher limits proposed in the conference report by Congress are even worse.
Chuck says Congress "totally dropped the ball" on the AGI limit issue. Hard to disagree with that, but that's not the only ball they dropped, for sure.
Chuck bashes the sugar to ethanol program, which is not something we work on a lot, but it does seem to be quite a boondoggle for a fairly small number of people.
Chuck mentions some salmon part of the farm bill (I'm not familiar with it) that include payments to "pay fisherman not to fish". Well, that sounds a lot like direct payments, which are paid to farmers whether they actually plant a crop or not. Again, those would be the payments that the administration wanted to increase. I'll try to ask a question about that.
The White House guy mentions an expansion of the Davis-Bacon Act as something they really object to. Gee, it would just be terrible if people would have to be paid a living wage while constructing an ethanol plant built with federal subsidies.

My first question: Is there anything in the nutrition, conservation or rural development titles that you would consider grounds for a veto by themselves? Or are the administration's veto principles contained with the commodity title?

A very paraphrased answer: On nutrition, they actually took some of the administration's proposals, so we don't have any problem with that title.

On conservation, they made some improvements and tried to write a good conservation title, we do have some objections and it is not the title we would write, but that's certainly not where our veto objections are.

On rural development, there is very little rural development money in this bill, and we had supported a vastly higher amount of funding for rural development in our administration's proposal for sewer projects, etc. But Congress could find only a tiny amount of money for rural development because they couldn't even take money from the richest Americans.

Tom Philpott of Grist just asked a couple of good questions on ethanol and trade- unfortunately, he got stock political non-answers that totally indicate how little concern they really have for policy that supports family farms and people around the world (think typical free-trader crap language). I'll let him write it up on Grist if he wants.

Parke Wilde- Following up a little bit on what Dan asked, How can supporters in gains for rural development, conservation, and nutrition be assured giving at least tacit support to a veto will not undermine the gains they received in the farm bill already?

Super paraphrased answer- simply look at out policy book. We did more for nutrition, more for conservation, and certainly more for rural development than Congress has done. White House dude- I may concede that the farm bill in Congress is better in certain ways than the 2002 bill, but I would argue that the President's proposal (from last spring) is much better on those three topic than what is before Congress today.

That's some damn political junk, but still reinforces the message that the administration basically accepts the conservation, nutrition and rural development title as written by Congress.

This is the question I didn't have the chance to ask: You mentioned record farm income and how that is an argument for lowering subsidies, but the administration's own proposal recommends dramatically increasing direct payments- the only payments being made right now, in a time of record high prices. Additionally, you mention a salmon provision that will "pay fisherman not to fish". Isn't that basically the same as direct payments?

Overall, it was a predictable conversation, and I'm not sure if it's worth the increased surveillance activity of my person sure to result. And I don't want to hear any more about how a sustained veto would just be so awful for the priorities of the sustainable ag and nutrition community. If a veto is sustained and farm bill negotiations start back up again, the gains in the nutrition, rural development, and conservation titles of the farm bill in Congress will not be under threat from the White House (If they do come under attack, you can definitely blame our so-called Congressional allies, who are desperate to override a veto right now).

The subsidy reforms we would like are not in accordance with what the White House is pushing, either. Which stinks, because we won't have their support, but no matter. We will fight for what we believe is right no matter the views of the President or Congress.

Mom, Apple Pie, and a Farm Bill Veto

Dan Owens — Sat, 10 May 2008 20:02:12 -0700

Ah, 1956. Just mention any year in the 50s and it conjures up days of prosperity and civility in political discourse. In 1956 America was booming (thank you unions!), the GI Bill was fueling a wave of prosperity, and the words "under God" were added to the Pledge of Allegiance. Jack Kennedy was still somewhere in Congress, and you could turn on your brand-spanking-new color TV to watch good, wholesome programs on weekdays and hit the drive-in on weekends. Don Larsen pitched the only perfect game in World Series history, and Elvis Presley was on Ed Sullivan for the first time.

However, there were signs of discord. Marilyn Monroe married playwright Arthur Miller (!), Jackson Pollock didn't make it past August, and that pesky Egyptian Nasser spent most of the year messing with the Suez Canal.

And then, in a shocking display of moral fortitude, President Dwight Eisenhower vetoed a farm bill. Now we have to remember, at that time there were about 23 million people living on farms in the US (around 2 million now), and not only that, it was a presidential election year. Senate Majority Leader Lyndon Johnson rubbed his hands with glee (lot of glee back then, you know), thinking of the possibilities. He was going to make the General pay a heavy political price for vetoing one of the most popular pieces of legislation ever. Time Magazine, 1956:

Right after President Eisenhower's veto of the farm bill, Senate Majority Leader Lyndon Johnson set the style for Democratic reaction. "The veto of the farm bill," keynoted Johnson, "can be described only as a crushing blow to the hopes and the legitimate desires of American agriculture." Then, as other Democrats arose in the Senate to lambaste the President, Johnson sprawled out in his chair, grinned broadly and winked at his party colleagues. Feeling that they had at last been handed a deadly issue against Dwight Eisenhower, other Democrats grinned along with Lyndon Johnson in the early days of last week.

But somehow, things didn't work out the way Johnson wanted:

In the hours before the vote on overriding, a secondary political reaction began to set in. Congressmen with an ear cocked to the country began to hear editorial approval of the President's veto in such Midwestern cities as Milwaukee, Kansas City, Omaha and Chicago, and from such Southern centers as Dallas, Miami, Richmond and Memphis. Even the Des Moines Register, a supporter of the farm bill, was philosophical. Republican leaders meeting in Washington (see below) began to perk up after initial despondency. The President, they figured, had pulled the rug from under the Democrats by his principle-over-politics decision, as well as by his offer of administrative relief to farmers and his request for immediate soil-bank payments. By midweek, House Republicans who had backslid on the farm-bill vote (TIME, April 23) began to rally.

The veto stood- and the Democrats, who needed 2/3 of House votes to override, couldn't even muster the simple majority it took to pass the bill in the first place (211-202).

You know, it occurs to me that the Mulch Blog has been compiling quite the list of pro-reform editorials, from many of those same cities. Some things never change. 1956 was the last time any president vetoed a farm bill, and Eisenhower came out looking good. He won re-election handily. And more than 50 years later, Eisenhower is still viewed as someone who put principle over politics.

Despite our collective fond remembrances of the 50s, political discourse was probably just about as nasty back then as it is now (think McCarthy). One thing has changed, though. They had some serious orators in Congress back then. I know I'm posting practically the entire article here, but it's just so good:

Promising that he would call Agriculture Secretary Ezra Benson on his Senate Agriculture Committee carpet within 48 hours, Louisiana's Allen Ellender nonetheless took direct aim at Eisenhower. "The choice was the President's," cried Ellender. "He has chosen to let our farm population dangle at the end of Secretary Benson's flexible noose." Oklahoma's Senator Robert Kerr supplied the oratorical topper: "From his ivory tower at the Augusta country club, where he has been completely insulated from the voice of the people, the President has again acted on the advice of little men who made his decision for him . . . The nails that have been driven into the farmer's hands, the cross upon which he is being crucified, may have been furnished by Benson, but the hammer that drove those nails into the farmer's hands was wielded by the hand of Eisenhower. The hand that placed the crown of thorns upon the farmer's head was the hand of Eisenhower."

Damn. I wish I could have live-blogged some Senate debates back then. I listened to the Senate press conference for about 30 seconds last Thursday and had to get another cup of coffee to stay awake. Politics beat out principle in that press conference. Let's hope Congress has enough principle as a whole to sustain a veto.

UPDATE/CORRECTION: Bill Harshaw notes in the comments that more veto activity took place after 1956, just not on stand-alone farm bills Chris Clayton makes the same point at DTN.

More 1956 factoids.

Happy Mother's Day to all, but especially to moms who work in libraries and have recently visited Istanbul (That's in Turkey, or so I'm told).

My Town

Brian Depew — Fri, 09 May 2008 22:29:31 -0700

This week was a long one at work, but walking home after dark tonight I remembered why I (and the great people that I work with here at the Center) do it. It was a peaceful walk on a calm spring night. As I walked first down our sleepy rural Main Street, past our small public library and onto a dark residential street, I thought about the farm bill. Farm and rural policy could do something for my town. I really believe that, but for too long conscious policy decisions made in Washington have hurt my community rather than help it.

So we fought to make this farm bill better. We fought to limit commodity subsides to the biggest farms who do little good and much harm in the Heartland. We fought for real and meaningful investment in rural development, money to help foster small businesses in rural communities. We fought to limit corporate control over our family livestock farmers and ranchers. And, well, folks, we came up short. And that can be frustrating and mentally draining.

But my town is worth it, and rural America is worth it. And that is why the effort to bring fundamental reform to the farm bill is not wasted effort.

The message from many on this farm bill is that the wins (and there are wins) were not as great as we would have liked, but we should support the bill anyway because it is better than an extension of the current bill. Wait till next time, the argument goes, next time we will be able to build on these wins and maybe achieve some more meaningful reform. I'm not all that old, but I am old enough to know that wait almost always means never.

I reflected on all of this as I walked home. Past houses with lights on, and houses without lights on, and past houses where no one lives anymore. There are too many of those last kind on the walk between my house and our office. And that is precisely why my town can't wait. Can't wait five more years that turns into 10 more years. Because in 10 years there will be fewer farmers in my county, fewer jobs in my town and more empty houses.

We can do better for farmers and rural people, and I rest well tonight knowing we are standing up for a right and just cause. We -- and many readers of this blog should count themselves as part of that we -- stood up for what was right. And we gave them a hell of a fight. In the end that is the only way we will win.

Six short blocks later, and a third of the way across town, I was home.

May Newsletter from the Center

Brian Depew — Fri, 09 May 2008 13:32:08 -0700

The Center's May Newsletter is online.

In this month's newsletter you can read about our kick off to raised $35,000 from individuals in, this, our 35th year (or just skip reading about it and go straight away to this page and give a donation to help make it happen).

We have three articles this month as part of our ever-popular reporting on corporate farming and the ongoing fight to constrain corporate influence on our agriculture. The regular Corporate Farming Notes touch on the looming mega-merger in meat packing (sign our petition to the Justice Department about that here). There is also an article about our recently concluded (and unsuccessful) efforts to pass a legislative replacement for the landmark Nebraska corporate farming ban, Initiative 300. Finally, our 35th Year series continues this month with a reflection on decades long battle over corporate farming laws in Nebraska. Here is an excerpt from that history piece:

Election Day 1982
On Election Day, we lost Omaha by a modest margin but made up the difference in Lincoln and won by 2:1 in rural Nebraska. It was a stunning victory of people over corporate power. In some ways, Election Day 1982 is when the battle over corporate farming began. Hell hath no fury like the rich and powerful when they can’t have what they want. The Omaha National Bank filed a lawsuit almost immediately. It failed.

There were six more suits over the years in state and federal court. And nearly every year there was at least talk of legislative attempts or ballot efforts to repeal the ban.

Read the whole thing here. That and more is in the newsletter.

You can sign up to receive a free paper or email version of the newsletter by joining our Rural Action Network by signing this petition. You can also recieve an RSS feed of the newsletter at this page.

When Dan Speaks the President Listens

Brian Depew — Thu, 08 May 2008 15:15:11 -0700

From a statement issued by Secretary of Agriculture Ed Schafer this afternoon:

"Today, the United States House and Senate announced the completion of a farm bill that unfortunately fails to include much needed reform and increases spending by nearly $20 billion. At a time of record farm income, Congress decided to further increase farm subsidy rates, qualify more people for taxpayer support, and move programs toward more government control.

And this.

Americans appreciate our farmers and ranchers and understand the uncertainties and risks that farming presents. However, they do not understand why their taxes should be used to provide payments to individuals with adjusted gross incomes of $500,000 and higher, some of the wealthiest people in America.

We are also concerned about a lengthy list of extraneous provisions that are not related to farm programs and have no place in this legislation.

For a year and a half, the Administration has been consistently clear that Congress needs to move forward with a good farm bill that the President can sign. They have failed to do so. This legislation lacks meaningful farm program reform and expands the size and scope of government. I have visited face to face with our President and he was direct and plain. The President will veto this bill."

We agree, Mr. President, this Farm Bill needs a veto.

Well Lookie Here

Dan Owens — Thu, 08 May 2008 09:12:13 -0700

Direct payments, as I'm sure many of you know, are the $5.2 billion dollars that is being paid out every single year, no matter the price of farm commodities, no matter whether the farmer even grows anything at all. As many have noted, they're kind of hard to justify when corn is $6/bushel and rice is $20/hundredweight- the highest prices in decades. But organizations such as the American Farm Bureau and pretty much all commodity groups have strenuously opposed taking even a single penny from direct payments to pay for other programs, like maybe a a conservation or rural development program.

Farm Bill negotiators in Congress appear poised to cut those payments by a pitiful 2% in 3 years of a 5 year farm bill. That would be in the neighborhood of $300-400 million I believe, out of $25 billion or so. Not all that impressive. But let's ask farmers- do they really want these payments at all?

DTN Ag is a farm news service, one I guarantee is rarely read by anyone outside the conventional farm community. One of their agriculture reporters, Chris Clayton, put up an online poll that asks:

As the farm bill wraps up, direct payments remain a staple payment for producers, accounting for $5.2 billion in spending, while fights continue in Congress over finding more funding for programs such as domestic and international food aid. How much should producers be willing to give up in direct payments in these times of high prices?

He gives options- no cut in payments at all, cut certain percentages, or "producers do not need to collect direct payments". 414 votes have been cast so far. And guess what?

As of 10:58am today, 188 votes have been cast for "producers do not need to collect direct payments", 54 for at least some cut, while 172 have been cast for no cut in payments at all. Well, well. It sounds to me like the near-unaminous front put on by supposed "farm" organizations in Washington to preserve every dollar of direct payments isn't exactly reflecting the preference of actual farmers. It makes you wonder why they're fighting so hard to preserve $25 billion in payments that more than half of farmers don't think should exist at all.

Update: As of 3:45pm, we're at 226 that say get rid of direct payments and 195 who think they shouldn't be cut at all. 63 somewhere in the middle. And by the way, I should have given a hat tip to John Phipps earlier, who led me to the poll.

This Farm Bill Needs a Veto.

Dan Owens — Mon, 05 May 2008 21:31:15 -0700

We appear to be right up on it- a farm bill will probably pass Congress before May 16th. It appears the deals are (almost) done. All that remains are few contentious issues, and we're not all that concerned with how those turn out because all of the options on the table, frankly, stink like a hog lagoon in mid-August.

So while we haven't seen the final language of the entire farm bill, we have a pretty good idea of where everything stands. There are wins, and there are losses, but perhaps more important is to remember where we are and where we came from.

Two years ago, when I started working at the Center for Rural Affairs, there was an uncertain aura around the Farm Bill. Nobody really knew what all could be accomplished, but we definitely knew that there was going to be intense public interest in the bill, more than ever before. The Michael Pollan effect was multiplying rapidly. There was a general consensus that good things could be done, but questions about how much we could actually succeed at.

And then there was a real earthquake- the 2006 elections. Democrats took the House and the Senate, and it seemed that a new day had dawned. Hopes soared. We sat around and looked at each other- two Midwestern Democrats, chairing the Ag Committees? Those payment limits-hating Southerners are in the minority? Are you kidding me? We're going to kick some ass, take some names and generally turn the farm policy world upside down.

This was the chance, this was it- the stars had aligned for real reform. And I don't mean pie-in-the-sky impossible reform, I mean things like Dorgan-Grassley payment limits, which almost succeeded in 2002. Maybe a ban on meatpacker ownership of livestock, which was the law of the land for 50-odd years. I mean the big fights where there is real opposition- where corporate agribusiness (who don't care much about conservation programs one way or the other) would fight all-out to kick your ass, but this time you were going to win.

But, as we all know, that did not happen. Y'all know how it went. A Kent Conrad-Saxby Chambliss alliance came along and essentially smacked down hopes for real structural reform in the Senate. Good old boy Collin Peterson turned out the not as good as we had hoped (though others had warned us about this), and he managed to get a certain Nancy P. on his side. Those writing the farm bill had a remarkable ability to ignore what was happening outside of DC while they were writing the bill. Commodity prices go through the roof, ethanol is the hot ticket, seventeen bazillion groups are calling for real subsidy reform, not nearly enough money is around for things like conservation and rural development. What's the response of those writing the farm bill? "We need to protect our commodity program baseline".

If you don't know what baseline is, good for you. Because at the end of the day, all of the terminology, the insider parlance of these unfortunate times, all of the "you need to understand how it works in Washington" rhetoric is merely a tool to disenfranchise YOU. It is how your opinion and your voice is summarily dismissed by the DC grand poo-bahs.

But we did win some things, and you should be proud; I am proud to have been a part of this campaign with you, and I look forward to the next one. I particularly look at funding for beginning farmers, money for a rural microenterprise program, money for the newly renamed, ever changing Conservation Stewardship Program. We're grateful for those investments, and they will do real good if this farm bill becomes law.

But- but- it isn't enough. This bill, as currently written, is not worthy of passing Congress. There are wins, but the magnitude of those wins is not anywhere close to the magnitude of the opportunity squandered by those who claim to represent family farms, sustainable agriculture and rural America. When this bill hits the President's desk, he should veto it. And then Congress should sustain that veto, pass a one year extension, and start over again. Because this farm bill ain't worth it.

We will have the opportunity to fight again, and despite my occasional reputation as an irredeemable cynic, I have real hope that we can do better, that we can win more, that we can get a farm bill that is better than the one about to pass Congress. And we can try again in 2009. But if the bill becomes law, we will have to wait until 2013. I'm not willing to wait that long, and many of our small towns can't wait that long. So get out the veto pen, Mr. President, and do the right thing. Kill this farm bill.

Nice Marmot.

Dan Owens — Thu, 01 May 2008 09:24:55 -0700

If the Mulch Blog gets to make movie references, so do I.

We're back on the farm bill wagon, and I have to say it is inspired by the Mulch Blog, which has a great post on the latest so-called payment limits shenanigans being considered by Congress. Referencing the pitiful agreement between Congressional farm bill negotiators, it includes the following memorable lines:

Make that a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham...
It's a farce of a masquerade of a burlesque of a whoopee cushion.

I'm swooning over here. Continuing on a more serious note:

As we've said before, there is plenty of money in this bill to increase food stamps, conservation, and other priorities. Democrats just have to demonstrate the political backbone to face down the subsidy lobby.

If Democratic leaders can't do that now, when subsidized farmers are making record profits from the market, they'll never do it.

Damn straight. And it is pretty clear that they don't have the political backbone to face down the subsidy lobby- for many, it isn't even clear they have any interest in doing so at all. And this is really classic Washington politics- nobody ever wants to have to decide which programs are worth funding. They'll go through months of political budget gymnastics to find "offsets", all in an effort to avoid having to make tough choices. The money is there- it just needs to go to the programs that deserve it.

Also today, the Politico notes the political irony surrounding Bush's insistence on a lower adjusted gross income limit on farm programs:

Trying to close the books on a new farm bill, Congress and the White House are bumping up against the uncomfortable fact that President Bush twice last year vetoed health care bills for working families who earn far less than most farmers getting subsidies. Income eligibility was a central issue in those veto fights as Bush opposed a bipartisan effort to expand the State Children’s Health Insurance Program up the poverty ladder.
The irony weighs most heavily on Republicans who backed Bush on his vetoes but are now under pressure from commodity interests, especially in the South, to resist income caps on farmers.
In the Georgia Republican delegation, for example, Rep. Nathan Deal was one of those who pressed hardest for strict income caps on SCHIP; his colleague, Sen. Saxby Chambliss, the ranking Republican among Senate farm bill negotiators, has only reluctantly agreed to the farm income caps proposed Wednesday.

Ah, the hypocrisy. Is anyone really surprised by this? We've pointed out time and again that income caps are ineffective by themselves, but no mind. Last fall, with the support of many of the same congressmen now opposing him on farm bill income limits, Bush vetoed an SCHIP bill that would have put a 300 percent of poverty rate income cap on SCHIP. Once you hear the numbers involved, you'll either laugh out loud or start crying.:

A 300 percent cap would translate into about $51,510 for a family of three — a single mother and two children, for example. In comparison, the $950,000 threshold lawmakers envision for the farm bill would be the equivalent of about 5,500 percent of poverty.

And as the Mulch Blog explains, even that $950K number isn't firm. What a farce. I don't know what else to say. If this is the best the Ag Committee and Congressional leadership can do, they should be ashamed.

The Mulch Blog Steps Up

Dan Owens — Tue, 29 Apr 2008 20:37:50 -0700

For those of you crazy enough to still be following the farm bill, going over to the Mulch Blog is worth your while. Over there, Ken Cook (of Environmental Working Group fame) is following the action, particularly in regards to payment limits (also AGI limits, if you know what I'm saying). We've lost our farm bill blogging mojo for now, but I can guarantee we'll be back at some point to take some shots at the final product. We'll call it like we see it regarding the issues we feel qualified to pass judgement on, and none of this "well it's not perfect but it really is pretty good, considering" stuff we're already starting to see from certain corners. A Mr. John Crabtree of the Center for Rural Affairs home office likes to refer to that as "typical progressive nonprofit happy horses--t when they get their butts kicked". Actually, come to think of it, Mr. Crabtree has various colorful appellations for all of the stages of the political and policy-making process, none of which are suitable for the better sort, which we most certainly are not.

Anyway, go on over and read up.

I'm not jealous. Oh, and something about food.

Dan Owens — Tue, 29 Apr 2008 14:57:50 -0700

Since the Ethicurean is name-dropping, let me just say that I am in no way jealous that a bunch of cool people are hanging out at some fancy-pants conference in Phoenix (well, Chandler, pop. 240,000 or so). Not. At. All. No sir, not me. I would never get upset that I wasn't even invited, because I didn't want to go anyway. I wouldn't mind hanging out with Jim Kleinschmit and Steph Larsen and a few others (but not that Brian DePew, a social-climber if there ever was one), but I'll take care of that another time.

Now that's settled, I'll move on to the slew of articles dealing with food prices over the weekend. I have no doubt my previous blog post inspired them all (probably they were afraid of getting scooped).

In the New York Times, Tyler Cowen argues for more free trade:

The damage that trade restrictions cause is probably most evident in the case of rice. Although rice is the major foodstuff for about half of the world, it is highly protected and regulated. Only about 5 to 7 percent of the world’s rice production is traded across borders; that’s unusually low for an agricultural commodity.

So when the price goes up — indeed, many varieties of rice have roughly doubled in price since 2007 — this highly segmented market means that the trade in rice doesn’t flow to the places of highest demand.

Well, let me just say that the place of highest demand for a commodity is not necessarily the place with the most need. Cowen later goes on to note:

The reality is that many of today’s commodity shortages, including that for oil, occur because ever more production and trade take place in relatively inefficient and inflexible countries. We’re accustomed to the response times of Silicon Valley, but when it comes to commodities production, many of the relevant institutions abroad have only one foot in the modern age. In other words, the world’s commodities table is very far from flat.

I'm not sure how agriculture will ever approach the "response times of Silicon Valley", which is about what it would take to make free trade and agriculture work together, but more on that later.

The Washington Post is running a very good series on food prices, but the trade confusion prevails. Consider this from Sunday's article:

The root cause of price surges varies from crop to crop. But the crisis is being driven in part by an unprecedented linkage of the food chain.

A big reason for higher wheat prices, for instance, is the multiyear drought in Australia, something that scientists say may become persistent because of global warming. But wheat prices are also rising because U.S. farmers have been planting less of it, or moving wheat to less fertile ground. That is partly because they are planting more corn to capitalize on the biofuel frenzy...

In fact, many economists now say food prices should have climbed much higher much earlier.... If market forces had played a larger role in food trade, some now argue, the world would have had more time to adjust to more gradually rising prices.

"The international food trade didn't undergo the same kind of liberalization as other trade," said Richard Feltes, senior vice president of MF Global, a futures brokerage. "We can see now that the world has largely failed in its attempt to create an integrated food market."

In recent years, there has been a great push to liberalize food markets worldwide -- part of what is known as the "Doha round" of world trade talks -- but resistance has come from both the developed and developing worlds. Perhaps more than any other sector, nations have a visceral desire to protect their farmers, and thusly, their food supply.

Well, that really doesn't sound all that bad to me. Protecting the food supply sounds like a social good to me; in fact, it sounds like exactly the sort of thing governments should do to correct for a classic "market failure". The Post article notes that "global grain reserves plunged after the Cold War"; well I can tell you that establishing a grain reserve- which we're all for- is exactly the sort of anti-free trade measure economists loath.

And just the day before, the New York Times noted:

Food has moved around the world since Europeans brought tea from China, but never at the speed or in the amounts it has over the last few years. Consumers in not only the richest nations but, increasingly, the developing world expect food whenever they crave it, with no concession to season or geography.
But the movable feast comes at a cost: pollution — especially carbon dioxide, the main global warming gas — from transporting the food.

How about that- a classic externality. Suddenly the free market idea of shipping food from one place to another doesn't look quite as good. Or at least you need to start considering this sort of thing, which is discussed later in the article.

Monday, the Post continues its series and lays the blame for the food crisis squarely on the lack of free trade in agriculture:

But it turned out that globalization did not really work for food. Countries, especially rich ones, felt compelled to continue protecting their farmers and their domestic food supply even as they pushed for trade liberalization for manufactured goods. It distorted the market, which didn't adjust as global demand surged and production flagged.

Wait a minute. I have very distinct memories of the US being accused of overproducing, distorting the market, and screwing farmers in the global South.

Later in the article:

The global competition for food is hitting Mauritania in other ways as well. That can be plainly seen on the Atlantic shores of Nouakchott, where another increasingly scarce food commodity is hauled onto sandy beaches daily in traditional wooden boats: fish... "We see our best-quality fish leaving the country right in front of our eyes every day," said Mame Kato Diop, 36, wrapped in flowing indigo and yellow robes as she and other fishmongers waited for the exporters to finish their deals. They would later buy what was left for resale in town. "They leave us with sardines as they eat juicy fish. We stand no chance against the hunger of richer countries."

So here it appears trade is a bad thing, whereas in grain markets it is good. I'm confused.

But wait! Throughout these articles a few lines jump out and tell the real story:

Cowen in the Times:

Many poor countries, including some in Africa, could be growing much more rice than they do now. The major culprits include corruption in the rice supply chain, poorly conceived irrigation systems, terrible or even nonexistent roads, insecure property rights, ill-considered land reforms, and price controls on rice.

The Post on Sunday:

Investors fleeing Wall Street's mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up even more..

The Post on Monday:

Mauritania, with only 0.2 percent of its land arable, produces scant amounts... That is partly because there are fewer and fewer farmers. In a nation girdled by the encroaching Sahara, the slums of Nouakchott, the capital, are swelled with former tillers of soil who abandoned hard lives growing subsistence crops amid years of drought. City life was comparatively better, but in recent months as food prices have risen, those already living on the smallest of margins have despaired.

So it appears to me that are some more pressing problems to international food security than free trade, and that in certain instances free trade actually made problems worse. We've driven farmers off the land worldwide, and the hundreds of billions of dollars being dumped into commodity markets by investors may actually be increasing food insecurity. Certainly that money is increasing market volatility, which is bad in and of itself.

And how, exactly do all these people expect agriculture to constantly adjust its production to world market demands? If we drive a bunch of farmers off the land in Mexico to the US for a job, it's not like they can run back to their land and start growing corn when the price triples. And even if they could, all of these other problems- infrastructure, credit, political unrest, etc- would probably discourage them from doing so. And if they did, well, then production would go up, prices would crash, and we'd be right back where we were three years ago. Which, by the way, just happens to be the defining economic cycle of agriculture, and that's why we need some decent damn public policy to remedy the ill effects caused by that cycle.

Because, as agriculture economist Darryll Ray writes :

“The dissipation of international food stocks, particularly for grain, is the primary cause of the sudden and sharp increases in the prices of cereals and milk.”

By failing to take the importance of food seriously, policies have been put into place that leave the provision of grain reserves to farmers, speculators, and other commercial enterprises.

The problem with that logic is that private enterprise has no incentive to hold stocks of grains and oilseeds in anticipation of a major supply or demand disruption; these disruptions are too unpredictable. In addition, futures markets provide the kind of price protection and profit potential that commercial enterprises need without all of the hassle associated with holding physical quantities of grains and oilseeds over long periods of time.

Huh. How about that. I leave it up to John Nichols at the Philadelphia Inquirer to sum it all up. He writes it better than I could, so go read the entire article.

The current global food system, designed by U.S.-based agribusiness conglomerates like Cargill, Monsanto and ADM and forced into place by the U.S. government and its allies at the World Bank, the International Monetary Fund, and the World Trade Organization, has planted the seeds of disaster by pressuring farmers here and abroad to produce cash crops for export and alternative fuels rather than grow healthy food for local consumption and regional stability...

Congress should also embrace trade and development policies that help developing countries regulate markets with an eye to feeding the hungry rather than feeding corporate profits. This principle, known as "food sovereignty," sees struggling farmers and hungry people and says, as the Oakland Institute's Anuradha Mittal observes, that it is time to "stop worshiping the golden calf of the so-called free market and embrace, instead, the principle [that] every country and every people have a right to food that is affordable." As Mittal says, "When the market deprives them of this, it is the market that has to give."

The Market Strikes Back

Dan Owens — Fri, 25 Apr 2008 13:27:21 -0700

I've decided the farm bill process has truly jumped down the proverbial rabbit hole, so we're moving on to other topics for now. And so I'll weigh in on the food vs. fuel debate, dangerous as that may be, because it is one of the most important debates occuring today. And it is a debate that desperately needs to be broadened to include the entire way in which we structure our agricultural support, production and distribution systems. Any and all comments are welcome- these musing are just my thoughts to date, and could change at any moment. Right off the bat I'll say recent increases in the price of food justify emergency spending on domestic and international food aid. I'll also point out that our most recent newsletter has an essay on the specific direction biofuels production should take.

For the US, everything I have seen indicates that while biofuels mandates are increasing the price of commodities domestically, the RFS only accounts for 10-25% of that increase (depending on which study you look at). Increased energy prices account for the vast majority of commodity price increases. And as we all know, the price of commodities is not a big influence on the price of food, and we don’t spend that much of our income on food anyway (around 10%).

The weak link between commodity prices and food prices is particularly true with regards to highly processed food, which the US consumes a great deal of. To make cause and effect trends even harder to discern, approximately $300 billion has been pumped into commodity markets in the past year or so by speculators (hedge funds, etc.) looking to park their cash somewhere safe since the subprime mortgage fiasco. This is causing some serious problems in the futures markets and certainly driving up commodity prices to an unknown extent.

Increased commodity prices are more directly correlated with food price increases when looking at less processed foods. That’s why we’re seeing substantial increases in the price of dairy products, eggs, etc. And we will see much higher prices on meat once excess capacity is eliminated (though that could take some time). The impact on low-income Americans of these price increases is hard to gauge, particularly because they tend to eat more highly processed foods. However, for USDA programs that require purchases of those types of foods (food stamps, school lunches), the impact could be quite severe.

Overseas, low-income diets often consist of a very high percentage of basic grains, etc. That means the impact of high commodity prices is much more severe.

However, the staple receiving the most media coverage (think food riots) is rice- and very little of that is traded on the world market (only about 8% of global production). Rice prices are much more local/regional. A severe drought in Australia combined with a shift towards grape production has had a big impact on Asian rice prices.

Also, when it comes to biofuels, it is important to remember that the US imports little in the way of ethanol due to the 54 cents/gallon ethanol tariff (though $100/barrel oil may overcome that). So it is hard to argue that the US is driving the negative environmental impacts of biofuels globally. The EU imports a large percentage of its biofuels and is currently wrestling with various standards to ensure that their biofuels consumption does not have negative environmental/social/economic affects, but that’s a tall order.

The bottom line on biofuels mandates and incentives is hard to discern. It is entirely possible that most of the biofuels used today will eventually be regarded as little better and perhaps worse than gasoline. However, advanced biofuels hold enormous promise. Right now, it would be politically difficult (if not impossible) to remove incentives for corn-based ethanol and keep incentives for cellulosic/advanced biofuels. And even if that could be done, it is possible, maybe even likely, that the result would be another farm crisis in the Midwest and finish off family farming once and for all. That puts farm and rural organizations such as ours in a difficult position. The ultimate solution is strong public policy that supports biofuels that are environmentally, economically, and socially sustainable- and public policy that supports family farms, ranches, and rural communities as a whole. But it will be a tough fight to get there.

My view is that biofuels mandates have taken up the slack in commodity markets. Probably more important than the actual cost of corn is the fact is the acreage competition that high priced corn inspires. I think that is what was really behind the run-up in wheat prices a few months ago, and certainly is still influencing prices for all commodities. And quite simply, there is money to be made in commodity markets now (Conagra just sold their grain trading operation to a hedge fund for $2 billion), and when there’s money to be made the little guy is going to have problems- be it farmers in the Midwest or the urban poor in Kenya.

The world has gone a long time enjoying grain market surpluses, and now they don’t exist, primarily due to biofuels and drought. It’s a new reality that has to be dealt with, and biofuels are being cast as the bad guy. But I think doing away with biofuels would ultimately do little to ameliorate the situation. Moreover, we’re seeing more and more calls for the next “green revolution”.

What, so we can drive the price of corn back down to $2 and rice to $7 /hundredweight? These days, few countries can produce enough food to supply their populations, and that means food production and distribution is now controlled by markets and the WTO. Ultimately, the advocates of globalized food production have succeeded in achieving many of their goals and now we’re paying the price. Biofuels may have illuminated the problems, but they certainly didn’t cause them.

I'll leave with these closing thoughts/questions: We all want farmers everywhere to make money and everyone to be food secure. But in the short term- right now- is it better for commodity prices to crash so food is more affordable to the global poor? Should we risk another farm crisis in the Midwest on the chance we help starving people in the developing world? Is it even possible to address these problems by only talking about biofuels? I think not. I'd like to hear what you have to say.

Let's Be Clear About This

Dan Owens — Wed, 16 Apr 2008 08:21:35 -0700

UPDATE: The Des Moines Register has a great article today on the lack of rural development funding in the farm bill- click here to read.

Jason Gray, whose work we like very much, has a good piece over at the Daily Yonder regarding the fate of rural development programs in the farm bill:

Rural development interests are pinned between these large, popular beasts and the unwillingness of Congress to seriously engage in a reform of the commodity subsidy scheme. And reducing subsidies for commodities is the only real source of funding in an otherwise bleak fiscal landscape.

I suspect that the rural development mouse will never become an elephant in its own right until Congress understands that effective rural development programs benefits both rural communities and the nation’s fiscal bottom line. We’re caught in a cycle: We can’t reduce funding for the programs that treat the symptoms of poverty, such as hunger — which means the country doesn’t have the money to fund development that might alleviate the causes of poverty.

It's quite good and you can read the whole thing here. However, I do have something to point out. The piece includes a few things along these lines:

Despite serious effort on the part of many, there is no increase in rural development funding in the current versions of the farm bill.

For those of you insane enough to still be following the farm bill, you might have seen this before. What little media coverage of the rural development title exists has repeatedly said "rural development will see no increase in funding" or there are tables showing the net increases or decreases in funding for various farm bill titles, and rural development has a big "0" next to it. Which might lead a reasonable person to conclude that rural development isn't getting an increase, but hey, it might be getting something.

It isn't. Rural development will get ZERO dollars under this farm bill plan. It drives me a little crazy to hear everyone talk about the "lack of an increase". That just means rural development gets nothing at all, because it started out with nothing under the budget formulas used by Congress. A $0 increase on $0 equals... $0!

Just so we're clear.

Politics is Not Policy

Dan Owens — Mon, 14 Apr 2008 09:35:10 -0700

Chris Clayton has an entertaining blog post up regarding the inevitable "anonymous" sources looking to talk trash about the ongoing farm bill discussions:

political people are now out looking for hacks to cast stones at others in the process.

That became clear Friday when I got a phone call from a senior aide on the Senate Finance Committee. As I've covered this farm bill, seldom do I get phone calls from staffers out of the blue but that wasn't the case on Friday. At first, I thought, "great, they finally are opening up."...

The aide tossed out doubts about Peterson's honesty in this process. At the time of the phone call, I remember thinking I can't believe the aide is saying all of this stuff. Normally, aides are about as cautious as a cat in a dog kennel, but that wasn't the case. There was a lot of talk about half-truths and going back on his word, and dishonesty. [Full Post Here]

Well, I can't say I'm surprised by the petty political infighting. And kudos to Clayton for writing this post, exposing the backstabbing efforts of the various players in the farm bill process. (Also last week, Tom Harkin was criticized and frankly, insulted in a Roll Call article about the farm bill). But more important, I believe, is that this effort by farm bill players to smear each other is a (perhaps intentional) distraction from the bill itself.

Because at the end of the day, I couldn't care less about the personalities in Congress. Sure, they're human (usually) with the desire to speak their side and place blame where blame is deserved (or not). But I don't care about that. I care about the legislation that results. I care that payment limits appear to be going down the drain, and that conservation won't get the funding it should, and that rural development programs will get the shaft. That's what I care about.

Have politicians ticked me off in this farm bill? Damn straight. But that's all about me and how I feel about various politicians. It has little to do with rural Americans, and it's not why I do what I do. When I attack- or praise- our esteemed leaders in Congress, it's not because of who they are. It's because of the policies they do or do not support. As the farm bill winds down, we'll see many more of these political hack jobs. But don't let that distract from the bill itself.

Bill Moyers on the Farm Bill

Brian Depew — Sun, 13 Apr 2008 19:39:10 -0700

Last week's Bill Moyers Journal on PBS was a special on food, farming and the farm bill. Moyers covers the issues with his usual moral authority discussing the shortage at food banks across the country coupled with the continuation of unlimited payments to very large farms.

Washington Post reporters Dan Morgan, Gilbert Gaul and Sarah Cohen, authors of the Post's series Harvesting Cash, are on the second segment of the program talking about unlimited payments, direct payments to housing subdivisions and disaster payments to livestock producers who suffered no disaster.

Bread for the World's David Beckmann discusses the farm bill reform efforts of the last year in the third segment, saying "We've won the argument... now it's just raw power" preventing reform.

The whole program is suggested viewing for all House and Senate staff working on the farm bill in these final days, and if they could get their bosses to watch it too, hey, that would be great as well.

A Slap In the Face

Dan Owens — Fri, 11 Apr 2008 14:03:43 -0700

Well, the House has published their farm bill "framework" (pdf) and word from DC is that it includes a 50% increase in the direct payment limit. This was included in the House-passed farm bill from last summer (and we studied it in a previous report), but it was hard to imagine that such an increase would ever be included in the final farm bill. Let's back up a minute to examine the sheer brazenness of this.

Direct payments are the ones paid no matter what. They average about $28 per acre for corn, and a nice $96 per acre for rice. Given the high prices for every commodity today, they are pretty much the vast majority of payments expected to be made over the life of the next farm bill. Many reasonable people are already questioning whether farmers should be getting these payments at all- $6 corn and $12 soybeans lead to people questioning the need for automatic payments for farmers (though the administration loves them). Rightfully so. Anyway, politicians like Colin Peterson have been running around talking about how there's just no money for anything new in the farm bill. These "pay-go" rules are just so tough, we can't fund everything we would like, yada yada yada. But somehow, they've found the money to increase farm program payments for mega-farms. Wow.

So we can't get a damn dime for rural development, but we can shovel out the money for even bigger checks to mega-farms. This is utter nonsense. I suppose I have to admire the guts of of the House farm bill negotiators to include this junk. After this, there's not much they can come up with that will shock me.