I have not had a chance to comment on the House Farm Bill, nor the upcoming Senate fight. I hope to in coming days. But I'd like to address now the concern over food prices, and how the role of ethanol and higher corn prices factors into it.
There has been lots of press as of late regarding higher food costs, with progressives jumping on the bandwagon of blaming ethanol and "rich farmers" profiting off rising commodity prices while us poor consumers get the shaft.
Bonddad had a diary yesterday where he blamed all food inflation on the price of wheat rising. Never mind that the price of wheat was in the toilet as recently as a year ago, and thus farmers had to be bailed out by taxpayer subsidies. And I didn't see my Wonderbread price go down.
Bonddad Diary on Food Costs
Consumers in the US pay the lowest (10% of income) costs for their cheap food policy. And what has this given us? we know: record obesity, industrialized, chemical farms driving out family farms, factory farm CAFOs who are environmental catastrophes, etc and a food system controlled by a handful of corporations.
The reason why food prices are rising ain't because of the fair prices being paid to farmers finally. It's because of 1. the end of CHEAP OIL which accounts for most of the processed foods in supermarkets 2. concentration / consolidation in the food processing and supermarket industries who control pricing, not the farmers.
Please do not blame ethanol, high corn prices for food costs. This is what the American Meat Institute, National Pork Producers, Tyson, Smithfield, Pepsi, all want you to think. They even have an Astroturf site devoted to blaming ethanol and wanting their cheap corn again so they can keep on making cheap meat, expanding factory farms, and cheap high fructose corn syrup! Never mind also that feeding corn to animals is not a good thing and has led to e.coli, for those of you who have read Omnivore's Dilemma. here is the astroturf website.
Balanced Food and Fuel
These folks miss the days of $2 corn. they want it back. never mind that corn costs around $4-5 to produce, esp. with higher energy costs. and they propose getting rid of ethanol subsidies or conservation programs so that there will be more corn for their factory farms and processed foods. So progressives who hate ethanol on the grounds that it's a sucky alt. energy source (and they are right) should be careful, however, not to fall into bed with corporate agribusiness's line and just get rid of ethanol subsidies so we can get cheap corn again.
Food and Water Watch just released a great study showing how rising corn prices have little impact on food prices. When corn/wheat/soybean prices were at record lows, as they were for several years (and thus why farmers needed taxpayer subsidy bailouts), prices for food/milk did not go down. but agribusiness profits sure as hell went up! In your cornflakes, that's probably around 5 cents worth of corn in there. same for bread. so please do not think farmers are getting rich off the rising commodity prices!
Grocery Prices not Linked to Corn Prices
Here is as well an article by a dairy farmer saying that corporate greed is way more to blame for high milk prices than ethanol or corn--and that dairy farmers are still in crisis, due to the high debts they sustained over the past few years thanks to record low prices. many dairy farmers went out of business, while Americans didn't seem to care, and yet now they do because we have less and less dairy farmers, but higher milk prices. many of those small diversified dairies have been replaced with factory farm CAFOs, the ones who benefitted from years of cheap corn, which gave them the advantage over grass-fed farmers and those dairy farmers who raised their own feed.
Farmers, Consumers, Getting Milked
In the debate over our food and farm policies, there are several trends:
- Our broken food system that leads to us getting fat. Public health awareness over obesity, how a Twinkie costs less than fruits, supersized fast food and soft drinks, the role of high fructose corn syrup.
- health/enviro cost of industrial factory farms. people hate 'em. they environmentally suck and just lead to e.coli and polluted water and air, while driving out family farmers.
- global warming: industrial factory farms contribute more to global warming than automobiles even! given that, don't we want meat to be more expensive?
- Subsidies. Mainstream media and a left-right coalition has demonized farm subsidies as the root of our problems, causing obesity because we subsidize corn while letting vegetables/fruits get the shaft. well, the same mainstream media and folks who bitch about our subsidies should be happy. with high commodity prices, taxpayers will shell out very little for subsidies this year. But now what does the mainstream media do? Blame high commodity prices for increasing food prices starving consumers, the poor and demonize ethanol for creating this.
The villian in all this are the same folks: corporate agribusiness who control our markets and food supply. it's not farmers, it's not subsidies, it's not ethanol. Higher commodity prices should be looked at as an OPPORTUNITY to help rebuild some of our food systems and rural communities. Everybody was criticizing and hating on our current industrial food policies, and demanding/clamoring for change. i see higher corn prices as a GOOD thing, for our farmers, and if it can stop the spread of factory farms. Ethanol is totally not a Good energy source. i will discuss that another time, but commodity prices that pay farmers a fair wage are a welcome development.
This fantastic, must-read from Tom Philpott today talks about how even though Tyson and Smithfield were bitching about high corn prices, they still made record profits!
Tom Philpott Column
How? because they've raised prices...note that farmers never have the same option since they are price takers. and farmers have had to absorb ALL the rising energy costs of the past few years. most of the cost of food has to do with packaging, distribution, processing, all requiring huge amounts of energy. THAT is the main reason why food prices are up, not higher commodity prices.
Philpott also notes how the meat giants are making their money--thru export markets as the demand for meat rises in China and India. now you know why they looooove free trade while most family farmers hate it. because it benefits industrialized-export-oriented agriculture, instead of localized markets.
To stop this, we need to reorient our system away from this type of agriculture, which can only thrive because of our lax enviro/labor laws, as Smithfield depends on an easily exploitable, non-unionized workforce, flout enviro laws, etc.
But an even more important factor, I think, is that our huge and highly consolidated meat giants have managed to establish classic "Third World" labor and environmental conditions right here in the United States.
But at the very least, cheap corn IS eating a bit into their profits, and that is a GOOD thing.
The Italians held a "pasta strike" today since rising wheat costs has led to increase pasta costs. but as astutely noted by some of the farmers leading the protest, it's the middlemen who are profitting, not them.
Pasta Strike in Italy
Activists say Italians will soon be paying up to 20 percent more for their daily serving of fettuccine, spaghetti or linguine. They say prices are being driven up by middlemen, while earnings for farmers and producers remain flat.
"Prices increase by five times between production and consumption," Toni De Amicis, a leader of Italian farm lobby Coldiretti, said during a protest in Rome. "The right recipe is to reduce the gap between production and consumption."
Salon.com had an excellent piece discussing how rising commodity prices COULD be a force for social justice if the benefits are distributed evenly. Wheat farmers for years in Europe could not get paid decently. so many turned to rapeseed for biofuel production. now there is a shortage of wheat, less supplies, and record prices. that's the price consumers pay for being complacent for so many years and not caring about how the farmers were being treated. and food processors used to getting away with paying farmers poverty wages for their products are now reaping what they sow. now that Europeans can't get their pasta or beer cheaply, maybe we can reconsider what our food system should look like and how we should treat our farmers.
Tequilla and Beer Costs Rising! The Horror!
Farmers say the brewers share some of the blame.
"For years there was an oversupply and we couldn't make any profits with barley and that's why we switched to biofuel crops," said Anton Stuerzer, 43, who grows barley and rapeseed at his farm in the neighboring village of Hoehenkirchen.
"It serves the brewers right that they have to pay those high prices now -- they should have paid us fair prices even when there was too much barley available."
So this has been a rambling diary, trying to lay out some of these complicated issues, which go far beyond bonddad's blaming wheat prices for food inflation. the richest country in the world is discovering that the era of cheap oil and cheap food is over. and they are seeking blame in the wrong places.
i'll leave it by quoting the end of the Salon piece. it's not about food v. fuel. it's about equity v. exploitation.
Not too hard to see the common thread here, huh? Depressed prices for agricultural commodities brought about by overproduction -- a problem that has been plaguing farmers, especially in the developing world, for decades.
How the World Works noted just a few weeks ago that Mexican corn farmers, who have long suffered from their inability to compete with subsidized, highly efficient American corn farmers, would no doubt respond to high corn prices by boosting production. That, in turn, could have a long-term positive effect on the Mexican rural economy that might well balance, or even outweigh, the negative social impact of higher food prices. The same story could well be repeated throughout the developing world, where agriculture is responsible for a far greater share of economic activity than it is in the United States or Europe.
It is very easy to make a short-term, facile equation in which biofuel production results in food price hikes and therefore must be bad, bad, bad. But the real key to addressing global hunger is not to keep food prices low, but to make economies rich. Which means the real challenge for government policy-makers is ensuring that the benefits of higher prices for agricultural commodities are actually captured by small farmers and rural communities, and not by corporate agribusinesses. It's not about food vs. fuel. It's about equity vs. exploitation.