Mark Muller, director of the Food and Society Fellows program at the Institute for Agriculture and Trade Policy (IATP), talks with Nourishing the Planet's research intern, Abby Massey, about the global food system and the impact it has on farmers, hunger and the environment.
How do agricultural policies affect the local and global market?
Over the past 10 to 12 years, I've spent a majority of my time peripherally involved with the U.S. Farm Bill. And we at the IATP have been leaders in pointing out some of the dumping issues of U.S. farm prices.
In the 1980s, both in the United States and elsewhere, farmers were suffering from low prices that were well below what the market should bear in terms of the cost of producing corn, soybeans, cotton, and rice -- the basic commodities. U.S. agricultural policies have helped drive down the price of commodities so low that it has created a lot of problems for U.S. farmers, and the way we make up for that problem is with the government payment program. So it costs taxpayers quite a bit to support such low prices.
And what has largely gone unforeseen is how the dumping -- that is, selling agricultural commodities well below the cost of production -- on international markets has had a tremendous impact on farmers around the world, because there is no way they can compete with these dumped commodities priced so low. There has been pretty good documentation in the past three years of the depopulation of the Mexican countryside and the impact of the U.S. dumping of corn on Mexico, which NAFTA has contributed significantly to. This dumping has driven a lot of Mexican campesinos into Mexico City or across the border because there is no viable economy anymore for agricultural production in much of Mexico.
So that has been a key point for us at IATP, and we have had a few reports over the years trying to quantify how much is being dumped. But this is very difficult, because there are very different prices in terms of the costs of production per good and comparing that to the market rate. Dumping results from a variety of policies, many of which are in the Farm Bill, but also many other policies that have driven U.S. production of a few commodities at the expense of locally grown food.
The U.S. has created some policies--such as crop insurance--that have created undue incentives for producing a few commodities: corn, soybeans, wheat, cotton, rice. These commodities have received federal support, at the expense of the opportunities in local markets. The challenge that many local farmers in, for example, Minnesota face is that it is much more expensive for farmers who are doing direct marketing to have insurance on their crops than it is for a farmer selling a commodity.
What are the major obstacles that farmers practicing organic and/or sustainable methods face? How does U.S. agricultural policy affect them?
First off, in terms of how we spend our research dollars through the U.S. Department of Agriculture and then subsequently through land-grant universities -- such a small component goes to the local organic and sustainable agricultural realm. The progress that has been made in local and sustainable agriculture in the past 30 years is really remarkable, given the lack of federal support for it and the continued heavy federal support for commodity crops like corn and beans that are already doing fine. There is also a lot of agribusiness investment in those crops.
It makes you question why we are not putting more research dollars into the next generation of crops that will provide more opportunities for farmers. We have really been behind in terms of agricultural research. There could be so much more organic and sustainable production if we had provided those research dollars years ago.
The GMO [genetically modified organism] issue is going to be an even stronger challenge for organic farmers. Cross-contamination issues and problems like that -- it seems like you hear about a new crop or concern every other month. Getting to some form of resolution about this in terms of maintaining the integrity of the organic label while also penalizing organic farmers for things beyond their control is a challenging policy question.
Over the last 10 years, it's been great to see, especially here in Minneapolis, the remarkable growth in the ability for people to buy organic food. That has happened by on-the-ground grassroots movements and people demanding these crops. I think the market is growing well at the local level but that there are still challenges, especially with organic commodities. One thing they are trying to figure out is price mechanisms: how to get a set price for organic products, and how that price differs from commodity prices of, say, corn. I think there is still some room for developing a fleshed-out market for commodities.
Do you think it is possible for the U.S. food system to be converted to organic and sustainable agricultural practices and still feed everyone?
I think it is definitely possible, but it will be a long-term transition; it's not going to happen in the next year or next five years. I think it is somewhat inevitable that we are going in that direction.
It is often put back upon us: if you shift to organic practices, how are you going to feed the world? How are we going to maintain the doubling or tripling of yields by 2050? I really feel like we haven't given it a fair chance yet. There are tremendous opportunities, through innovative permaculture practices and other approaches that we haven't tapped into yet, to increase yields and production dramatically. We can do a lot with organic production that hasn't come to the forefront yet, and we will have the opportunity to produce a lot.
In terms of long-term viability, given the soil and water issues, we can't keep on the chemical path too long. We need to become wiser with agriculture. It might not be a certified organic agriculture that emerges from this; it might be some sort of a hybrid middle ground. It might not get to the point where everyone is buying organic salad dressing. We have to be flexible and realize that the solution might not be to have everything certified organic.
What policies do you think need to be implemented in order to persuade farmers to use sustainable agriculture practices?
In terms of what is in the Farm Bill, I really like the Conservation Stewardship Program, which provides incentives for farmers to adopt practices that improve resources, whether it be ground water or soil. I think that is going to be a more effective, although very underfunded, program for farmers, in terms of making them see that there are different ways of producing. That is one policy that is doing a good job.
At the state level, there are a lot of programs that are paying for the certification process for farmers, to help them get over the initial hurdle. Those are very helpful in taking away some of the sting that farmers get after they change practices. They probably have lower yields for a while. Trying to get over that hump is a good thing. In terms of insurance, we do not have a proper insurance program that works well with organic farmers. So developing something that does work could be a huge benefit.
How will climate change affect the market, in terms of agricultural goods and food security?
We face a big problem of unpredictability. We just don't know how everything is going to be affected. We don't know if everything is going to get drier or wetter. Here in Minnesota, we've had some extraordinary flooding events over the past five years. We have to be more prepared, with more variability in yields and production in general. It's one of the big issues that is very scary to think about, given how ill-prepared we are for it. For example, all over the U.S. and Brazil, we are very dependent on soybean production. But we can't have so much dependence on one way of producing a crop; I think that could lead to disaster.
Describe the Sow the Seeds Fund. How have the farmers responded to the possibility of a longer growing season?
Here in Minnesota, we always feel limited when we hear about the great things going on in California and other parts of the United States where they have longer growing seasons. There is a tremendous amount of interest in using coop houses, greenhouses, and other methods of extending our season. It's obviously very financial: if you have a bunch of tomatoes to sell in August, you are going to get a certain price. And if you have those same tomatoes available in October, you're going to get double the price. There is a real incentive, a financial incentive, to extend the season, and farmers are very interested.
It started when there were some terrible floods in southeast Minnesota and southwest Wisconsin in 2007. It was devastating. That whole area is essentially the vegetable basket for much of the Midwest. You have the twin cities [of Minneapolis and St. Paul], and Chicago; a lot of our vegetables come from that region. The flooding wiped out several of our primary farmers. Most of them didn't have insurance, or if they did, it was only paying a fraction of the true value of these organic, direct-marketed products.
So we worked with local food co-ops, with Whole Foods, and with a lot of other organizations and raised $400,000 to get money to these farmers to keep them alive, because many of them were going to go out of business. That's how Sow the Seeds started -- with that immediate need. It went very well and has been going on ever since.
Explain the effect of government subsidies for corn on small farms. How is it changing the way farmers grow their crops today?
The first thing I want to say is that the question probably should be reworded, because we have the assumption that it's the government subsidies that are driving farmer behavior. But it's not the subsidies, it is the prices that are first and foremost driving the prices in agriculture. We have had very low prices for corn and soybeans generally since the 70s. The prices have been well below the cost of production, with occasional peaks where the farmer will have a year or two of great prices and then they go back down again. The latest one was in 2008, where we had this real jump in commodity prices and had a food crisis. But people forget that from 1999 to 2007, prices were just abysmal for most of that period--well below the cost of production.
The concern is not the government programs and how these prices are affecting farmer behavior. It is how these prices affect the grain buyers and traders' behavior. They love it when they can buy corn and beans well below the cost of production. That works great for their bottom line. They buy low and sell high, and can obviously make more money in that economic climate.
These groups help drive the policies that keep prices so low, because it helps the agribusiness buyers, traders, and processors. But it's devastating for the farmers. We make up for that by providing subsidies. We try to make up for that by making the difference between the cost of production and what they actually get in the marketplace. This is a lousy way of managing an agricultural market. But it's not that the subsidies are driving the bad behavior; they're put in there just to make up for the loss that they encounter. If we really want to change the system, what we need to do is get fair prices for farmers and have those fair prices in the marketplace. We have to address commodity price issues. The subsidies are one component of that, but it's just one component. The bigger issue is the multiple policies that are driving down the prices below the cost of production.
How would commodity prices be changed so that farmers receive a higher price for their crops?
A good example from the mid-1930s to the early 1970s was the supply management system that included a farmer-owned grain reserve. It was owned by the government, but it was done for and by farmers. When modern farm policy started in 1930, the secretary of agriculture, Wallace, had a supply management system. And what he recognized was that at that time, with the Dust Bowl and the Great Depression, the big issue was that commodity prices were so low that they were driving people off the land, resulting in the Grapes of Wrath story. The key was to get commodity prices up to a level that could support agriculture.
One solution was to have supply management, where when prices got too low -- when corn went under $3 a bushel -- they would have farmer-owned grain reserves purchase corn and take it off the market to keep the prices lower. It essentially provided a price floor for farmers. If prices got very high, say $7 a bushel, the farmer-owned grain reserve could then start selling it so that prices didn't go any higher than $7 a bushel. These mechanisms provided some stability so the market wouldn't swing too high and too low. There were no subsidies; it cost the government nothing to have this system, and it kept farmers in business. It kept prices fair for farmers and for consumers.
This system may have had some issues, but overall it worked very well -- much better than the system we currently have. And it was a way to keep commodity prices at a fair price and cost the government nothing. We had a series of different attacks on that system, which really started in the 1960s and 70s. The death to all these programs was the 1996 Farm Bill, the so-called "Freedom-to-Farm" Bill that got rid of these supply management systems. So, we know how to do this. We do have mechanisms to maintain a fair price for farmers. We have ignored and gotten rid of these programs largely due to the growth of agribusiness.
What role will small farms play in food production in the future?
According to the latest U.S. agricultural census, small farms are doing quite well. Some people, recent college graduates, are excited about getting out on the land. I think there will continue to be good things happening with small farms.
The large farms aren't going to go away in the near future. One path could be what Brazil did: we could continue to have larger and larger farms. I don't see it as beyond the realm of possibility that the small farms pool their resources. Essentially, you have these large collective farms of 50,000 acres. That could very well happen, particularly as western Minnesota and other Great Plains states continue to struggle with rural economic development. This might be the only option out there.
What effect do you think the food system has on hunger and obesity in the United States today?
It is significant. There is a reason that high-fructose corn syrup and soybean oil have made it into so many products. I have seen a couple of different studies by agricultural economists, trying to say that there is no relationship between agricultural subsidies and what we eat. But there is a lot of impact, and there are a lot of reasons that you go to the local convenience store and the options there aren't any good for you because we have made them most profitable. It has become so profitable that you can buy sugar and beans so cheaply, process it, then sell your food for what we consider to be a affordable price, but it is bad for our diets.
We put together some information a few years ago that the real price of fruits and vegetables continues to increase, whereas the price of commodities has gone down quite a bit. And so we have given a strong economic rationale for people to avoid fruits and vegetables and to eat more junk food. I think there is pretty clear evidence that our agricultural policies have had a long-term impact on our diet.
What policies could be implemented to make nutritious food more accessible?
I'd say, first and foremost, getting fair prices for farmers and getting commodity prices back where they should be; this would create a perverse incentive to eat junk food. There are some innovative things that the USDA has put forward, such as the Healthy Food Financing Initiative. One of the big issues that people are pointing out is that we have this gap between what consumers want and what farmers are growing, and how to bridge the two, in terms of cold stores, transportation, and processing.
We are doing a bit of work in schools. But it's a nightmare trying to get those carrots from that local farmer, sliced and cleaned, into the local kids' cafeteria.
Co-authored by Abby Massey, a research intern with the Nourishing the Planet project.
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