on Family Farm Agriculture
Porto Alegre, Brazil
I am pleased to be here representing family farmers from the United States who are members of the National Family Farm Coalition (NFFC). My family farm is in Missouri. We raise soybeans, corn, wheat, hay and cattle on 2,000 acres. I also serve as the President of the Missouri Rural Crisis Center representing over 5,000 farm families who are fighting to preserve family farm agriculture. The fight we are waging is not just local or national. It is global.
As family farmers, many of the barriers to our profitability and survivability are the same - whether in Brazil, France, Canada, Mexico, or the U.S. The increasing role of the multi-national corporations in controlling both the inputs and the marketing of our commodities jeopardizes our very existence.
I know from my travels as President of the NFFC and from contacts with farmers from other regions of the world through Via Campesina, that many farmers think that all is rosy in the farm economy in the United States. Some of this is due to how U.S. farmers are misrepresented by groups within their own country who participate in many meetings and receive a great deal of media coverage. The American Farm Bureau Federation, which sells crop insurance to farmers, and the commodity groups, who tax farmers to "promote" the farmers' product, are two examples of groups that misrepresent farmers. Both groups use the money they receive from farmers' pockets to lobby for the industrialization of agriculture and other measures in the corporate interest. While the U.S. economy continues to grow, it is leaving rural America behind and it is at the expense of farmers and other workers in our society. The truth is that there is a very severe farm crisis in the United States and it is on the verge of forcing most of the family sized farmers in our nation off the land. The situation is very similar in Canada. The NFU (National Farmers Union)-Canada reports sums up the current conditions this way:
"In the 1930's, it took a worldwide economic collapse, a stock market crash, mass unemployment, and a prairie-wide drought to drive net farm incomes to negative values. Today, stock markets are booming, employment levels are fair, the weather is generally good and crops are average or better. The current farm income crisis is unprecedented in times of economic prosperity and stability."
My presentation will discuss the impacts of corporate globalization in terms of increasing concentration in the agricultural sector and the real costs to family farmers of our failed domestic farm policy that was enacted in 1996, known as Freedom to Farm. I will provide examples of what the current situation is in the United States and Canada and provide some solutions that we have developed that if implemented would reverse the current trend towards industrialization.
What does globalization mean to me as a family farmer in the U.S?
It means domestic policies that support international deals which are in the interests of corporate agribusiness. These policies are created in Board rooms of companies motivated by profit and not the economic health of the farmer, the health of the consumer or the vitality of the rural community. Globalization means policies in the United States that force our prices as low as possible by removing an effective commodity loan rate or reserve; these policies force the world price to levels that are unsustainable for farmers around the world.
Globalization means that the number of farms in the United States that gross between 50,000 and 249,999 (18.2%) of the farms now only represents 21.1% of the total market value. 73.6% of the nation's farms share 6.8% of the market value of agricultural products sold while 7.2% of the farms receive 72.1% of the market value of products sold. There is an increasing shift towards the largest operations. Globalization means that prices for farmers have fallen on the farm while the profits of corporate agribusiness have reached record highs. In his April 2000 testimony before the Senate Democratic Policy Committee, Professor C. Robert Taylor of Auburn University presented his views in a statement entitled, " The Closing Circle of Global Food Companies. In his section on Manifestations of Economic Power, he presents data that shows that the retail cost of a market basket at the grocery store for consumers remained almost constant for the 15 years between 1984 - 1999. He further notes, "Since 1984, the real price of a market basket of food has increased by 3%, while the farm value of that food has fallen by 38%." Individual items in the market basket are even more dramatic. The real farm to retail spread for a gallon of milk from 1994-1999 has increased by 14.3%. In this past year, prices received by dairy farmers have dropped almost 50% from their 1999 level so this spread is even more dramatic today. The spread for pork was 52.1% and for beef, 23.6%. As Professor Taylor concludes in his testimony, "Thus these recent price increases, which are corrected for inflation, indicate the exertion of raw economic (market) power. The Canadian experience with grain prices and company profit is the same as the United States. The NFU-Canada report states:
"While the farmer growing cereal grains - wheat, oats, corn - earn negative returns and are pushed close to bankruptcy, the companies that make breakfast cereals reap huge profits. In 1998, cereal companies Kellogg's, Quaker Oats, and General Mills enjoyed return on equity rates of 56%, 165% and 222% respectively. While a bushel of corn sold for less than $4, a bushel of corn flakes sold for $133. In 1998, cereal companies were 186 to 740 times more profitable than the farms. Maybe farmers are making too little because others are taking too much." It means that when consumers shop, a declining share is received by farmers. In 1999, farmers were receiving 21 cents of the $1.00; while ten years ago, the level was 32 cents. This is at a time of increasing costs of production for farmers. While there are still far too many hungry people in America, the average person spent only 10.7 percent of their income on food; it was 11.6% a decade ago and 22% of the household budget in 1950. The goals of the World Food Summit in Rome are not being met on either a worldwide level or in the United States. Despite a booming economy, there is record demand for emergency food distribution in our country as many remain hungry.
It means unprecedented mergers, acquisitions, and concentration in all stages of the agricultural production, marketing, and retailing. Recent reports by Bill Heffernan at the University of Missouri-Columbia track the clusters of agribusiness firms. They have been identified as: Cargill/Continental/Monsanto ConAgra Archer Daniels-Midland(ADM)/ Novartis Farmland Industries/Cenex Harvest States/Land O' Lakes Cooperatives.
As Professor Taylor cites, "The four-firm concentration ratio which reflects horizontal concentration, exceeds 70% in many food and food related industries. It is 80% in fed beef slaughter and IBP now has 38% of the market while Cargill has about 20% of the market. These figures are very close to the concentration in the sectors as outlined in a recent NFU- Canada testimony to their Senate Standing Committee on Agriculture and Forestry entitled, "The Farm Crisis, EU Subsidies, and Agribusiness Market Power. Their report cites that " Two companies, IBP and Cargill, dominate the beef packing sector with 74% of Canadian capacity. Four companies (DuPont/Pioneer, Monsanto, Novartis, and Dow control 69% of the North American seed corn market and 47% of the soybean seed market. At the end of 1998, Monsanto controlled 87% of the U.S. cotton-seed market and sold 88% of the genetically engineered seeds in the U.S. The excitement surrounding the technology of genetic engineering by the U.S. government and corporations has fueled this greater concentration in the seed industry and has severely limited farmers' choices in what kinds of seed they can buy.
Globalization means factory hog farms moving into rural communities throughout the Southeast and Midwest. These operations impose economic and environmental hardship on farmers and consumers. The production practices - thousands of hogs in a small area pollute the water, soil, and air while their overproduction lowers the price for most other hog farmers. These factory hog operations are thriving due to low grain prices. They can buy the feed for much less that it would cost to produce. The US has lost 70% of independent hog farmers in the last 15 years. These same economic conditions accelerate the production of cattle in Brazil and other countries. There is an abuse of the land due to the practices while farmers receive low prices.
However, the Missouri Rural Crisis Center has started a project, called Patchwork Family Farms, that buys pork that has been produced in an environmentally friendly way. The farmers who have produced the pork receive a fair price that covers the cost of their production. The corporate middle-men such as Smithfield are out of the picture. We are dealing with businesses and people in our rural community who care.
Globalization means Factory Dairy Farms. Record low dairy prices are fueling expansion of dairy farms throughout the country. These operations are buying up the cows from farmers forced to sell out due to low prices. Bovine Growth Hormone (rBST) is being used to increase production, resulting in even more milk on the market further depressing prices and threatening the environment.
Globalization means the loss of local credit or banks that understand the rural community. Instead, CITIBANK and other international banking operations have imposed banking standards that ignore the real-life situations in the farming community. The local banker has lost most of their say in decision-making and the computerized calculation of cash flow and repayment ability usually translates into higher risk lending which means higher interest rates at the time we can least afford it.
Globalization means the loss of farm land in the United States and a dramatic loss of farmers who are able to make a full-time living from the farm. According to the most recent Agricultural Census, there are 1.9 million farms left in the United States. But of this number, there are only 554,000 farms, according to a recent USDA report, that generate gross revenues greater than $50,000 per year. While the number of farms run by families remained at about 85% from 1978-1992, the share of the output from these farms dropped from 62-54%.
Another grave problem in the United States is that the amount of minority-owned farmland in the United States continues to drop. According to the 1997 Ag Census, there are less than 18,000 African-American farmers left in the United States. A major class-action lawsuit against the U.S. Department of Agriculture was won by Black farmers in the US last year, but unfortunately the monetary settlements are coming very slowly and there are major problems associated with changing the attitudes and practices that has caused the discrimination over decades.
The continued loss of farms is due to the loss of income. The only farmers that have been able to stay in business have been those with a lot of equity, have little debt, or have been able to work off-farm. The long-term situation is very bleak when you look at the equity returns as discussed in Taylor's report. The 2.38% annual return for farmers is compared to retail food returns at 18%, food manufacturers at 17.2%, banks at 10.8%.
Where Are We Today?
The failure of the Seattle round of the WTO may help change the perception that free trade and an export-dependent policy is the answer. The international free- trade model encourages a form of agricultural production that externalizes its costs as much as possible, particularly the costs of land stewardship, labor, and food safety. That is, NAFTA and WTO require American farmers to adopt factory-style agricultural operations in order to survive. Record drops in net farm income translate into sub-poverty wages. As Robert Scott's report, Exported to Death, released by the Economic Policy Institute states, "But, for family farmers, the Omnibus Farm Bill - and the export-led growth strategy upon which it was based - has been a massive failure. The U.S. farm trade balance declined by nearly $12 billion between 1996-1998, and prices have plummeted. US corn prices dropped from $4.30/bushel in 1996 to $1.89 in 1998; or 56 percent. Wheat prices fell from $4.57 in 1996 to $2.46 in 1998 or 46%. While many US economists and legislators continue to proclaim the virtues of the free market and the need for expansion of trade such as the recent debate about China and extending permanent "normal trade relations", there are some economists that are starting to directly question the current situation facing farmers. Daryll Ray, an agricultural economist at the University of Tennessee has argued very eloquently that the reduction of government price and income supports coupled with the destabilizing effects of international trade will continue to suppress agricultural prices into the next century . He has also stated that, "Contrary to the USDA's rosy predictions, the plight of farmers is likely to get worse under current policies."
The 1996 farm bill manipulates commodity loan rates, federal payments to farmers, and other mechanisms in order that the market yields the lowest possible prices for family farmers. The failure of the Farm Bill is best dramatized by the need for the past two year's emergency disaster payments of over $6 billion per year. Unfortunately the farmers who have lost the most are not necessarily receiving these payments as they are distributed by the same mechanism as the "freedom to farm" decoupled farm payments - and even with these payments the losses are much greater.
During the WTO meeting in Seattle, NFFC actively participated in meetings with Via Campesina which represents family farm and peasant organizations and movements throughout the world. There were strong consensus positions emerging from these meetings about a future food security policy that strongly values farmers and rural communities in the process. The major position was to call for "Agriculture out of the WTO."
Other components of the Seattle Declaration issued by Via Campesina include: "Via Campesina rejects the neo-liberal policies that push countries into cash crop export production at the expense of domestic food production. These policies contribute to low commodity prices that are far lower than the real cost of production. Developing countries are forced to adopt these policies in order to pay their external debt. These countries must also open their borders to the importation of food which leads to even greater debt. The governments of the rich countries are giving massive subsidies without limit per farm in order to compensate price cuts and allows the TNCs to buy cheaply. This way these public funds are a direct support for industry and not for farmers. This is a vicious circle which benefits only the TNCs.
There is no doubt that the WTO is an instrument that places greater control and profits in the hands of the TNCs. The WTO is a totally inappropriate institution for democratic decision- making and policy formulation on important issues such as food sovereignty, health and environmental legislation, management of genetic resources, water, forestry and land, and the organisation of agricultural markets.
A profound reform of the WTO in order to make it respond to the rights and needs of people would mean the abolition of the WTO itself! We do not believe that the WTO will allow such a profound reform. Therefore, the Via Campesina, as an international movement responsible for the agricultural sector, demands that agriculture should be taken out of the WTO. Perhaps more appropriately, let's take the WTO out of agriculture. We invite other sectors to demand the same. We, as societies, must create an alternative to the current neo-liberal policies and to institutions such as the WTO, WB and the IMF. We must civilize these international policies and institutions. The Via Campesina invites social movements to initiate a participatory process with national governments to further develop an alternative model. This alternative should include the following:
Establish alternatives to the neo-liberal policies and institutions such as the WTO, WB and the IMF. Continue to mobilize public opinion to pressure TNCs and large trading powers. Strengthen the UN and develop new instruments within the UN system to increase transparency and democratic control. These institutions should represent the priorities and needs of people and ensure food security and fair trade. The Via Campesina has the following demands:
Via Campesina wants to support the International Tribunal of Peoples that has to judge the crimes committed against farming and indigenous communities.
Via Campesina calls upon international and national movements, and non-governmental organizations to build strong alliances to continue to fight these neo-liberal policies and to build alternatives. If we continue to work together we will succeed!
What is the Political Situation in the U.S. Today?
In December 1999, the White House and agricultural leadership in Congress called for changes in the commodity provisions of the farm bill for early 2000. It is now July, farmers have planted this year's crop with no assurance of any changes in policy that will result in an improvement of prices. The droughts that farmers were facing earlier this Summer have now been replaced by too much rain in some regions. Prices remain and are projected to remain at record lows. The only guarantee is that there will be increased payments based on the AMTA payments. Over $5.5 billion will be spent of taxpayer funds to avert a total collapse of the farm economy. It does nothing to really address the loss of farm income. It means a few thousand dollars to pay off bills while the politics in the U.S. Congress refuses to deal with the cause of the collapse.
While the House Agriculture Committee held two months of field hearings, the process has been controlled by the Republican leadership of the House Agriculture Committee who has hand- chosen the speakers making sure that the deck is stacked against any real calls for change or the presentation of an analysis of the true problems; a message that our farmer leaders would deliver. A new round of hearings has been scheduled for mid-July at which time we hope to present our proposal.
Much of the decrease in farm income and the misrepresentation of family farm and trade issues on Capitol Hill can be traced to the role that commodity organizations have developed on farm policy. These so-called "farm groups" extract fees based on the level of production of each farmer ostensibly for the "promotion" of the commodity. In fact, they then use the farmers money to lobby for the industrialization of agriculture and other measures in the corporate interest. We are talking about millions of dollars for each commodity group - funded by farmers but misrepresenting their interests both domestically and internationally. Because of this, the Campaign for Family Farms is directly challenging the pork commodity group called the National Pork Producers Council. Over 19,000 farmers signed the petition calling for a vote to end the current checkoff program. USDA Secretary Glickman announced in late February that he would call for the vote. Our expectation is for the vote to occur this August or September.
In the face of the sobering realities of corporate globalization, concentration and corporate control, the family farmers of the world are not left prostrate. We should have hope that we can achieve change. Remember we account for nearly 1/4 of the world's population. Family farmers of the world today have the most experience, education and probably the best equipment that family farmers have ever had.
Today we have a far greater ability to communicate and certainly we are much better organized. We need to make globalization work for us through international anti-trust law, international organizing of all farmers, international food security reserves and we also need international supply management. We need to link up our knowledge about the efforts being used by these very same companies against farmers and rural people in each of the countries. The Internet- e-mail communication regarding genetically engineered seeds has made a tremendous impact on making sure we know when there are findings, experiences in one place that help to refute the "promises" of these companies. We need to tell the stories farmer to farmer so that farmers are able to make the choices not to plant genetically engineered seed. It is our hope that the lawsuit against Monsanto that we helped put together will result in international anti-trust regulation.
We are the producers of the most important commodities necessary to sustain life. We must begin a new process of sales, distribution and trade. We must retain control of our production. No longer can we afford to deal with Multi-National corporations that supply expensive inputs and then rob us of our labor and production. Janet Jacobsen, an organic farmer and President of the Northern Plains Sustainable Ag Society, recently wrote that organic production is not the solution to our increasingly globalized production system, "Consolidation of companies into vertically integrated clusters have begun to mirror the conventional markets. Organic production is not immune from the global marketplace. There needs to be a push for local and regional food systems that are based on who and how our food is produced. When we allow global corporations to handle our production we are opening the door to be exploited. Family farmers in each individual country should have the first right to serve their own food security needs. It makes no sense to haul food thousands of miles before it is consumed.
Family farmers of the world must expand our efforts to build relationships with labor movements and consumers groups. During the fast-track battles in the U.S. Congress around NAFTA and GATT/WTO, NFFC has worked closely with labor and citizen organizations but our work must expand to changing our current farm and food policy. While it was encouraging at Seattle last December when the major labor movements invited family farmers to help lead the largest march, we should have been at the podium on the rally as well. Our work needs to be at the local and national level of each of our countries to show the links between farmers and workers often fighting the same threats of corporate globalization.
More than 65% of the consumers in the United States say they want their food produced by family farmers, not industrial agriculture. We have a major challenge to counter the power of the multi-nationals, the agri-business interests, the commodity groups and Farm Bureau who misrepresent the family farmer interests to develop a policy that will work for family farmers, not simply the expansion of industrialized agricultural production.
The National Family Farm Coalition member groups have put together a comprehensive farm bill proposal to replace the Fair Act, better known as Freedom to Farm, which if implemented would dramatically change the situation in the US and that in turn affect international policy.
Some of the key points of this proposal are to establish:
We must be able to have more control over our production of grain and livestock. For decades livestock has supplied the vehicle for value adding at the farm level. AMTA and loan deficiency payments from our government only enable corporate concentration to increase.
|Published in In Motion Magazine - August 1, 2000
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