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The Forum > Article Comments > Free markets haven't delivered on food and won't > Comments

Free markets haven't delivered on food and won't : Comments

By Adam Wolfenden, published 4/3/2009

Gone are the days of seeing food as just another commodity to be traded around the globe to where the money is.

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Recently I had a conversation with someone who works in a primary industries agency. He said that the solution to climate change and peak oil in the agricultural sector was bigger farms. I asked him to explain as this runs counter to almost all work that is being done on peak oil and climate change adaptation and resilience. He said that larger farmers are not as financially marginal. Bigger farms (actually many farms owned by a single farmer or corporation) means more cash means more capacity to deal with failures caused by climate events and more cash to pay for increased fuel. The objective was business resilience - not resilience of the land, not food security, not even protection of rural communities - just make sure that the few remaining 'farmers' earn a quid.
This confirmed whispers and rumours that I'd heard from such agencies - but I'd never had it presented to me in such clear and frightening terms.
These are the folks that ensure that the entire food production system is genetically engineered, nano-packaged and preserved, doused in chemicals, over fertilised and producing vast industrial monocultures that are highly processed and carted all over the globe in service of poor health and an obscenely excessive meat eating addiction.
Rethinking food is long overdue.
Posted by next, Wednesday, 4 March 2009 9:08:17 AM
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The author seems to have forgotten the real problem here. For years
the EC and US have paid tens of billions of $ in subsidies to their
farmers, whose surplus production was then dumped on the third world,
often well below the cost of production. No wonder that other farmers
then went out of business!

Fact is that farmers of the world cannot compete with EC and US
treasuries, which is what has been the case for decades now.

Last years short spike in grain prices followed years of low
prices. Farmers around the globe won't grow things, if they
cannot make a profit doing so. Take away those huge subsidies
and global prices would be more in line with production costs,
third world farmers would be the first to benefit.
Posted by Yabby, Wednesday, 4 March 2009 10:09:52 AM
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Yabby

"Farmers around the globe won't grow things, if they
cannot make a profit doing so. Take away those huge subsidies
and global prices would be more in line with production cost"

The trouble then would be that farmers in the first world would then not grow the required crops because they would not be able to make a profit. You are in a bit of a catch 22 situation. We need the food, and sooner or later, those in the first world are going to have to pay a decent price. In Australia in particular, our farmers have been getting paid a pittance for their produce and that combined with the current drought will force many of them to give up.
Posted by VK3AUU, Wednesday, 4 March 2009 11:04:22 AM
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VK3AUU, that's because Australia doesn't have export subsidies. The only form of subsidies the Australian farmers receive are drought relief packages, which I'd argue can't be viewed in the same light given the precarious state of the Murray Darling.

Yabby's right. The EU and US subsidy packages are obscene and can't be justified morally or economically. Take Jose Fanjul for example:
http://topics.nytimes.com/top/reference/timestopics/people/f/jose_fanjul/index.html
There's an assortment of articles there on the Fanjul brothers - one of America's largest welfare recipients, and their largest sugar producer.

That being said, I don't agree that this will solve everything. It will certainly help though.
I concur with the author that free market policy won't necessarily aid those in the third world - I for one, wouldn't blame third world countries, with significant numbers of starving people, to classify food production as an emergency security issue and create policies to ensure domestic distribution from farmers was a priority, thus rendering local farms more viable.

However, given the corrupt nature of many third world countries, such policies would inevitably be abused which is unfortunate - hence my belief that scrapping export subsidies would be a great first step.
Posted by TurnRightThenLeft, Wednesday, 4 March 2009 11:48:32 AM
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Yabby and others are right – what free market in food? The USA, Japan and EU impose protectionism and subsidies that distort markets to the disadvantage of the world’s poor farmers, and consumers both rich and poor. Reducing these barriers would improve living standards and food security, not diminish them.

Food security isn’t attained through self-sufficiency, it’s attained by having access to alternative supplies when local sources fail, as they invariably do from time to time. That means having access to global markets and the resources to buy on them. The world’s poorest and least food-secure countries are also the ones where trade is a relatively small proportion of GDP.

The food price spikes of recent years have many and complex sources including unusually strong demand in China, drought, and market-distorting policies such as subsidising biofuels in developed countries. Prices have fallen significantly since mid 2008, alleviating the stress they undoubtedly put on some of the world’s poor.

The recent price strike is an exception to a general rule that, in the long term, agricultural and other commodities’ prices tend to fall relative to the prices of other goods and services.

If recent trend in global markets are bad for the poor, how is it that:

- for several decades, global food production has risen faster than global population, per capita consumption has risen, and the proportion of the world’s population suffering starvation and malnourishment has declined.

- The UN reports that it millennial goal target of reducing global poverty by half between 2000 and 2015 is on track

- Most of the progress in reducing poverty and hunger has been in countries in South and East Asia that have embraced globalisation and trade as the path to development

- There has been much less progress in regions such as sub-Saharan Africa where governments have been suspicious of free trade.

http://www.undp.org/publications/MDG_Report_2008_En.pdf

There are still far too many hungry people and food-insecure countries. The solution to this is more of the types of policies that raise agricultural productivity – new technology, innovation, international investment and trade that allows specialisation and competition.
Posted by Rhian, Wednesday, 4 March 2009 2:20:40 PM
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Here's a matter well worth considering:

China has 1.3 billion people. More than a seventh of the entire world population.
Yet, for many years, it's been a net producer. The country manages to produce enough food to feed its many many people.

There are clearly lessons to be learnt here.

Much of this has come from rural families having small plots of land to supplement their income and grow food for harvest, and burning such materials in winter for warmth.
The State retains freehold ownership and gives out long term leases.

In response to the adverse economic circumstances, the government is considering lengthening the duration of these leases which will spur larger farms and a higher degree of industry in the countryside.

I do worry however that larger farms will mean fewer plots available for individual families. This will create benefits in terms of profitability, but I worry about sustainability, given the success of the previous arrangement in terms of the sheer number of mouths being filled.
Posted by TurnRightThenLeft, Wednesday, 4 March 2009 5:40:28 PM
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In a recent speech Barak Obama foreshadowed the slashing of agricultural subsidies in the USA, especially to big corporate farmers. Not only would this go a good way to offsetting the cost of the stimulus package, he made it clear it had his full support for a host of other reasons. Lets hope he can take Congress with him.

On another thread on OLO not so long ago, someone described the situation in Rwanda where the people in an area of great fertility where they used to be entirely self sufficient in food now received international food aid as they were forced to grow export crops. As long as global capital allows, or forces, this sort of situation, the food problem can only get worse.

There is also the problem of overpopulation. Again, the new US administration (and ours) are supportive of giving women the ability to cantrol their own fertility, which can only be a good thing.
Posted by Candide, Wednesday, 4 March 2009 6:39:46 PM
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This is an aside.

Candide, I understand that Australia along with the USA had rules in place (thanks in this country to Brian Harradene) that prohibited government funding to charities that provided advice to women about abortion. One of Obama's first steps was to reverse that prohibition. I don't believe the Rudd government has yet summoned the courage to bite the bullet on that one. Do you know what the current situation is?
Posted by kulu, Wednesday, 4 March 2009 7:13:22 PM
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I don't think the agricultural subsidies in the US and the EU quite serve the same purpose although of course both distort the world market.

In the EU and particularly in France they are more about supporting the traditional rural lifestyle while in the US its about promoting bigger profits. I have some sympathy for the French position as I do for our own farmers who have seen the countryside depopulated and smaller farmers losing their livelihood because our governments have not seen fit to provide some sort of support for them.
Posted by kulu, Wednesday, 4 March 2009 7:24:09 PM
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There never was really a free-market. Globalisation and free-trade is about 1% of the world's richest and most powerful controlling the rest of the 99%. Free-trade, globalisation, reaganomics, Milton Friedman and the Chicago school of economics has been proven to be a failure.

We need to rediscover Karl Marx's brand of economic theory.

http://www.globalissues.org/video/728/lori-wallach-free-trade-how-free-is-it

The world should go back to managed(fair)trade and nation building.

90% of the consumer goods currently produced are not really required. If one really does a costing of a laptop (notebook) computer it would be like US$200 (per unit) for manufacturing plus US$1500 environmental costs.
Posted by Philip Tang, Wednesday, 4 March 2009 7:52:24 PM
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*someone described the situation in Rwanda where the people in an area of great fertility where they used to be entirely self sufficient in food now received international food aid as they were forced to grow export crops*

Candide, I'd say that the situation in Rwanda is far more complex
then that. I've read various stuff about why genocide occured there
and one problem is ever rising numbers of people. So farming plots
became smaller and smaller, down to unsustainable levels.

I found this little gem the other day:

*Religious ideology also contributed to the country's deepening demographic problems. The majority of Rwanda's population were Catholic. Despite Rwanda's evident overpopulation, those in
the church and government hierarchy not only refused to promote birth control programs, they actively opposed them. Radical Catholic pro-life commandos raided pharmacies to destroy condoms with the approval of the Ministry of the Interior.*

Its on page 33 of this URL

http://www.du.edu/gsis/hrhw/volumes/2002/2-1/magnarella2-1.pdf

No wonder there is a food problem in the country.
Posted by Yabby, Thursday, 5 March 2009 10:17:00 AM
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This is because largely the markets for food are the least free of any markets worldwide.

Making them free would most likely reduce the price of food world wide.
Posted by Shadow Minister, Thursday, 5 March 2009 10:18:13 AM
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*Religious ideology also contributed to the country's deepening demographic problems. The majority of Rwanda's population were Catholic. Despite Rwanda's evident overpopulation, those in
the church and government hierarchy not only refused to promote birth control programs, they actively opposed them. Radical Catholic pro-life commandos raided pharmacies to destroy condoms with the approval of the Ministry of the Interior.*

You know, you can all keep sticking band-aids on the correlated problems we are all drowning in or see the big picture and reduce!

Its takes a long time, but please try and use your imagination cause de-evolution has all-ready started. " we are going off our blue-printed time line so extinction is inevitable, for us and many other living things.

We are with western society at full peril of our over estimating, and now we have a world too full of sick people. Nature has always dictated the health of a species by keeping its members in check hence the survival of the fittest.

Human over-population reduction and the various signs that we all see quite clearly is the only way I can see to take the heat off this planet, so to speak. I would like to see the worlds people to wake up and learn that sustainability is the system that works.

19 century thinking will not work with this many people! as for free markets greed is involved not the availability of food. I would like to see the world stop trade or slow it down a bit, and concentrate on whats wrong on the home front. 15 billion people for Australia would be nice.

The governments of the world are starting to loosing control, and you know what they tried to fix similar problems with Don't you! That's right! WAR>

Our whole history is full of tails like the one countries growth and conquer, and what makes you think that this time is not going to happen again?

All the signs are here!

Get ready for roll-a-coaster ride.

EVO
Posted by EVO2, Thursday, 5 March 2009 3:27:37 PM
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The evidence is against Mr Wolfenden. Food security comes from diversity of supply, as noted by a previous commenter. Freer markets deliver more goods per input. The subsidies in US, Europe and Japan are the complete opposite of free markets. The food riots were, interestingly, mainly to do with the least-traded crops like rice. The more traded a commodity, the more secure its provision.

"the promises of more and cheaper foods that would come with free trade have ... brought ... under-priced imports."

That is, the promise of cheaper food has brought cheaper food! LOL

Mr Wolfenden also conflates the issue of food security and job security for producers - they are not the same thing. He needs a refresher course on free trade:
http://jarrahjob.net/?p=3
Posted by fatfingers, Thursday, 5 March 2009 5:21:44 PM
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I have to admit, I thought this was a very odd article. In fact as Shadow Minister has mentioned, food markets are some of the least free in the world. Try getting rice into Japan.

Yabby is correct, if subsidies were removed from the equation, then supply and demand would dominate. Unfortunately, food prices would go up to better reflect the cost of production, but produces would respond to real needs rather than Government subsidies. The proximate cause of the food riots last year was two things: drought in many producing countries and biofuels mania in the EU and US.

Fatfingers, you have hit the nail firmly on the head. Wolfenden is complaining that modern agricultural systems are creating cheaper food and wants that to change. That might be OK for him, but I rather suspect that poor people in other parts of the world might see the result differently.
Posted by Agronomist, Saturday, 7 March 2009 9:05:31 PM
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I have been told that in our world, sufficient food is produced to supply the world's population four times over. The actual problem is greed, politics and all those thing that prevent the food from getting to the hungriest and neediest. Lets address those issues please!
Posted by bridgejenny, Monday, 9 March 2009 10:41:42 PM
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