Guide Food Crises and the WTO

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The food and financial crises of and have pushed millions more people into poverty and hunger, while changing the parameters of international trade.
Table of contents

In addition, developing countries were given until to phase out their export subsidies, with five additional years until to phase out subsidies covering transportation and marketing costs. If global commodity prices continue to decline, as Diaz-Bonilla forecasts, these longer transitional periods mean that export subsidies could continue to have an impact on agricultural production in middle- and low-income countries, harming poor producers and slowing poverty reduction and economic development in these areas. He also discussed other issues covered under the topic of export competition, including export credit and guarantees, food aid, and state trading enterprises.

Joseph Glauber of IFPRI discussed this issue of public food stocks, stating that falling global commodity prices could impact the ease with which a permanent solution is reached, as well as what form this solution will take. Minimum support levels for staple food production in many developing countries, including India and China, have remained high despite declining world prices, meaning that domestic prices in these countries are higher than global prices.

This discrepancy could potentially distort agricultural production and further drive down global prices, says Glauber. Glauber discusses several options to resolve this, a number of which have been put forward by WTO members:. Food Security Portal. In Focus How small businesses are driving growth across African agriculture. To tackle climate change we need to rethink our food system. Categories Africa. Evidence-Based Research. G20 Mexico. Jun 15, by sgustafson. Glauber discusses several options to resolve this, a number of which have been put forward by WTO members: Increase de minimis percentage for developing countries: This strategy would provide developing countries more policy space within which to design food security programs like public stockholding; however, Glauber points out that the major flaw in this strategy is that the percentage applies to all forms of domestic support and could be considered distortionary.

Thus, it is unlikely that WTO member states would agree to such an increase. Update the reporting base period: The current base period for calculating appropriate price support levels is ; however, this period represents a time when global agricultural prices were very low. Using a more recent period could produce a more representative measure of price supports.

Critics of this strategy caution that support could be under-estimated if prices fall below the levels seen in the new base period. Allow the Fixed External Reference Price to move with prices: One way in which to do this would be to update the current reference price average using a price index; however, this could also result in support being under-estimated if prices start to decline.

Restrict eligible production: Limiting the amount of domestic production that a government can purchase for a public stockholding program can prevent countries from underreporting their domestic price support levels; in theory, this can help ensure that distortionary price support policies are not disguised as public stockholding programs.

This is also a function of monopoly expansion. The USDA claims prices are expected to increase another three to four percentage points throughout , the steepest increase in 17 years.

Public stockholding for food security purposes

Because both fuel and food prices are going up, these people are most affected by the crisis, and may be joined by millions of others living at or near the poverty level. The food crisis is worsening. While it has not been addressed by politicians or the presidential candidates, the triple whammy of a declining economy and food and energy inflation are squeezing the poor and the middle class alike. Over 28 million people—a national record—have been driven into the national food stamp program.

Higher commodities prices, specifically for corn, wheat, milk, and soy beans, coupled with rising energy costs, are the main reason that food prices are rising faster than normal rates. A dozen eggs costs 50 cents more than last year, a loaf of bread, 20 cents more. However, because they make their money on high volume and low margins—and because they can source directly from producers—larger chains and big box stores have posted sizable profits with the food crisis.

This even bests U. Other major retailers, such as Wal-Mart, also say that food sales are driving their profit increases. Prices are up, but just how bad is the food crisis in the United States? Federal support for food banks began during the food crisis of the s as an emergency anti-poverty measure to close what was thought to be a temporary food security gap. In the s, despite a downturn in the economy, the Reagan administration cut support for social safety nets, pushing poor people into the street and forcing food banks to turn to the private sector for donations.

Food banks fought hunger by collecting unwanted food from distributors and individual households.

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Religious institutions, nonprofits, and an army of volunteers set up soup kitchens, food pantries, and food banks, giving rise to a rapidly growing emergency food movement. As the number of hungry people in the United States has grown, food banks have increasingly taken up the slack where government food stamps and federal school and nutrition programs leave off. Though the demand for food has increased, food stocks are down. The USDA distributes surplus when stocks are high or commodities prices fall below a certain level.

Like international food aid, they respond to the needs of the grain market first, tending to decrease distribution when food is most needed and increase it when it is less needed. Because many food banks across the nation rely heavily on government surplus, the decline in USDA bonus commodities has pressured them to find alternative suppliers and sources of food.

Many food banks are making substitutions for traditional sources of protein and dairy, and others are reorganizing their operating structures. The U. Farm Bill. Food crises and farm crises are never far apart. In the s, the government had been managing grain supply and market fluctuations by maintaining national reserves and paying farmers to idle their land.

But when oil shortages and inflation pushed up food prices—provoking widespread hunger abroad—then U. Secretary of Agriculture Earl Butz told U. Policies that curbed overproduction and protected farmers from price swings were replaced by ones that encouraged maximum production and low prices. When it turned out the hungry people of the world were too poor to buy all the food U. The average farm size went from to acres, reflecting a steady agrarian shift to mega-farms. Under new agricultural policy, farmers were guaranteed a minimum price for their grain.

True to its word, over the next two decades, the government paid out billions of dollars to maintain surpluses of cheap grain. Cheap grain became the bulwark not only of the feedlot explosion, but of U.

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This policy was later incorporated into the rules of the WTO that prevented developing countries from raising tariffs to protect their agriculture from cheap foreign imports. The Farm Bill called for a phase-out by Farm Bill like price floors to rural economies, conservation, and diversified livestock programs. Counting on unimpeded exports, U. The main beneficiaries of these policies were large farms, multinational grain traders including Cargill and Archer Daniels Midland, the feedlot industries e.

Profit margins are rapidly thinning for both conventional and organic farmers. In general, farmers report that their costs are increasing faster than prices for their goods.

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The prices of most fertilizers have tripled over the last 18 months. Agrofuel—specifically corn-based ethanol—was once considered a good way to add value to corn in order to improve farm incomes. Unfortunately, the farmer-owned cooperatives that initially ensured returns to farmers are quickly being taken over by industry. This is rapidly changing. Because of the economies of scale of its plants, and the fact that it can dominate the grain market in both food and fuel crops, ADM is emerging as the hegemonic player in the United States.

While other ethanol companies are struggling with shrinking margins due to high corn prices, ADM has strengthened its market share, as well as its profits. Organic farmers are also reporting an increase in their input costs organic fertilizer, seeds, and plastics used for irrigation, and general costs such as electricity and water. Many organic milk producers can no longer find organic feed grains. But what happens if we have a devastating drought or other natural or man-made disaster which results in a food crisis in the United States?

There are no food reserves! The United States has a Federal Reserve Bank for money, and a Strategic Petroleum Reserve for oil, but absolutely no federal reserve for grain and other emergency foodstuffs. The federal government is investing billions of dollars in taxpayer money to bail out Wall Street. Both the food crisis and the financial crisis are rooted in similar polices that have fed on each other for years. Free market reforms worldwide, championed by the United States, eroded support for local agriculture and led to massive consolidation in the agriculture industry.

Large banks quickly swallowed up small banks. Some financial services companies, like Goldman Sachs, even became importers of physical goods, while traditional agribusinesses, like Cargill, now have investment banking arms that deal in everything from real estate and corporate securities to IT technology. Deregulation and consolidation both make markets extremely vulnerable to shock. When the sub-prime mortgage crisis hit in , investors began to scramble for safe places to put their investments.

At least some of the rampant food price inflation that began at the beginning of was caused by exactly that scramble—a combination of investing in agricultural commodities and oil, which drove up the price of food and farm inputs. Looking for safer investments, traders that may or may not be in businesses related to food at all, put their money into commodities futures. This system of deregulation has caught our economy and our food system in a negative feedback loop.

Less regulation breeds more consolidation and less stability in both agricultural and financial markets. The Wall Street bailouts may or may not stabilize financial markets in the short run, but will do nothing to address the root causes of the current crisis, nor will they stave off the next one. A real solution must include measures to stabilize both food and financial markets. We need strong oversight on large traders and financial services, and increased support to local economies, small farmers, local banks, and small borrowers. Most of all, we need a dramatic departure from the free-market fundamentalism that brought us here in the first place.

The official prescriptions for solving the world food crisis call for more of the same policies that caused the crisis in the first place: e. Expecting the institutions that built the current food system to solve the food crisis is like asking an arsonist to put out a forest fire. To solve the food crisis we need to fix the food system. That entails re-regulating the market, reducing the oligopolistic power of the agri-foods corporations, and building agro-ecologically resilient family agriculture.

We need to make food affordable by turning the food system into an engine for local economic development in both rural and urban areas. In fact, the three need to work in concert, complementing each other. In the United States, food policy councils can localize and rationalize local food systems. Safety nets for low-income people should be improved to ensure adequate access to fresh, healthy food.

Food banks should be supported to source fresh, healthy food from local farmers and through state-level commodities programs. Support independent community-based food businesses at home and abroad. A prudent reserves policy that stabilizes commodities prices would reduce controversial farm subsidy payments by ensuring prices do not collapse … [this will] benefit consumers and farmers instead of leaving our fates to the whims and dictates of unstable, global markets. Suspend international agrofuels trade and investment.

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Halt any expansion of government-supported biofuels programs and immediately revise all renewable fuels mandates, tax incentives, and other subsidies. A coalition of progressive environmental and social justice groups in the United States recently launched a global call for a U. Institutional investors have poured hundreds of billions of dollars into the commodities futures markets, driving up food and energy prices to historic levels.

Even though prices have dropped in recent weeks, regulatory loopholes still remain ready to introduce extreme market volatility, political instability, and much human suffering. To lower international food prices and protect our social interests, the Commodities Futures Trading Commission must use its authority to curb excessive speculation in commodities futures and r e-establish strict position limits on speculators which were successful until removed by the Commodity Futures Modernization Act of We must r egulate and bring transparency to all trading.

We can also removing damaging speculative influence on commodities prices by prohibiting participation in commodities markets by those who do not produce, manufacture, or take physical delivery of the commodities. We must create a solidarity economy that puts compassion and care for one another ahead of short-term profits, in the United States and around the world.

On a pound-per-acre basis, extensive research shows that small family farms are more productive than large-scale industrial farms. And they use less oil, especially if food is traded locally or sub-regionally. According to Henry Saragih, coordinator of the international farmer and peasant federation Via Campesina:.

Global Report on Food Crises 2018

Rebuilding national food economies will require immediate and long-term political commitments from governments. An absolute priority has to be given to domestic food production in order to decrease dependency on the international market.

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Peasants and small farmers should be encouraged through better prices for their farm products and stable markets to produce food for themselves and their communities. Landless families from rural and urban areas have to get access to land, seeds, and water to produce their own food. This means increased investment in peasant and farmer-based food production for domestic markets.

The IAASTD calls for an overhaul of agriculture dominated by multinational companies and governed by unfair trade rules. Contrary to conventional wisdom, agro-ecological farms, growing throughout the world, are highly productive and—according to a path-breaking study from the University of Michigan—can easily provide us with all the food we need. As industrialized farming and free trade regimes fail us, these approaches will be the keys for building resilience back into a dysfunctional global food system.

Food sovereignty is the right of all people to healthy and culturally appropriate food produced through ecologically sound and sustainable methods, and their right to define their own food and agriculture systems. At the heart of these concepts is the belief that we need to democratize our food system in order to ensure equity and sustainability. The democratization of our food systems requires a social change in the way we manage food.

We must reduce the political influence of the industrial agri-foods complex and strengthen antitrust laws and enforcement. These changes will require both changes in practices and in legislation in order to establish a regulatory context for sustainable and equitable food systems.

These changes also depend on the degree of political will on the part of business, our legislators, and our communities.