Food System
All of the processes, people, materials, and
infrastructure involved in producing the food
we consume each day, including the required
inputs and outputs for each stage in the food
production process. These stages include:
Growing
Harvesting
Storing
Transporting
Changing (Transforming or Processing)
Packaging
Marketing
Retailing
Preparing
Consuming
Convention or Industrial Food Systems
•Rely on large-scale farming
•Require massive farm inputs including fertilizers,
fossil fuels, and machinery
•Dependent on large-scale government subsidies
•Technology dependent: processing, packing, GMO’s,
etc.
•Generate huge amounts of waste
Alternative or Sustainable Food Systems
•Encourage small to mid-size farms, but not
necessarily opposed to high-intensity or large-scale
operations
•Require organic inputs: compost, manure, saved
seeds, etc.
•Not dependent on subsidies (wouldn’t it be nice,
though, if the government subsidized broccoli and
kale?)
•Benefits from new technologies but can produce
high-quality food using many primitive methods
•Generates little to no waste
Supermarket History
First grocery store chains appear in the late
1900’s
The Great Atlantic and Pacific Tea
Company (A&P)---1859
Piggly Wiggly --- 1916—introduces self
service grocery
Safeway—1911 (Sam Sellig stores)—
1925 “Safeway” name
Kroger--1883
First Supermarkets appear in the 1930’s
First “true” supermarket may be King
Kullen in Queens, NYC in 1930
Features:
self-service
separate product departments
discount pricing
marketing
volume selling
Supermarket Success
•Transcontinental railroad---1869
•Automobile---1885, mass production 1914
•The Great Depression—1929
•Petrochemical fertilizer—The Haber-Bosch process for
“fixing” nitrogen—1913
•Food Policy—1973 Farm Bill—established modern
system of grain subsidies
Big Players
Pepsi-Co---c. $45 billion total
revenue
Frito-Lay
Tropicana
Quaker
Gatorade
Lipton
Dole—c.$ 7 billion
General Mills---c. $15 billion
Betty Crocker
Pillsbury
Yoplait
Green Giant
Cascadian Farm
Muir Glen
Nestle—c. $111 billion
Digornio
Zephyrhills
Edy’s
Tombstone
Haagan-Daz
Hot Pockets
Kraft—c. $41 billion
Nabisco
Ritz
Grey Poupon
South Beach
Food Policies
•Food policies are common, often very complex, and nearly
ubiquitous
•They are frequently contradictory
•
Ex. Farmers want higher prices while consumers want
lower prices
•Scope of food policy includes tariffs, subsidies, research, technology,
health, safety, the environment, transportation and many other areas
World Food Crisis of 2008-2009
World food prices began to rise sharply in 2007.
As a result, countries producing food took steps to limit rising prices by keep more
food “at home.” This helped stabilize domestic prices.
Keeping more food for domestic consumption means fewer food exports. This
further increases the price of food for countries that import food.
Some food importing countries lowered tariffs on food to help stabilize prices; but,
by making food cheaper, demand for imported food went up, so the price of food
began to rise in global markets.
Lesson Learned from the Food Crisis of 2008/2009:
When each country focuses only on itself, things can spiral out of control.
or
Westhoff’s “Rule of Thumb”:
“Government policies can both raise and lower food prices. Some policies
that try to make domestic food prices more stable can make food prices in
other countries more volatile.”
Example: If the U.S. requires the use of biofuels, the price of grain
and vegetable oils rise in Asian markets. Why?
Subsidies in High-Income Countries (esp. the United States)
When the U.S. government subsidizes grain/legume production (wheat,
corn, soy, etc.), the prices of these commodities remain “artificially” low.
Farmers can charge less than the fair market price because the U.S.
government makes up the difference.
As a result, American consumers and American corporations can buy grain
at a very low price.
BUT, we can also export of grain at artificially low prices to the rest of the
world. When we do this, farmers in other countries cannot compete with
the low price of important American commodities. As a result, some
farmers are forced into a cycle of poverty because they can’t make a profit
on their crops.
Subsidies: A Historical View
Governments develop subsidies to cope with industrialization
As more and more people make money in other sectors of the economy, outside of
agriculture, farmers need more and more help to stay afloat and preserve their way of
life.
The U.S. began its subsidy programs in earnest in 1933 with the Agricultural Adjustmen
Act under the New Deal
At the time of the Great Depression, farmers needed help to survive. Most farms were
small and most farmers were poor.
Most farms today are large commercial farms that do not need subsidies to survive.
Q: So Why Do We Still Have Subsidies?
A: The Farm Lobby and the Farm Bill
The “Iron Triangle” keeps the subsidy system in place:
House and Senate Agricultural Committees
USDA
Farm lobbyists (The American Farm Bureau Federation and The National
Farmers’ Union, National Corn Growers’ Association, U.S. Wheat Associates,
The National Cotton Council, etc.)
The Biofuel Conundrum
On the one hand, promoting biofuels increases the prices of grains and
seed oils around the world;
On the other hand, government subsidies keep the prices of grains and
seeds artificially low.
Q: So, what’s the problem? Should these competing forces balance out?
A: Sometimes, but not all the time. When demand is changing quickly,
things can spiral out of control.
Ethanol in the United States
Three-pronged policy:
1. U.S. government subsidizes ethanol production
Ex. Tax credit: If you blend ethanol with your regular gasoline, we will give
you a credit on your taxes (i.e., lower your overall tax bill). This allows fuel companie
to pay a high price for ethanol because it’s in their interest to use it.
2. We place a tariff on ethanol imports from Brazil and other countries
3. We mandate a minimum level of biofuel (ethanol) use: the Renewable Fuel
Standard; Energy Independence and Security Act of 2007
Rice: An Example of How Policy Trumps Supply
Looking at the chart on p. 63 in Westhoff, explain why people were,
literally, starving for lack of food in 2008, even though world stocks of
rice increased during the course of the year.
Back to Biofuels in the U.S.
If the U.S. eliminates all policy supports for ethanol production, what will happen?
One scenario:
Demand for ethanol would decrease sharply
Demand for corn would decrease
Corn price would fall
Farmers would plant more soybeans and wheat since corn is less profitable
Soybean and wheat prices would also fall
Food prices would fall
Meat prices would fall and meat production would increase
What about other countries who depend on U.S. exports?
Food Prices, Ethanol, and Crude Oil
If oil prices rise, the demand for ethanol increases
Combined with the ethanol tax credit (a subsidy), this
would keep ethanol prices relatively high
Corn demand increases
Food prices increase
Food Prices, Ethanol, and Crude Oil
If oil prices fall, demand for ethanol decreases
Even with the ethanol tax credit (a subsidy), ethanol prices in
late 2008 fell considerably
Corn demand decreased
Food prices decreased
The Renewable Fuel Standard (RFS) became “binding,”
establishing a “floor” for minimum levels of biofuel use—so
the price of biofuels was kept artificially high.
Corn prices and food prices remained artificially high.
A Closer Look at Tariffs
Tariffs increase the price of food in the importing country and decrease the
price of food in the exporting country.
Ex. If we tax Brazilian sugar, our sugar prices go up, while Brazilian
producers must lower their prices to remain competitive in the U.S. and
world markets.
Export subsidies: allow buyers in importing countries to obtain food at
lower-than-market prices. Prices are artificially inflated in the exporting
(subsidizing) country and artificially deflated in the importing country.
Other Forms of Subsidy and Government Support
Quotas
Farm credit services
Fuel and Fertilizer subsidies
Food assistance programs, “Supplemental Nutrition Assistance Program” in
the U.S. (aka ‘food stamps’)
Commodity stores (government stockpiles of grain)
What about NAFTA? Is it good or bad? (Here we are again!)
Food Regimes
A term used to describe “the international food order” (Winders 132)
The set of policies in place in countries all over the world that set
relative prices of food and encourage specialization in food production
Important features of food regimes:
1. “Set the market” and thus structures the production and
distribution of agricultural commodities (and shapes the international
division of labor of agricultural production)
2. Made possible through state regulation of food markets (tariffs,
subsidies, etc.)
3. Control the direction of trade flows
4. Change throughout history
More Characteristics of Food Regimes
Characterized by play between free market supporters and those
seeking more regulation (i.e, “protectionists”)
The flow of basic good commodities, especially grain, help to define
social, political, and economic relations on a global scale. Flood
regimes create relationships of dependence in which some nations rely
on others for their food supply.
Usually dictated by a “hegemon” or power nation or group of nations
that are able to dictate patterns of production, trade, and
development (example, Britain in the 19th century, U.S. today)
Food regimes play an integral role in establishing and/or threatening
food security.
Food Security
Defined as the condition in which “all people at all times have access
to sufficient, safe, nutritious food to maintain a healthy and active
life.” (World Food Summit 1996)
Includes “physical and economic access to food that meets people's
dietary needs as well as their food preferences.” (WHO)
Applies to nations, regions, cities, or even households
Q: Why is it important to talk about food regimes and food security?
A: Because there are a lot of problems involving food around the
globe, and we don’t have solutions for them.
Some tough binaries to consider:
There isn’t enough food to feed everyone in the world. / There is
enough food in the world to feed everyone adequately; the problem is
distribution.
Future food needs can be met by current levels of production. / We
are running out of production capacity and the current system is
unsustainable.
National food security is paramount. / National food independence is
not a logical goal because of global trade.
Globalization and free trade movements lead to the persistence of
food insecurity and poverty in rural communities. / Globalization helps
the poor by lowering food costs and efficiently organizing production,
distribution, and the division of labor.
The U.S. Food Regime
Emerged strongly after World War II
Fundamentally protectionist
•price regulation
•purchasing surplus commodities
•subsidies
•production controls
Most significant development was the flood of grain, particularly
wheat, into the world food supply
U.S. created markets for grain exports and also gave away surplus as
“food aid” to impoverished or “developing” countries
As U.S. grain became cheaper and more abundant, some nations
experienced a collapse of agrarian sectors and “massive rural-to-urban
migration” (Winders 136)
The Problem with U.S. Food Policy after WWII
Relied on a failed attempt to manage supply
•Limited the number of acres on which farmers could produce
commodity crops
•Offered minimum price supports per bushel
Combined, these two policies encourage farmers to grow as much as
possible on the least amount of land
This high-yield revolution was achieved by the invention of chemical
fertilizers (the Haber-Bosch process of fixing nitrogen)
By the mid 1950’s we were awash in a sea of wheat, cotton, and corn.
While the livestock industry took up the extra surplus of corn, the wheat
and corn suppliers were in trouble.
As a result, the U.S. aim to control supply (production) had failed. We
turned to the other side of the coin: consumption and export subsidies.
The U.S. and Global Free Trade: GATT
1948—The U.S. used its global influence after WWII to pass GATT, the General
Agreement on Tariffs and Trade
•
established “most favored nation” trading status that
extended trade preferences to all partners of the agreement
•
average import duties fell from 40% in 1940’s to 5% by 1989
• did not apply to agriculture! (GATT exempted agriculture from
its restrictions on tariffs and subsides and allowed the U.S. and
other countries to continue to control supplies/production)
•The wheat and cotton lobbies opposed liberalization of
agricultural markets in a historical turn around (see Winders 144).
•As more and more countries signed on to GATT, they also
adopted U.S. supply management practices in order to compete
with cheap U.S. exports
Food Aid: Charity or Greed?
After WWII, the U.S. developed to policies to help reduce
the surplus of food commodities, especially wheat
Marshall Plan
•
helped to rebuild Europe while allows
U.S. to unload surplus
1954----“PL 480” (Public Law 480)
•
U.S. sells grain to needy countries at
“concessional” prices
•
Accounted for a whopping 80% of U.S.
wheat exports by 1965
Q: Who benefited the most from
this “aid”?
FAIR Act
The Federal Agricultural Improvement and Reform Act of 1996
*Ended supply management policies for U.S. wheat, corn, and soy, but not
tobacco or peanuts
*Ended federal requirements to leave a certain amount of land
unplanted (aka the ARC, or Acreage Reduction Program)
*Ended price supports, or minimum prices set by the government
for individual commodities like wheat and corn. (If prices fell below these
minimums, the government would make up the difference with cash
payments to farmers).
*Replaced price support payments with direct payments to farmers
regardless of market prices (based on a % of total farm expenses and number
of acres planted in the past)
*Kept export subsidies in place
Q: Why do most scholars argue that the FAIR Act was a victory for
Republicans?
Q: Why did Bill Clinton, a Democrat, sign the FAIR Act?
•Corn
•Livestock/Chicken
•Rise of agribusiness, esp. Cargill and ADM
•South shifting to the right
Washington Consensus
Neoliberalism
Green Revolution