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Unfair Food Pricing Is Killing Family Farms and Regenerative Farming
By Elizabeth Henderson
In February, a dairy farmer friend sent me a note confiding that a few farmers she knows are living on cereal until their milk checks arrive. Yet, the recently released census of agriculture shows that the number of young farmers is growing even as the average age of farmers also increases, and there are uplifting articles about young black farmers connecting with the land and enjoying the self-empowerment that comes with being an independent farmer.
Meanwhile, voices are rising about the central role that regenerative and organic farming can play in a Green New Deal, a program to mobilize all possible forces to prevent climate disaster.
How can we make sense of these conflicting currents? What policies and programs will create a just transition for family-scale farmers? What changes will enable farmers to maximize the potential of photosynthesis for putting carbon in the soil to supplement reductions in greenhouse gas emissions in mitigating climate disaster?
Farmers who are constantly worrying about financial viability have little bandwidth for new practices or long-term improvements that take initial investments. As Robert Leonard and Matt Russell noted in an opinion piece in The New York Times:
"Government programs like the current farm bill pit production against conservation, and doing the right thing for the environment is a considerable drain on a farmer's bank account, especially when so many of them are losing money to low commodity prices and President Trump's tariffs."
The farm debt crisis of the 1980s never completely went away and has now resurfaced with a vengeance. In 2017, aggregate farm earnings were half of what they were in 2013 due to vast overproduction of basic commodities, and farm income has not recovered. The North American Free Trade Agreement resulted in the loss of mid-sized and smaller farms in all three signatory countries as integrated production and marketing favored larger farms.
Since 1950, the U.S. has gone from 5.4 million farms to just over 2 million, a loss of more than 3 million farms, with important shifts from many smaller integrated farms to fewer large, more specialized farms that grow even larger. For dairy farms in particular, these have been hard times as illustrated by the losses in the two top dairy states. New York State has lost 20 percent of its dairy farms in the past five years. Wisconsin lost 691 dairy farms in 2018.
While the persistence and shrewd maneuvering of organizations like the National Sustainable Agriculture Coalition and the National Organic Coalition meant that programs that support organic and sustainable farming fared remarkably well in the 2018 Farm Bill, the bulk of the more than 500-page bill carries on with business as usual, even making it easier for big farms to get bigger by failing to cap the payments any one farm can receive and allowing more relatives to cash in on programs in the bill.
Both mainstream parties advocate the neoliberal, free-trade policies that the ever more aggregated seed, food and chemical corporations have imposed upon the U.S. since World War II to the detriment of family-scale farms all over the world. The dairy farmers who got through the winter eating cereal and the new farmers who are eagerly starting out are in urgent need of radical change.
Why is this happening? Political economist and author Eric Holt Giménez would say this is just capitalism working as it is supposed to. Faced with slim margins in the race to cover farm expenses, farmers produce more, and that drives prices down even further. The beneficiaries are the ever-larger corporations that have consolidated their dominance in the food sector. The result? Shoppers pay more, and a shrinking portion of what they pay goes to farmers.
At first, this mainly hit conventional farms; then in 2017, organic processors started limiting the amount of milk they purchased from organic dairies and cut the price paid below the cost of production. As a result, family-scale farms of all kinds are going out of business, and tragically, there are increasing reports of farmer suicides.
Graphic source: Agricultural Economic Insights (used with permission)
If you juxtapose the Agricultural Economic Insights chart with the United States Department of Agriculture (USDA) chart above showing the declining number of farms, it is clear that loss of farm income corresponds with the loss of farms. More than half of U.S. farm households lost money farming in recent years, according to the USDA, which estimated that median farm income for U.S. farm households was negative $1,553 in 2018.
Farm incomes have dropped despite record productivity on U.S. farms because oversupply drives down commodity prices. Through a plethora of racist policies, black farmers have lost land at more than five times the rate of white farmers from the peak of black farmland ownership in 1910 until the 1990s. Meanwhile, profits in consolidated food businesses (farm inputs, retail stores) remain high with returns on investment ranging from 8 to 35 percent. Clearly, there is plenty of money in food: It just does not get apportioned fairly to the people who do the actual work.
Programs to train new farmers, especially veterans, get media attention and funding, but as the National Young Farmers Coalition repeats tirelessly, land in most parts of the country is too expensive for a farmer to buy with farm earnings. USDA data show that farm families have a middle-class income, but only on the largest farms growing a few commodities is that income from farm earnings.
So, while presidential candidates and Green New Dealers are putting bold proposals on the table for public discourse, farmers, farmworkers and concerned eaters should take the opportunity to hammer out proposals that will solve the structural issues that have turned U.S. farming into a problem instead of the win-win-win solutions that are possible.
Declaring that she wants "Washington to work for family farmers again," Sen. Elizabeth Warren promises to take some steps in the right direction by breaking up vertically integrated trusts, allowing farmers themselves to repair the equipment they purchase, ensuring that contracts for livestock farmers are fair, reinvigorating country of origin labeling, and restricting foreign ownership of farmland.
Sen. Bernie Sanders goes much further, outlining a program that would completely restructure the food system so that farmers can make a living and afford to pay living wages to employees. These are the policies this country needs if we hope to keep family-scale farming.
When farmers can afford to adopt regenerative organic practices, they will take more carbon out of the air and put it in the soil where it builds soil health, making the people and livestock who eat those crops healthier. The original New Deal's parity pricing also fueled the soil conservation that ended the dust bowl.Farmers can focus on carbon farming if the price they receive in the marketplace covers the costs of running their farms. Family-scale farmers and the people who want to eat locally grown food all need a fair Green New Deal for the 21st century.
Elizabeth Henderson farmed at Peacework Farm in Wayne County, New York, for more than 30 years. Peacework CSA was one of the first community-supported agriculture farms in New York State. She is a member of the Board the Northeast Organic Farming Association (NOFA) of New York, and represents the NOFA Interstate Council on the Board of the Agricultural Justice Project. Elizabeth is the lead author of Sharing the Harvest: A Citizen's Guide to Community Supported Agriculture (Chelsea Green, 2007), with a Spanish language e-book edition in 2017. She maintains the blog The Prying Mantis.
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Ola Elvestrun, Norway's environment minister, announced Thursday that it is freezing its contributions to the Amazon Fund, and will no longer be transferring €300 million ($33.2 million) to Brazil. In a press release, the Norwegian embassy in Brazil stated:
Given the present circumstances, Norway does not have either the legal or the technical basis for making its annual contribution to the Amazon Fund.
Brazilian President Jair Bolsonaro reacted with sarcasm to Norway's decision, which had been widely expected. After an official event, he commented: "Isn't Norway the country that kills whales at the North Pole? Doesn't it also produce oil? It has no basis for telling us what to do. It should give the money to Angela Merkel [the German Chancellor] to reforest Germany."
According to its website, the Amazon Fund is a "REDD+ mechanism created to raise donations for non-reimbursable investments in efforts to prevent, monitor and combat deforestation, as well as to promote the preservation and sustainable use in the Brazilian Amazon." The bulk of funding comes from Norway and Germany.
The annual transfer of funds from developed world donors to the Amazon Fund depends on a report from the Fund's technical committee. This committee meets after the National Institute of Space Research, which gathers official Amazon deforestation data, publishes its annual report with the definitive figures for deforestation in the previous year.
But this year the Amazon Fund's technical committee, along with its steering committee, COFA, were abolished by the Bolsonaro government on 11 April as part of a sweeping move to dissolve some 600 bodies, most of which had NGO involvement. The Bolsonaro government views NGO work in Brazil as a conspiracy to undermine Brazil's sovereignty.
The Brazilian government then demanded far-reaching changes in the way the fund is managed, as documented in a previous article. As a result, the Amazon Fund's technical committee has been unable to meet; Norway says it therefore cannot continue making donations without a favorable report from the committee.
Archer Daniels Midland soy silos in Mato Grosso along the BR-163 highway, where Amazon rainforest has largely been replaced by soy destined for the EU, UK, China and other international markets.
An Uncertain Future
The Amazon Fund was announced during the 2007 United Nations Climate Change Conference in Bali, during a period when environmentalists were alarmed at the rocketing rate of deforestation in the Brazilian Amazon. It was created as a way of encouraging Brazil to continue bringing down the rate of forest conversion to pastures and croplands.
Government agencies, such as IBAMA, Brazil's environmental agency, and NGOs shared Amazon Fund donations. IBAMA used the money primarily to enforce deforestation laws, while the NGOs oversaw projects to support sustainable communities and livelihoods in the Amazon.
There has been some controversy as to whether the Fund has actually achieved its goals: in the three years before the deal, the rate of deforestation fell dramatically but, after money from the Fund started pouring into the Amazon, the rate remained fairly stationary until 2014, when it began to rise once again. But, in general, the international donors have been pleased with the Fund's performance, and until the Bolsonaro government came to office, the program was expected to continue indefinitely.
Norway has been the main donor (94 percent) to the Amazon Fund, followed by Germany (5 percent), and Brazil's state-owned oil company, Petrobrás (1 percent). Over the past 11 years, the Norwegians have made, by far, the biggest contribution: R$3.2 billion ($855 million) out of the total of R$3.4 billion ($903 million).
Up till now the Fund has approved 103 projects, with the dispersal of R$1.8 billion ($478 million). These projects will not be affected by Norway's funding freeze because the donors have already provided the funding and the Brazilian Development Bank is contractually obliged to disburse the money until the end of the projects. But there are another 54 projects, currently being analyzed, whose future is far less secure.
One of the projects left stranded by the dissolution of the Fund's committees is Projeto Frutificar, which should be a three-year project, with a budget of R$29 million ($7.3 million), for the production of açai and cacao by 1,000 small-scale farmers in the states of Amapá and Pará. The project was drawn up by the Brazilian NGO IPAM (Institute of Environmental research in Amazonia).
Paulo Moutinho, an IPAM researcher, told Globo newspaper: "Our program was ready to go when the [Brazilian] government asked for changes in the Fund. It's now stuck in the BNDES. Without funding from Norway, we don't know what will happen to it."
Norway is not the only European nation to be reconsidering the way it funds environmental projects in Brazil. Germany has many environmental projects in the Latin American country, apart from its small contribution to the Amazon Fund, and is deeply concerned about the way the rate of deforestation has been soaring this year.
The German environment ministry told Mongabay that its minister, Svenja Schulze, had decided to put financial support for forest and biodiversity projects in Brazil on hold, with €35 million ($39 million) for various projects now frozen.
The ministry explained why: "The Brazilian government's policy in the Amazon raises doubts whether a consistent reduction in deforestation rates is still being pursued. Only when clarity is restored, can project collaboration be continued."
Bauxite mines in Paragominas, Brazil. The Bolsonaro administration is urging new laws that would allow large-scale mining within Brazil's indigenous reserves.
Hydro / Halvor Molland / Flickr
Alternative Amazon Funding
Although there will certainly be disruption in the short-term as a result of the paralysis in the Amazon Fund, the governors of Brazil's Amazon states, which rely on international funding for their environmental projects, are already scrambling to create alternative channels.
In a press release issued yesterday Helder Barbalho, the governor of Pará, the state with the highest number of projects financed by the Fund, said that he will do all he can to maintain and increase his state partnership with Norway.
Barbalho had announced earlier that his state would be receiving €12.5 million ($11.1 million) to run deforestation monitoring centers in five regions of Pará. Barbalho said: "The state governments' monitoring systems are recording a high level of deforestation in Pará, as in the other Amazon states. The money will be made available to those who want to help [the Pará government reduce deforestation] without this being seen as international intervention."
Amazonas state has funding partnerships with Germany and is negotiating deals with France. "I am talking with countries, mainly European, that are interested in investing in projects in the Amazon," said Amazonas governor Wilson Miranda Lima. "It is important to look at Amazônia, not only from the point of view of conservation, but also — and this is even more important — from the point of view of its citizens. It's impossible to preserve Amazônia if its inhabitants are poor."
Signing of the EU-Mercusor Latin American trading agreement earlier this year. The pact still needs to be ratified.
Council of Hemispheric Affairs
Looming International Difficulties
The Bolsonaro government's perceived reluctance to take effective measures to curb deforestation may in the longer-term lead to a far more serious problem than the paralysis of the Amazon Fund.
In June, the European Union and Mercosur, the South American trade bloc, reached an agreement to create the largest trading bloc in the world. If all goes ahead as planned, the pact would account for a quarter of the world's economy, involving 780 million people, and remove import tariffs on 90 percent of the goods traded between the two blocs. The Brazilian government has predicted that the deal will lead to an increase of almost $100 billion in Brazilian exports, particularly agricultural products, by 2035.
But the huge surge this year in Amazon deforestation is leading some European countries to think twice about ratifying the deal. In an interview with Mongabay, the German environment ministry made it very clear that Germany is very worried about events in the Amazon: "We are deeply concerned given the pace of destruction in Brazil … The Amazon Forest is vital for the atmospheric circulation and considered as one of the tipping points of the climate system."
The ministry stated that, for the trade deal to go ahead, Brazil must carry out its commitment under the Paris Climate agreement to reduce its greenhouse gas emissions by 43 percent below the 2005 level by 2030. The German environment ministry said: If the trade deal is to go ahead, "It is necessary that Brazil is effectively implementing its climate change objectives adopted under the [Paris] Agreement. It is precisely this commitment that is expressly confirmed in the text of the EU-Mercosur Free Trade Agreement."
Blairo Maggi, Brazil agriculture minister under the Temer administration, and a major shareholder in Amaggi, the largest Brazilian-owned commodities trading company, has said very little in public since Bolsonaro came to power; he's been "in a voluntary retreat," as he puts it. But Maggi is so concerned about the damage Bolsonaro's off the cuff remarks and policies are doing to international relationships he decided to speak out earlier this week.
Former Brazil Agriculture Minister Blairo Maggi, who has broken a self-imposed silence to criticize the Bolsonaro government, saying that its rhetoric and policies could threaten Brazil's international commodities trade.
Senado Federal / Visualhunt / CC BY
Maggi, a ruralista who strongly supports agribusiness, told the newspaper, Valor Econômico, that, even if the European Union doesn't get to the point of tearing up a deal that has taken 20 years to negotiate, there could be long delays. "These environmental confusions could create a situation in which the EU says that Brazil isn't sticking to the rules." Maggi speculated. "France doesn't want the deal and perhaps it is taking advantage of the situation to tear it up. Or the deal could take much longer to ratify — three, five years."
Such a delay could have severe repercussions for Brazil's struggling economy which relies heavily on its commodities trade with the EU. Analysists say that Bolsonaro's fears over such an outcome could be one reason for his recently announced October meeting with Chinese President Xi Jinping, another key trading partner.
Maggi is worried about another, even more alarming, potential consequence of Bolsonaro's failure to stem illegal deforestation — Brazil could be hit by a boycott by its foreign customers. "I don't buy this idea that the world needs Brazil … We are only a player and, worse still, replaceable." Maggi warns, "As an exporter, I'm telling you: things are getting very difficult. Brazil has been saying for years that it is possible to produce and preserve, but with this [Bolsonaro administration] rhetoric, we are going back to square one … We could find markets closed to us."
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