Illinois specialty farmers talk about inequities in the trade war bailout

Tufts Friedman School alum Jeff Hake is featured in yesterday's report from the Illinois State University NPR Station, WGLT.

Jeff Hake and his immediate family run Funks Grove Heritage Fruits and Grains, a nine-acre farm in rural McLean. McLean County has secured the largest payouts through the Market Facilitation Program of any county in the country, but Hake's farm won't see any of that money.

As a family farm that sells most of its products directly to consumers—things like black raspberries and Johnny cake mixes—Hake is not exactly on the front lines of the trade war, but he sees the bailouts as a symptom of a greater problem.

“It’s just throwing money at the problem and hoping that things will work out later,” Hake said.

Can we improve the nutrition quality of the food supply by restraining international trade?

Because the Donald Trump administration is rolling back U.S. commitments in major trade agreements, our trading partners are retaliating with import restraints on U.S. food and agricultural products.

For example, the European Union (EU) may erect new trade barriers on peanut butter, sweetcorn, and orange juice. Canada may impose barriers on yogurt, processed meals with meats, pizza, maple syrup, cucumbers, and many other products.

Notice the diversity of nutrition profiles for these products. Food that would have been sent to Europe or Canada will instead remain on the U.S. market.

The question for my new video (fourth in a series) is: Can we improve the nutrition quality of the food supply by restraining international trade?

Parke Wilde - Nutrition Quality and International Trade from Tufts Friedman School on Vimeo.

U.S. Food Policy: An Introduction (Second Edition)

The book Food Policy in the United States: An Introduction, whose second edition has just been released in the Earthscan Food and Agriculture Series (Routledge), prepares readers to make their own distinctive contribution to a lively conversation about our food system.

There is no reason why food policy debate should continue to mirror the current dysfunctional state of our national political debate. We can do better.

The first in a series of related videos asks: Who should study U.S. food policy?

Routledge provides a free sample chapter on the author Q&A page.

U.S.-Mexico agricultural trade helps the U.S. economy and nutrition for consumers

For the United States, trade with Mexico offers many benefits for the economy and dietary quality for American consumers. 

Regarding the economic benefits, a recent August 2016 article in the magazine Amber Waves, from the U.S. Department of Agriculture -- by USDA economists Steven Zahniser, Adriana Moreno, and Arturo Ruanova -- emphasizes the contribution of the North American Free Trade Agreement (NAFTA). Gradually, from 1994 to 2008, they write, NAFTA removed tariffs and quotas, while at the same time reconciling rules on both sides of the border about how food safety is protected:

Together, this sweeping trade liberalization and ongoing regulatory cooperation made possible a dramatic increase in U.S.-Mexico agricultural trade.

The results included an enormous jump in export sales to Mexico, benefiting U.S. farmers. A chart in the Amber Waves article shows that agricultural trade with Mexico is nearly in balance, with agricultural exports equal to or exceeding imports in most years.

USDA's Foreign Agricultural Service has a page devoted to agricultural exports to Mexico, with statistics, links to agricultural trade offices in Mexico City and Monterrey, and a guide for exporters who seek to do business in Mexico. The top 5 U.S. export industries are dairy ($1.3 billion), pork ($1.3 billion), beef ($1.1 billion), poultry ($1.0 billion), and prepared food ($707 billion). Producers in these industries are important to the U.S. agricultural economy, and they are politically influential.

Like the Amber Waves article, USDA's FAS notes the role of NAFTA in this trade:

Under the North American Free Trade Agreement (NAFTA), Mexico and the United States have eliminated all tariffs and quantitative restrictions on agricultural goods and have strengthened scientific ties to eradicate diseases and pests, conduct research and enhance conservation.

Moving beyond just agricultural products, the office of the U.S. Trade Representative (USTR) has a web page devoted just to trade with Mexico. For U.S. producers, Mexico was the second-biggest export market in the world. Total U.S. trade with Mexico is more in balance than trade with several other countries. In 2015, U.S. exports to Mexico were an astonishing $240 billion, almost double our exports to China. Meanwhile, U.S. imports from Mexico were $294 billion, much less than our imports from China. Our trade deficit with Mexico is just $54 billion (much smaller than our deficit with China, Germany, or Japan, for example).

For nutrition, federal government sources place a heavy priority on increased consumption of fruits and vegetables. For example, the Healthy People 2020 initiative lists fruit and vegetable consumption as "Leading Health Indicators" and proposes ambitious goals for increased consumption.

USDA data on food imports show that fruit imports from Mexico increased almost 6-fold from 2000 ($0.8 billion) to 2014 ($4.7 billion). Similarly, vegetable imports from Mexico increased 3-fold from 2000 ($1.7 billion) to 2014 ($5.4 billion). With increased tariffs or reduced trade with Mexico, fruit and vegetable prices in the United States would be much higher. The consequence of reduced agricultural trade with Mexico would be that Mexicans would have more fruits and vegetables (and less beef, pork, and processed food), while U.S. consumers would have less fruits and vegetables (and more beef, pork, and processed food).

I always read with great care the large literature by public interest advocates who raise serious concerns about agricultural trade with Mexico. For example, Tom Philpott at Mother Jones describes conditions for agricultural workers in Mexico as "heartbreaking." Food and Water Watch argues that provisions for sanitary/phytosanitary rules in existing and proposed trade agreements are too weak. I hear the point of each, and yet think that reduced trade is not the remedy. I do not think the workers in Tom's story are helped by shutting down the U.S. Mexico border, and I think Mexico is capable of producing food to the same standards as producers in Florida or California. Looking forward beyond the hardships that excellent public interest sources have noted, we can improve labor and food safety standards without exaggerating differences across the border as if we had our own house fully in order.

In short, U.S.-Mexico trade is important and beneficial to the U.S. economy and nutrition. You can hear this view from me, and (as of this writing) you can hear it from the steady, sober online data sources maintained by the federal government.

Food policy in Brazil emphasizes enjoyment of meals and criticizes overprocessed foods

The Food and Environment Reporting Network (FERN) and the Nation have an in-depth article by Bridget Huber this week on national food policy in Brazil, led by Carlos Monteiro and colleagues. Dietary guidelines in Brazil bluntly criticize highly processed foods while simultaneously communicating a healthy enjoyment of food more generally.

Monteiro came to believe that nutritionists’ traditional focus on food groups and nutrients like fat, sugar, and protein had become obsolete. The more meaningful distinction, he started to argue, is in how the food is made. Monteiro is most concerned with the “ultraprocessed products”—those that are manufactured largely from industrial ingredients like palm oil, corn syrup, and artificial flavorings and typically replace foods that are eaten fresh or cooked. Even by traditional nutritionists’ criteria, these sorts of products are considered unhealthy—they tend to be high in fat, sugar, and salt. But Monteiro argues that ultraprocessed foods have other things in common: They encourage overeating, both because they are engineered by food scientists to induce cravings and because manufacturers spend lavishly on marketing.

This blog has previously discussed the way Brazilian dietary guidelines combine nutrition and sustainability issues, in a manner that is not done in the United States. I helped colleagues at George Washington University organize a conference on sustainability issues in dietary guidance in 2014, at which Monteiro was a speaker, and the Brazilian experience has influenced my sense of what might be possible in the United States.

Regarding enjoyment of healthy meals, Huber writes:

Pleasure is an essential part of the new guide, which frames cooking as a time to enjoy with family and friends, not a burden. And instead of sterile prescriptions for the number of grams of fat and fiber to eat each day, the guide focuses on meals. Sample meals were created by looking at the food habits of Brazilians who eat the lowest amount of ultraprocessed foods. One dinner option is a vegetable soup followed by a bowl of acai pulp with cassava flour, as one might eat in the Amazon region. Another plate, more typical of São Paulo, is spaghetti, chicken, and salad. If these seem like ordinary meals, that would be the point, one of the researchers said: They wanted to counteract the idea that a “healthy” diet is one full of unfamiliar and even unpleasant foods.

What really improves the economic condition of immigrant farmworkers

There are few roles in the U.S. food system as tough as being an immigrant farmworker ... especially one without documentation. There has been enormous advocacy in recent years to improve farmworker wages and working conditions.

Yet, in addition to advocacy, it is worthwhile to stay informed about the economic fundamentals that even more strongly influence working conditions for immigrant laborers.

Consider the consequences of several recent years of economic recovery (which increases job opportunities outside of agriculture), combined with the failure of sensible immigration reforms (which would have included a compromise with farmers, designed to stabilize their labor supply).

Economic growth and (perhaps pardoxically) nativist conservative grass-roots opposition to immigration reform have combined to raise wages for immigrant farmworkers.

University of Florida researchers -- Zhengfei Guan, Feng Wu, Fritz Roka, and Alicia Whidden -- this week write about labor conditions for strawberries and other specialty crops in Choices Magazine:

Specialty crop growers generally depend on a large number of farm workers to grow, harvest, and pack their tender fresh crops. Consequently, growers are sensitive to both the cost and availability of farm labor. Working conditions in agriculture are often physically challenging and hourly earnings are relatively low compared to other employment opportunities for U.S. residents. Thus, a large portion of agricultural labor needs have been met by immigrant workers. A high percentage of these immigrants are working in the United States without legal authorization. In recent years grower concerns over cost and availability have intensified as the rhetoric over comprehensive immigration reform continues to harden.

Figure 1: Annual Average Number of Hired Workers in U.S. Agriculture (Excluding Service Workers) and Average Wage Rates

Source: USDA/NASS, 2014

Mexican labor issues in U.S. food retail markets

To understand food policy in the United States, one must pay attention to Mexican and Central American farmworkers in this country, but also to farm labor in Mexico.

The Los Angeles Times today has started an article series and a remarkable video series on the Mexican workers who produce in Mexico for export to the United States.

The tomatoes, peppers and cucumbers arrive year-round by the ton, with peel-off stickers proclaiming "Product of Mexico."

Farm exports to the U.S. from Mexico have tripled to $7.6 billion in the last decade, enriching agribusinesses, distributors and retailers.

American consumers get all the salsa, squash and melons they can eat at affordable prices. And top U.S. brands — Wal-Mart, Whole Foods, Subway and Safeway, among many others — profit from produce they have come to depend on.

These corporations say their Mexican suppliers have committed to decent treatment and living conditions for workers.

But a Los Angeles Times investigation found that for thousands of farm laborers south of the border, the export boom is a story of exploitation and extreme hardship.

One future contributor to a more just food system could be policies that U.S. importers and supermarkets may adopt, stipulating standards for farm labor in the upstream supply chain. To some extent, such policies are being developed. The LA Times article reminds us that these policies are not yet working smoothly.

Another contributor to a more just food system could be changes in the supply and demand for farm labor, leading to higher wages and better working conditions. It is important to pay attention to these fundamental economics, and not just to labor standards that supermarkets promise to adopt.

Two of the best agricultural economists covering this issue are Philip Martin and J. Edward Taylor. Their 2013 report, titled "Ripe with Change" (.pdf), summarizes (in somewhat blander language!) many of the same terrible conditions that the LA Times article reported, while also reporting some promising trends in tighter labor markets for Mexican farm workers. In particular, demand for agricultural production has been increasing across North America, while simultaneously employment demand in other Mexican industries has expanded. An essential question is whether Mexican workers will reap the benefits, or instead whether small increases in wages will provoke large increases in mechanization, leaving workers little better off than before.

Is it really so bad that WTO ruled against U.S. in country-of-origin labeling dispute?

The World Trade Organization (WTO) today ruled in favor of Canada and Mexico, saying that U.S. country-of-origin labeling (COOL) rules violate our commitments in previous trade agreements.

The COOL rules in dispute required new labels on fresh beef, pork, and lamb, but not on processed foods such as hot dogs. The labels would say what country the product comes from. In some cases, the labels might have to be complex ("this cow was born in Canada, fed in the United States ...").

Many people who care about food policy from a public interest perspective will say the WTO ruling is terrible. For example, Food & Water Watch Executive Director Wenonah Hauter says today:

The WTO’s continued assault against commonsense food labels is just another example of how corporate-controlled trade policy undermines the basic protections that U.S. consumers deserve.

But let me ask, is the WTO ruling really so bad? I have two reasons for asking this question.

First, perhaps the WTO ruling has some merit.

Canada and Mexico claimed that the U.S. law was designed as a trade barrier, not merely as a consumer labeling provision. They pointed out that the tracking and record-keeping burdens fell more heavily on Canadian and Mexican producers than they did on seemingly similar U.S. producers. They also cast doubt on the consumer information merit of all this tracking and record-keeping, because so much of the meat was destined for processed food that never would carry a country-of-origin label anyway. If the U.S. asks Canada and Mexico to incur tracking and record-keeping costs, and then fails to share the resulting information with processed meat consumers anyway, it does look like maybe the whole point was just to create a burden for our trading partners.

It would be one thing if the United States simply never negotiated a trade agreement in the first place. But, it is another thing altogether if the United States does negotiate a trade agreement, saying we will reduce trade barriers in return for Canada and Mexico doing the same, but then we fail to do what we promised.

Second, from the perspective of Food & Water Watch and other trade-skeptical consumer groups, perhaps the consequences are not so terrible.

WTO critics claim such rulings violate U.S. sovereignty. For example, Lori Wallach, director of Public Citizen's Global Trade Watch says today:

Many Americans will be shocked that the WTO can order our government to deny U.S. consumers the basic information about where their food comes from and that if the information policy is not gutted, we could face millions in sanctions every year.

This is not true. The WTO cannot order our government to deny U.S. consumers such information. The WTO cannot rewrite U.S. laws. The U.S. can simply refuse to comply.

When the WTO rules against the United States, the only remedy the WTO has is the power to permit Canada and Mexico to put up trade barriers of their own, without these trade barriers being ruled non-compliant with the same trade agreements. In other words, the only power the WTO has is the power to state for the record, "fair is fair."

For example, if the U.S. chooses not to honor the WTO ruling, Canada has proposed a list of U.S. exports that may get new import tariffs at the Canadian border: corn, meat, apples, pasta, orange juice, and so forth.

The United States may honor its trade agreements, or we may fail to honor them. If we don't honor them, surely it is right to be good sports when Canada and Mexico establish new import tariffs.

On what grounds should Food & Water Watch or Public Citizen's Global Trade Watch complain about the WTO ruling? If it is fine for the United States to exercise our sovereignty, it is fine for others also. Far from griping about the WTO ruling, trade-skeptical public interest organizations could just tip their hat to the WTO, contemplate the consequences for reduced food trade, and declare, "all is well."

There is a good reason why they don't do so. Many Americans, especially in agricultural regions of the country, are glad for the business that trade brings in the form of increased export markets for our farmers. When we remember that Americans are food producers as well as consumers, the trade agreements begin to seem more sensible and the WTO begins to seem more reasonable.

Further information

Chapter 4 of Food Policy in the United States: An Introduction addresses trade issues. I do my best to make the case for a public-interest pro-trade perspective in a talk at Cornell University last fall (video here).

Textbook on Economics of Agricultural Development

Many important debates in U.S. Food Policy turn on competing views about the global food prospect, especially the food situation in developing countries. For those who want to study this topic seriously, Routledge has just published the new third edition of the comprehensive textbook, The Economics of Agricultural Development: World Food Systems and Resource Use, by George W. Norton, Jeffrey Alwang, and my Friedman School colleague William A. Masters. From the link:

Our third edition is out in August 2014, and the Japanese edition appeared in January 2013. Click here to read a review of the first edition (in ERAE), find it at your local bookstore or any online bookseller, request a review copy from Routledge, or visit our instructors’ website for lecture slides, extra photos and example quizzes.

Kellogg announces new climate change commitments

The Kellogg Company today unveiled new commitments to address actions by itself and its suppliers that affect climate change. General Mills on July 28 had announced similar initiatives.

From Kellogg's statement (.pdf) today:

As stated in our Kellogg Global Supplier Code of Conduct, we expect suppliers to support our corporate responsibility commitments by implementing sustainable operating and farming practices, and agricultural production systems. Suppliers must strive to reduce or optimize agricultural inputs; reduce greenhouse gas emissions, energy and water use; and minimize water pollution and waste, including food waste and landfill usage.

The anti-hunger organization Oxfam International had been encouraging leading food manufacturers to make such commitments. Oxfam's recent report, Standing on the Sidelines, had argued that food and beverage companies need to do more. Today, Oxfam praised Kellogg's announcement:

“We welcome Kellogg’s efforts to become an industry leader in the fight against climate change and the damage it is causing to people everywhere,” said Monique van Zijl, campaign manager for Oxfam’s Behind the Brands campaign. “Kellogg’s new commitments add momentum to calls on governments and the wider food and agriculture industry to recognize that climate change is real, it’s happening now, and we need to tackle it.”

In the announcement today, Kellogg says it will set targets for greenhouse gas reductions, produce a climate change adaptation strategy, take steps to limit deforestation impacts in its supply chains, and commit to disclosure of key climate change information. Oxfam said Kellogg plans to participate in the Business for Innovative Climate and Energy Policy (BICEP) group and sign the Climate Declaration.

Superfood fads for global farmers

In a Marketplace report last night, Dan Bobkoff describes the excitement of new crops for global farmers without overstating the power of any single new crop to transform the world. To communicate this balance of opportunity and realism, Bobkoff chatted with my fellow Tufts economist Will Masters.

Masters is chairman of the Food and Nutrition Policy Department in the Friedman School of Nutrition at Tufts. He says more often than not, so-called miracle crops like moringa or breadfruit are distractions. "Why [is] it that it didn't get identified as a huge success previously?"

In other words, it's not like farmers haven't tried many of these crops before. Farmers experiment. They'll plant something new, and see how it does. And, over the years, many of these so-called superfoods failed for the most mundane of reasons. They take too long to grow, require too much labor or are prone to pests. It's not as easy to spread breadfruit as wheat.

"That search across all the available biodiversity has been going on for thousands of years," Masters said, "and it's led to a system that has found a half dozen or dozen major species that feed the world. And that's because those major species have some pretty amazing characteristics."

The dilemma of fair trade bananas

At Civil Eats yesterday, Aliza Wasserman explains the dilemma for the public interest entrepreneurs who are developing a fair trade banana market. The article describes a recent conference at Tufts University.

The most difficult question is whether fair trade bananas should come only from smallholders and cooperatives (preserving fair trade principles but limiting scale), or instead whether fair trade sourcing should allow larger plantations so long as they follow the stipulated principles (sacrificing a small-is-best principle but achieving a larger share of the total market).

Wasserman writes:

Fair Trade banana plantations have also been crucial to building a robust supply of Fair Trade bananas. Plantations represent both a key challenge and opportunity, by providing the promise to impact the broader industry and bring Fair Trade bananas to a larger consumer base. Nearly everyone at the conference hoped to impact the broader industry, whether they are focused on the future of small-scale or “smallholder” farmers, or the overall future of Fair Trade bananas.

But many of the presenters felt that the current pricing system, in which the Fair Trade certifying bodies, like Fair Trade International or FLO, distribute the same premium to plantation owners and small landholders alike, represents a major flaw in the system. Many in the industry believe that cooperatives of small producers should receive a premium that is linked to their higher cost of production relative to plantations, which can take advantage of economies of scale. Yet, the first banana producer to receive Fair Trade certification was a plantation, and scaling up Fair Trade would not be possible without them.

While a student at the Friedman School, Wasserman was a regular contributor to the U.S. Food Policy blog.

WCRF policy strategies to reduce non-communicable disease around the world

The World Cancer Research Fund (WCRF) this month published a new 2-page document (.pdf) summarizing the organization's recommendations on using food policy to address the problem of high rates of non-communicable diseases (NCDs).

The recommendations encourage clear nutrition labeling, healthy school meals programs, well-targeted taxes and healthy food subsidies, and restrictions on advertising for breastmilk substitutes and for unhealthy foods (especially to children).

The WCRF is an international not-for-profit umbrella organization for a network of cancer prevention organizations. WCRF literature reviews on dietary patterns and cancer risk are used by the U.S. federal government as one of several evidence sources for the Dietary Guidelines for Americans.

The WCRF policy recommendations are bolder and more activist than some policy-makers would be ready to consider in the United States, but the WCRF approach nonetheless offers a lot of insight.  For example, a background document on law and obesity prevention (.pdf) carefully considers both advantages and disadvantages of legal approaches to addressing public health nutrition challenges.  It acknowledges not just the political power of food and beverage manufacturers to thwart such policies but also the constitutional protections for commercial speech and the serious concerns consumers may have about policy interventions that limit their autonomy.

For perspective on U.S. food policy debates, it is illuminating to hear an international perspective that is (not surprisingly) comparatively interventionist, but which at the same time fully recognizes the challenges and tradeoffs involved in such policy proposals.

 

Balancing multiple concerns in Oxfam's Behind the Brands campaign

On September 17, Oxfam America released the most recent update to company scorecards from its Behind the Brands campaign.  For example, the update ...

• praised Nestle for improvements in recognizing land rights,
• noted that changes to Coca-Cola's guiding principles earned small increases in environmental sustainability scores,
• assigned an increased score to Unilever for improvements on gender issues, and
• reported that Associated British Foods, General Mills and Kellogg’s "remain at the bottom of the scorecard with few signs of progress."

The Behind the Brands campaign urges leading branded food and beverage manufacturers to improve the anti-poverty impact and environmental sustainability of their activities in developing countries.   The campaign reflects Oxfam's characteristically sensible approach toward the role of private sector initiative in economic development. While some non-governmental advocacy organizations might wish these multi-national corporations would leave developing countries alone, Oxfam instead wishes them to stick around ... and perform better for the interests of the world's poor.

In total, Oxfam's scorecards address seven issues: 

• land,
• women,
• farmers,
• workers,
• climate,
• transparency, and
• water.

This is a good list of issues.  Still, as an economist in a nutrition school, I couldn't resist asking Oxfam whether nutrition issues might ever be considered as well.

Laura Rusu, a media manager for the non-profit organization, acknowledged that "health advocates are rightly asking tough questions about the effects of high-sugar diets."  She described Oxfam as "an organization working to right the wrongs of poverty and injustice."  While the Behind the Brands efforts "do not focus on the nutrition profile of these companies," Rusu gave a respectful shout out to initiatives that do, including the Access to Nutrition Index. 

Even recognizing that developing countries have major challenges of hunger and under-nutrition, I rank broader nutrition concerns higher today than I did a few years ago.  Given the focus specifically on major branded food and beverage companies, such as Nestle and Coca-Cola, I personally might rank nutrition concerns about product offerings as one of the top seven issues.  New branded food products are replacing traditional foodways that have considerable appeal both in terms of nutrition quality and in terms of economic opportunities for smaller farmers and small-business distributors and retailers.

Ractopamine and the proposed Chinese purchase of Smithfield Foods

Helena Bottemiller reported at the end of May for NBC News that the proposed purchase of Smithfield Foods by a Chinese company may be related to the fact that China has stricter standards than the United States does for a growth promoting drug:

The proposed $4.7 billion sale of Smithfield Foods, America’s largest pork producer, to China’s biggest meat processing company comes amid significant trade friction between the two countries over meat and livestock.

China bans ractopamine, a controversial growth-promoting drug that is widely used by U.S. livestock producers. Russia also bans the feed additive and both countries have recently stepped up residue testing in meat, worried about the health effects of the drug. The actions have constrained American meat exports.

Bottemiller's feature was supported by the Food & Environment Reporting Network.

AGree policy initiative encourages comprehensive immigration reform

The co-chairs of the AGree agricultural policy initiative today sent a letter to U.S. Senators encouraging comprehensive immigration reform.

Dan Glickman (former Secretary of Agriculture under the Clinton administration), Gary Hirshberg (Stonyfield Farm), Jim Moseley (former Deputy Secretary of Agriculture under the Bush administration), and Emmy Simmons (former senior U.S. international aid official) wrote:

We applaud the Senate Judiciary Committee’s leadership in moving forward on the bipartisan legislation. This presents a huge opportunity for foreign-born agricultural workers who want to build a better future for themselves and their families and for American farmers and ranchers struggling with serious labor shortages. AGree has initiated and supported efforts to overcome volatile and divisive differences that have doomed past reform efforts and we will continue to use our convening powers and work in tandem with other groups to help achieve a new national immigration policy.

AGree has four principles for immigration policy reform.  These principles seem politically astute, including key themes that one hears both from agricultural producer groups and from immigrant labor advocates:

• Build a legal, more stable workforce in agriculture;
• Develop a practical and economically viable guest worker program that allows employers to hire legal foreign workers and protects foreign and U.S. farm workers;
• Ensure quality of life, good working conditions, and opportunities for food and agriculture workers; and
• Provide more opportunities for farm workers to develop skills and advance their careers within the food and agriculture sector.

The Senate legislation that the AGree co-chairs support is the Border Security, Economic Opportunity, and Immigration Modernization Act, S. 744.  It is very much a compromise piece of legislation.  This week is critical in the Senate, and, even after passing the Senate, the House is even more challenging.

From the perspective of immigrant labor advocates, farm producers and managers are a complicated group of allies.  On the one hand, farmers are a terrific helpful voice, because they speak of immigrant farm workers with respect, articulate the great value that the workers bring to the American agricultural economy, and oppose a deportation-centered immigration policy.

On the other hand, the farm groups insist on an awful tough stipulation in their support for a path to legal status for illegal workers.  The farm groups insist that newly legalized workers be prohibited from moving quickly into non-farm jobs such as construction or food service.  For the farmers, the whole point is that these newly legal workers should stay on the farm, keeping wages in check.

By and large, the Senate bill represents the best possible compromise that immigrant labor advocates could strike with farm groups, so that they could speak with one voice in the political debate.  If immigrant labor advocates and farm groups split, they will be soundly beaten by the anti-immigrant and nativist folks in Congress.

I participate in AGree as part of its Research Committee, but had no role in the organization's immigration position.  For a scholarly but highly readable account of the current issues, see Philip Martin's article (may be gated) in the January edition of the American Journal of Agricultural Economics.

Agreement with Mexico about tomato imports

Agriculture Secretary Tom Vilsack on Feb. 2 announced a new agreement with Mexico, under which Mexico's tomato exports must satisfy a minimum price.

In adopting a moderately protectionist policy by mutual agreement, the two countries avoid a trade conflict that could have harmed their commerce more seriously.

"I applaud the good work of Undersecretary Sánchez and the Commerce Department to forge this important agreement to allow our domestic tomato industry to compete on a level playing field. The draft agreement meets the requirements of U.S. antidumping law and provides an effective remedy for our domestic tomato producers, further bolstering agriculture as a bright spot in our nation's economy. Ultimately, the Obama Administration forged an agreement that will restore stability and confidence to the U.S. tomato market and ensure fair trade in fresh tomatoes through increased reference prices, coverage and strengthened enforcement. The United States is one of the world's leading producers of tasty, high-quality tomatoes. Our U.S. fresh and processed tomatoes account for more than $2 billion in cash receipts and support thousands of American jobs in our food industry, shipping, processing and more."

Undersecretary Francisco J. Sánchez

The U.S. Food Policy blog recently discussed how agricultural labor markets in Mexico and the United States are interconnected.  If it is true that agricultural wages in Mexico are rising, it becomes easier for Mexico to agree to a price floor for Mexican tomato exports, addressing multiple problems simultaneously.  In a 2010 article for the Journal of Agricultural and Resource Economics (may be gated), Friedman School graduate student Wendy Johnecheck, Julie Caswell, and I studied the possible impact of hypothetical country-of-origin labeling (COOL) regulations on the U.S.-Mexican trade in tomatoes.

In my class on U.S. food policy, we explore (a) some occasions when import-competing businesses (such as U.S. tomato growers) have convinced the government to put up protective barriers and (b) other occasions when such barriers have been resisted by advocacy coalitions led by import buyers (such as major retail chains) and other U.S. agricultural industries that rely on exports (such as wheat producers).  These U.S. advocacy coalitions are politically important, because, of course, Mexican producer groups have no direct representation in the U.S. Congress.

A former student from this class today pointed out yesterday's New York Times coverage of the new tomato deal, which echoes these points.  In the article, Stephanie Strom explains the advocacy coalitions that make the new policy politically feasible:

The Mexicans enlisted roughly 370 American businesses, including Wal-Mart Stores and meat and vegetable producers, to argue their cause. Those businesses feared a bitter trade war like the one the Mexicans waged over trucking, which imposed stiff tariffs on American goods headed south. 

Mexican farm labor markets tighten up, with possible implications for U.S. farmers and farm workers

The agricultural labor supply in Mexico may be shrinking, a development that is likely to raise wages for farm laborers in both Mexico and the United States.

If this is truly a long-term trend, rather than a short-term response to economic recession or disruption because of recent violence, then it would have several implications.  It could cause some difficulties for U.S. farm owners, and it could somewhat hinder efforts to encourage increased consumption of fruits and vegetables at low prices.  On the positive side, it could help smooth U.S. immigration policy debates, and it would help alleviate hardship for the immigrant workers who play such a central role in the American food system.

An article in the most recent issue of Applied Economics Perspectives and Policy (may be gated), by J. Edward Taylor, Diane Charlton, and Antonio Yúnez-Naude, is titled "The End of Farm Labor Abundance."  Here is the abstract:

An analysis of nationally representative panel data from rural Mexico, with observations in years 2002, 2007, and 2010, suggests that the same shift out of farm work that characterized U.S. labor history is well underway in Mexico. Meanwhile, the demand for agricultural labor in Mexico is rising. In the future, U.S. agriculture will compete with Mexican farms for a dwindling supply of farm labor. Since U.S. domestic workers are unwilling to do farm work and the United States can feasibly import farm workers from only a few countries in close geographic proximity, the agricultural industry will eventually need to adjust production to use less labor. The decline in foreign labor supply to farms in the United States ultimately will need to be accompanied by farm labor conservation, switching to less labor intensive crops and technologies, and labor management practices that match fewer workers with more farm jobs. 

This article may be thought-provoking for readers who participate in U.S.-based sustainable food movements.

For one thing, these movements have been trying to come to grips with labor issues, recognizing that even locally oriented and organic food production in the United States makes heavy use of low-wage farm workers.  It is good that these movements have been giving greater attention to worker advocates, including the Coalition of Immokalee Workers and others, but this attention has to be accompanied by a fearless and honest analysis of the basics of labor supply and labor demand, which are more fundamental determinants of both wages and working conditions.

For another thing -- and here I am generalizing a bit -- many of the thinkers and writers in this movement whose work I generally respect highly are nonetheless trade skeptics to a degree that makes me nervous.  It is sensible to expect high standards from trade policy without straying quite so close to a nativist pessimism in which low-income trading partners are seen as bottomless pits of economic distress.  The reason I am more optimistic than many of my friends about international trade is that I have not yet given up on the prospects for economic advancement that reaches even low-wage labor markets in the countries we trade with -- starting, for example, with Mexico.

Food value chains beyond the farm gate

USDA's Economic Research Service has long published a well-known graphic illustrating the food value chain as a dollar bill, with each segment showing a particular industry's contribution to the average consumer dollar spent on food.

A key insight from this graphic is that farmers on average receive only about 10 cents for every dollar of consumer food spending.

It may be more surprising to hear how rapidly value chains around the world are changing, even for staples such as rice and potatoes.  A December report from the International Food Policy Research Institute (IFPRI), by Thomas Reardon, Kevin Chen, Bart Minten, and Lourdes Adriano, describes this change as a Quiet Revolution. Although the supermarket-ization of the food system in developing countries introduces risks and challenges, the report seems to me fairly upbeat.  It emphasizes several ways that economic development of the value chain can offer benefits for poor farmers and consumers, leading to improved food security.  To supply the megacities of countries like China, India, and Bangladesh with sufficient food, we cannot think just about traditional farmers selling raw commodities to a local merchant trader.  Instead, it is necessary to come to grips with modernization even in the food system that serves the world's poor consumers.

Agricultural producer support declining over time

We hear all sorts of generalizations about U.S. farm policy.

Some say U.S. farm programs are too stingy and should provide more help to farmers, especially small farmers. Others say U.S. farm programs are a boondoggle that just makes rich farmers richer. Still others say farm programs make consumers fat by encouraging too much cheap food.

Instead of generalizing, it is important to think quantitatively.

One good data source is the Producer Support Estimates (PSE) from the Organisation of Economic Cooperation and Development (a club for the world's upper-income countries). I use this data source in several chapters of my forthcoming book from Routledge/Earthscan called Food Policy in the United States: An Introduction.

The PSE data measure diverse agricultural programs and policies in a consistent way across countries and over time.  One problem with the PSE is that it can seem a little complex.  To provide an orientation, Rebecca Nemec and I created the following data gadget.  Nemec is a graduate student at the Friedman School at Tufts and the teaching assistant for my class on U.S. Food Policy.  The top panel shows broad categories of support for agricultural producers.  The bottom panel shows more detail about each broad category in turn.   

Just click on each colored broad category in the top panel to see the corresponding detail in the bottom panel.

Working from top to bottom, we learn about trends in several major categories of producer support.

• Price supports and deficiency payments help farmers in years when prices are low.  OECD worries about these programs because they distort international trade and hurt farmers overseas.  Michael Pollan criticizes deficiency payments for making corn too cheap.  Notice that in recent years -- with greater scarcity and higher prices -- these distorting policies have fallen to almost nothing under current policy.
• Conservation programs have been growing in recent years, and also do not respond to price fluctuations as wildly as deficiency payments do.
• The other payments category includes direct payments, which pay farmers regardless of the current price.  These direct payments may end under some current farm bill proposals.  They do not distort agricultural markets very much, but it is unpopular to pay farmers when they are prospering during high-price years.
• Market Price Support represents the economic impact of the trade barriers that protect some producers, especially for milk and sugar, from imports.  Although they do not have a budget cost, these supports benefit farmers at the expense of consumers.  As with deficiency payments, the impact of these trade barriers has declined to almost nothing in recent high-price years.

An especially clever feature is that PSE data allow sensible comparisons across two seemingly different types of policies:

• payments to farmers at the taxpayers' expense (the first three broad categories), and
• trade policies that support farmers at the consumers' expense (the fourth broad category).

To speak coherently about U.S. agricultural policy, one must make important distinctions across several types of programs and be aware of rapid changes in program impacts from one year to the next.

There are a couple limitations that I should mention.  First, the OECD data may have some limitations of their own.  Second, while I did the best I could to classify programs from the OECD data into sensible categories, I did make some judgement calls about these program classifications.

In general, U.S. support for farmers has been declining in recent years, mainly because of high food prices that result from greater scarcity on world markets.  Though some people are more optimistic, I think population and environmental constraints may generally keep prices fairly high in the future.

This means that governmental support for U.S. farmers can be smaller over time, unless legislators replace existing programs with new and poorly designed alternatives.  For example, I worry about new and potentially expensive crop insurance programs that have been proposed in draft farm bills.

Powered by Tableau