Globalization of Food - started in relation to the globalization of agriculture ... and the European Union was ... World Trade Organization Agriculture Trade Page 2 Globalization

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  • Agriculture policy and its effects continue to change at an alarming pace. When the Migrant Education Program was started in 1965 US agriculture was very different than it is today. Nearly the only thing that remains the same is there were farmers and migrant workers working then ,and they continue to work today. The way farming and food production is conducted has changed in many ways, as well as where products are shipped, and how they are packed and produced. The SOSY consortium, during the 2012 year, will be compiling and dis-tributing a series of briefs that will be specifically focused on providing information in regards to factors that directly affect US agriculture which then in turn affect farmers and producers, migrant workers, and the MEP. In order for the MEP program to be proactive in program planning and in finding eligible students of all ages, it is important to keep up with current trends. We have to know and understand agriculture as it af-fects those we serve and work with each day. Since the MEP program is a national program, we have to look at national trends. These in-clude how weather is affecting agriculture, keeping up with issues re-lated to workers such as state immigration laws, and also understand-ing how imports and exports of agriculture products affect the overall US agriculture economy, farmers, producers, and migrant workers. This brief will provide an overview of what has happened since the program started in relation to the globalization of agriculture

    BRIEF PURPOSE

    MICROSOFT

    JANUARY 2012 Volumne 1

    Globalization of Food

    SOSY PARTICIPATING STATES-COLORADO, FLORIDA, IDAHO, ILLINOIS, KANSAS, MARYLAND,MASSACHUSETTS, MINNESOTA,MISSISSIPPI, MONTANA, NEBRASKA, NEW HAMPSHIRE, NEW JERSEY, NEW YORK, NORTH CAROLINA,

    PENNSYVANIA, SOUTH CAROLINA, TENNESSEE, VERMONT, WASHINGTON, WISCONSIN

    WWW.OSYMIGRANT.ORG

    SOSY Partner States: Alaska, Arkansas, California, Indiana, Kentucky, Missouri, Texas SOSY Partner Organizations: National Center for Farmworker

    Health (NCFM), Adult Learning Resource Center (ALRC), National PASS Center (NPC), National HEP/CAMP Associations

    Agriculture policy and its

    effects continue to change at an alarming pace.

  • The US Agriculture Sector has become more and more efficient over the last century. During the past decade there have been many changes fueled by a more global economy, more goods are shipped around the world, including agriculture products. According to a report by the Food and Resource Economics Department at Indian River Research and Education Center, Globalization is possibly the biggest and most important phenomenon that has shaped the world after the last world war. It has affected (and improved) trade, invest-ment and other types of economic activity, and affected people through awareness, cultural ex-change, tourism, migration trends, communications and technology. Globalization has usually been supported and promoted by most national governments so that it has created its own mo-mentum. There has been an enormous increase of interchange among people and nations, much positive and some acrimonious, particularly among small farmers who understandably are un-willing to lose any form of governmental protection and face competition from larger and more "efficient" producers.

    In 1948, the General Agreement on Tariffs and Trade (GATT) was established during a UN Con-ference on Trade and Employment. It was established after World War II. This was at a time when several institutions such as the World Bank and the International Monetary Fund were being created. Instead of the GATT it was proposed that a International Trade Organization be launched to address trade barriers, employment investment, restrictive business practices, and commodity agreements. The international trade organization was not approved at the time so instead the GATT was established. It lasted until 1993, when it was replaced by the World Trade Organization( WTO) in 1995. The WTO deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dis-pute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments. According to statistics from the WTO, in 2010 the US was the worlds leading merchandise im-porter, China was the worlds leading merchandise exporter, and the European Union was the worlds leading supplier of services. 90% of all world trade is done through the WTO. Globalization of industries and markets for some is seen as positive for the world overall but oth-ers do not see it that way. According to an article titled, The Impact of Globalization on Family Farm Agriculture, by Bill Cristison, the following is noted. These policies are created in Board rooms of companies motivated by profit and not the economic health of the farmer, the health of the consumer or the vitality of the rural community. Globalization means policies in the United States that force our prices as low as possible by removing an effective commodity loan rate or reserve; these policies force the world price to levels that are unsustainable for farmers around the world. Globalization has altered the economic structure of both developed and developing countries in ways that are sometimes difficult to understand or even believe. The following example of this is provided through the Indian River Research report, Few in the United States realize that the precursor of rising oil prices is not the Iraq war, but China's 45% annual increase in demand for this product. This demand will only increase in the near future. History is demonstrating, (with some exceptions), that the world moves from one state of equilibrium to another as individual countries change.

    World Trade Organization & Agriculture Trade

    Page 2 Globalization of Food

    Caption describing

    picture or graphic.

    Globalization

    means that

    prices for

    farmers have

    fallen on the

    farm while the

    profits of

    corporate

    agribusiness

    have reached

    record highs.

    C. Robert Taylor

    Page 2 Globalization of Food

  • Page 3 Globalization of Food

    Source: http://agclassroom.org/gan/timeline/farm_tech.htm

    A Timeline of American Agriculture Farm Machinery & Technology

  • According to Cristison, globalization means that the number of farms in the United States that gross between 50,000 and 249,999 (18.2%) of the farms now only represents 21.1% of the total market value. 73.6% of the nation's farms share 6.8% of the market value of agricultural prod-ucts sold while 7.2% of the farms receive 72.1% of the market value of products sold. There is an increasing shift towards the largest operations. Globalization means that prices for farmers have fallen on the farm while the profits of corporate agribusiness have reached record highs. In his April 2000 testimony before the Senate Democratic Policy Committee, Professor C. Robert Taylor of Auburn University presented his views in a statement entitled, " The Closing Circle of Global Food Companies. In his section, Manifestations of Economic Power, he pre-sents data that shows that the retail cost of a market basket at the grocery store for consumers remained almost constant for the 15 years between 1984 - 1999. He further notes, "Since 1984, the real price of a market basket of food has increased by 3%, while the farm value of that food has fallen by 38%." Individual items in the market basket are even more dramatic. The real farm to retail spread for a gallon of milk from 1994-1999 has increased by 14.3%. In this past year, prices received by dairy farmers have dropped almost 50% from their 1999 level so this spread is even more dramatic today. The spread for pork was 52.1% and for beef, 23.6%. As Professor Taylor concluded in his testimony, "Thus these recent price increases, which are cor-rected for inflation, indicate the exertion of raw economic (market) power. "While the farmer growing cereal grains - wheat, oats, corn - earn negative returns and are pushed close to bankruptcy, the companies that make breakfast cereals reap huge profits. In 1998, cereal companies Kellogg's, Quaker Oats, and General Mills enjoyed return on equity rates of 56%, 165% and 222% respectively. While a bushel of corn sold for less than $4, a bushel of corn flakes sold for $133. In 1998, cereal companies were 186 to 740 times more profitable than the farms. Maybe farmers are making too little because others are taking too much." It means that when consumers shop, a declining share is received by farmers. In 1999, farmers were receiving 21 cents of the $1.00; while ten years ago, the level was 32 cents. This is at a time of increasing costs of production for farmers. While there are still far too many hungry people in America, the average person spent only 10.7 percent of their income on food; it was 11.6% a decade ago and 22% of the household budget in 1950. Recent reports by Bill Heffernan at the University of Missouri-Columbia track the clusters of agribusiness firms. They have been identified as: Cargill/Continental/Monsanto ConAgra Archer Daniels-Midland (ADM)/ Novartis Farmland Industries/Cenex Harvest States/Land O' Lakes Cooperatives. As Professor Taylor cites, "The four-firm concentration ratio which reflects horizontal concen-tration, exceeds 70% in many food and food related industries. It is 80% in fed beef slaughter and IBP now has 38% of the market while Cargill has about 20% of the market. These figures are very close to the concentration in the sectors as outlined in a recent NFU- Canada testi-mony to their Senate Standing Committee on Agriculture

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