Social Aspects of Food Systems, Sustainability, and Climate Change February 26, 2015.

Social Aspects of Food Systems, Sustainability, and Climate Change

February 26, 2015

What are the “commons” relevant to dairy farming in SC Wisconsin?

• Take 5 minutes at your “pod” to discuss• Commons refers to common property

resources as described in the Elinor Ostrom 1999 article.


• Profitability (high output and low input prices)

• The environment• Rural communities


• Prices– Land– Credit– Inputs– Outputs– Labor

• The environment

As SOURCE:– Soils, Water, Land

availability for cropping/ spreading

As SINK:– Water pollution, soil

erosion/ exhaustion, GHG emissions, biodiversity loss, aesthetics

• Rural communities– Keeping money

local– Maintaining

community cohesion

– Trust between different types of farmers

– Trust between farmers and urbanites.

Environment

U.S. GHG Emissions

Carbon & Nitrogen Added

Carbon & Nitrogen& Phosphorus Added

Water pollution caused by livestock farms

Source: Lathrop, 2008

What scale of governance is implied by these common property resources?

• Lake Mendota eutrophication• Gulf of Mexico dead zone• GHG emissions

• What governance challenges do these scales imply?

What factors affect how farmers manage the commons?

What factors affect how farmers manage the commons?

• The framework we’ll be talking about today considers dairy farmers as both:– having agency • having the free will to make decisions• Having the political and economic power to be effective

– being constrained by global political and economic forces• World market prices, market imperfections, national

environmental and land use laws, uneven distribution of political power

What values motivate WI dairy farmers?



• The environmentAs SOURCE:– Soils, Water, Land




• Rural communities– Keeping

money local– Maintaining

community cohesion

What influences Wisconsin Land Prices?

Inflation rate = 11%

Influences:• Capital gains taxes• Currency fluctuations• Monetary policy• Oil prices• Trade agreements• Development

regulations

Negative real interest rates

WI12%(22nd)

NJ82%

What are some solutions to high farm land prices?

What macro-economic changes could lower farm prices?

• Anything that changes (currently artificially low) interest rates.

• Phasing out direct and indirect subsidies to construction and development

• Increase capital gains taxes

Policies to keep farm prices down

• Wisconsin Working Lands Initiative– Purchase of Agricultural Conservation Easement

(PACE) grant program – Agricultural Enterprise Area (AEA) program.

• This are voluntary program similar to mandatory programs in Europe.

• They prohibit development• Passed in June 2009

Policies to keep farm prices down

• PDR• TDR• Zoning– No non-farm structures allowed

• Reduced taxes on agricultural land









community cohesion

Increasing input prices

What influences farm input prices?

What influences farm input prices?

• Market concentration and oligopolies.

Often these top 4 are the same across sector

Some Agribusiness Oligopolies

• Agro-chemical, seed companies that make inputs for farmers – Monsanto, Dow, DuPont, Bayer, Syngenta

• Processing companies that buy raw products from farmers – Cargill, Archer Daniels, ConAgra, Tyson/IBP, Smithfield

• Food manufacturing companies that create brands – Nestlé, Philip Morris, Unilever, PepsiCo, Coca-Cola, Mars









community cohesion

I checked these numbers…

What causes falling real farm-gate output prices?


• Over-supply relative to demand.• Monopoly/Oligopoly in output markets– Concentration in processing– Concentration in distribution– Concentration in retail

• Low supermarket prices

Milk production has increased

Milk consumption has decreased

For a gallon of 2% milk:• Farmers received about 46%• Cooperatives 6%• Wholesale processors 36%• Retailers >12%

Loss of Producer Economic Power

• In most U.S. metropolitan areas, one company, Dean Foods, has acquired the majority of fluid plants.

• Two corporations dominate the cheese sector; Kraft Foods at the retail level and Leprino Foods at the food service level.

• Regardless of which cooperative a U.S. producer markets his milk, at the end of the day the majority of milk is purchased by only three major buyers that dictate each market.

• Cooperatives in the U.S. handle over 80% of the total milk production. However, not all cooperatives actually process their members’ milk; some only market the milk collectively for their members.

Wal-Mart tries to consider no more than two suppliers for each food product it features in its stores across the U.S.

Some graphics of concentration in the organic agri-food sector…

USA 6.7Singapore 6.7

Switzerland 8.9

United Kingdom 9.3

Canada 9.5

Austria 9.9

Australia 10.0

Ireland 10.4

Denmark 11.2

Netherlands 11.8

Qatar 12.0

Germany 12.0

Sweden 12.2

Finland 12.5

Norway 13.0

South Korea 13.4

Japan 13.6

Taiwan 13.6

Bahrain 13.7

France 13.8

Belgium 13.8

Spain 13.8

United Arab Emirates 14.1

Italy 14.1

Hong Kong, China 14.3

Israel 15.2

Slovenia 15.2

New Zealand 15.4

Chile 15.6

Brazil 15.7

Czech Republic 16.1

Greece 16.6

Hungary 16.8

Bulgaria 17.6

Poland 17.7

Slovakia 17.8

Colombia 17.9

Uruguay 18.4

Kuwait 18.5

Portugal 18.6

Latvia 18.8

South Africa 19.2

Estonia 19.6

Venezuela 19.9

Costa Rica 20.2

Montenegro 20.5

Argentina 20.7

Malaysia 20.7

Turkey 22.0

Tunisia 22.7

Ecuador 23.1

Lithuania 23.7

Dominican Republic 24.1

Iran 25.0

Mexico 25.1

Saudi Arabia 25.5

China 26.1

Serbia 27.4

Thailand 28.0

Romania 28.3

Bolivia 28.7

India 29.6

Russia 30.5

Uzbekistan 30.8

Croatia 31.1

Bosnia-Herzegovina 31.3

Indonesia 33.2

Georgia 33.2

Macedonia 34.2

Vietnam 35.5

Morocco 35.8

Peru 36.5

Belarus 37.3

Egypt 37.4

Jordan 37.5

Ukraine 38.6

Turkmenistan 38.8

Guatemala 40.1

Philippines 42.4

Algeria 42.6

Kazakhstan 43.5

Azerbaijan 45.3

Cameroon 45.8

Kenya 46.9

Pakistan 48.1

Nigeria 56.7

Percentage of Income spent on Food

USA – 6.7%France – 13.8%Mexico – 25.1%Peru – 36.5%Pakistan – 48.1%


• Over-supply relative to demand.• Monopoly/Oligopoly in output markets– Concentration in processing– Concentration in distribution– Concentration in retail

• Low supermarket prices

Bottom line – constraints on farmer agency

• A cultural and political emphasis on free-market competition rather than cooperation

• Market imperfections– Oligopoly and market concentration

• Concentration of economic wealth, and thus political power, in the hands of those who benefit from the status quo makes it hard to organize for change.

What can farmers (and civil society) do to improve output prices?

• What have they done in the past?

Organize !

1933 Wisconsin Farmers Protest

Results of political and cooperative organizing in 1930s

• Cooperatively owned processing plants that differentiated by quality of product

• Cooperative marketing• Legislation – Milk marketing orders of 1937

(federal law) Higher farm-gate (mailbox) milk prices


• What are current options?

Inequality in political and economic power

• Wealth inequality video: • https://www.youtube.com/watch?

v=QPKKQnijnsM


• Control supplyIncrease farm-gate prices Decrease GHG emissions

• Prices must reflect product differentiation based on: – Quality– Environmental performance– Social performance

• Farmer prices• Farm community welfare

Social Aspects of Food Systems, Sustainability, and Climate Change February 26, 2015.

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Transcript of Social Aspects of Food Systems, Sustainability, and Climate Change February 26, 2015.