$ 1 trillion US Farm bill 2014: Business as usual. Subsidising Corporate welfare in the name of farming

An overview of the 2014 US Farm bill

After a lot of dilly-dallying, the US has finally passed the US Farm bill 2014. The earlier Farm bill 2008, which makes budgetary provisions for agriculture and food security, had expired in September 2012. Anyway, with US President Obama putting his signatures on Feb 7, the bill has come into existence. Probably to tide over the push and pulls from political opponents (backed by Corporate interests), this time the bill is for 10 years. The 2014 Farm bill makes a budgetary provision of almost $ 1 trillion ($956 billion to be exact), which includes $ 756 for food security programmes. 

A cursory look at what the bill contains clearly shows that the emphasis once again is on the faulty industrial agriculture. It replaces old subsidies with new ones, raises the minimum price growers receive for certain crops, and of course has cut down the food stamps programme. While signing the bill, Obama said: "This bill helps to clamp down on loopholes that allowed people to receive benefits whether they were planting crops or not. And it saves taxpayers hard-earned dollars by making sure that we only support farmers when disaster strikes or prices drop. It's not just automatic." 

But not everyone agrees. Dan Sumner, an economist at the University of California at Davis said: "Those programs could create problems. That’s the kind of assurances that the U.S. government is willing to provide that most farmers in the world, in fact, don’t have access to. With the backing of the government US farmers can produce more and export more. Ultimately, that drives down world prices and it’s a little tougher for farmers in developing countries to compete with that." (New US Farm bill reaps controversy, Voice of America. http://www.voanews.com/content/new-us-farm-bill-controversy/1847016.html).  

Bulk of the budgetary allocation is actually for Supplemental Nutrition Assistance Programme (SNAP) that goes to provide food security to an estimated 47 million hungry. Although the SNAP budget has been cut by $ 8.7 billlion from what was earlier proposed, it still shows how crucial is this safety net in a country which calls itself the Mecca of market economy. $756 billion is proposed to be spent in the next ten years on feeding the hungry. Interestingly, the US had objected to India's paltry food security assistance of about US $ 20 billion a year at the recently concluded Bali WTO Ministerial. US finds nothing wrong in its own $ 75.6 billion/year support in the name of food security, but finds the Indian food security initiative to be WTO incompatible !

Regarding the farm incomes, the bill allows farmers to choose between Agricultural Risk Coverage (the Senate Program variable support levels) and Price Loss Coverage (the House program with fixed support levels) on a crop-by-crop basis. According to Daryll E Ray and Harwood D Schaffer of the Agricultural Policy Analysis Centre of the University of Tennessee "If prices remain high for the next 5 years, the ARC will provide most grain farmers with a superior level of coverage. On the other hand, if prices fall and remain there for a sustained period of time, the PLC will provide farmers with the best coverage. For both programs base acres and yields can be updated."

Accordingly "Reference prices for the PLC program are wheat, $5.50/bushel; corn, $3.70/bushel; grain sorghum, $3.95/bushel; barley, $4.95/bushel; oats, $2.40/bushel; long grain rice, $14.00/hundredweight (cwt).; medium grain rice, $14.00/cwt.; soybeans, $8.40/bushel; other oilseeds, $20.15/cwt.; peanuts $535.00/ton; dry peas, $11.00/cwt.; lentils, $19.97/cwt.; small chickpeas, $19.04/cwt.; and large chickpeas, $21.54/cwt.

"It is interested to note that in the previous counter-cyclical program, the target price for corn, barley, and grain sorghum were all the same—$2.63 per bushel. Now the reference price for corn is $3.70 while grain sorghum is $3.95, and barley is $4.95. Not coincidentally grain sorghum is important in House Agricultural Committee Chair Frank Lucas’ state of Oklahoma, while barley is important to House Agricultural Committee Ranking Member Colin Peterson’s northern tier farmers." #

Further reading: 

1.New farm law is bad for Taxpayers and the Environment, Environment Working Group. 

http://www.ewg.org/release/new-farm-law-bad-taxpayers-and-environment

2.What others are saying about the farm bill, Environment Working Group.

http://www.ewg.org/agmag/2014/02/what-others-are-saying-about-farm-bill

3.Finally, a Farm bill. Daryll E Ray and Harwood D Schaffer, University of Tennessee

http://agpolicy.org/weekcol/706.html

Why can't US Fed print more money to remove global poverty? Just $ 120 billion more.

Is there any hope for the world's poor? Can poverty be made history? 

Every high-level Summit ends up with a call to remove poverty. The World Economic Forum too has been talking about removing poverty, and more recently it campaigned for removing hunger in our lifetime. A few weeks back at Davos in Switzerland the UN Secy Gen Ban Ki-Moon in fact led those who signed on a Zero Hunger campaign. Well, if everyone is so concerned, why is that hunger and poverty continues to grow despite all the global efforts being made to hide the realities (and play down the embarrassing statistics).

The answer is simple. The political leadership is not honest in addressing hunger and poverty.

An Oxfam International report: The cost of inequality: how wealth and income extremes hurt us all (See the pdf here: http://www.oxfam.org/sites/www.oxfam.org/files/cost-of-inequality-oxfam-mb180113.pdf) tells us that the world's top richest 100 people earned enough money in 2012 to end global poverty four times over. This comes to $ 240 billion they earned in 2012.

More recently, the TIME magazine had a report entitled: One State to destroy your faith in humanity: The World's 85 richest people own as much as the 3.5 bullion poorest (See the link here: http://business.time.com/2014/01/20/worlds-85-wealthiest-people-as-rich-as-3-5-billion-poorest/). Based on a report prepared by Oxfam, it said that the world's richest shared a wealth of 1 trillion Pound Sterling which is what the poorest 3.5 billion, half the world's population, has. What is more startling is the despite such statistics that obviously destroy our faith in humanity and also in political and economic leadership that does nothing to curb such "power grab" by a handful of wealthy families, empty slogans of fighting hunger or removing poverty are thrown at us unabashedly.

All this is happening at a time when the US Fed has decided to taper its bond-buying programme by another $ 0 billion. Beginning Feb 2014, US Fed will now be purchasing bonds worth $ 65 billion now. This tapering of its little understood Quantitative Easing programme actually began in January when it reduced bond purchases by $ 10 billion. Earlier, for 15 months, US had gone in for a QE programme which meant that the US Fed was buying bonds worth $ 85 billion every month. In other words, in 15 months, US Fed had made available US $ 1,275 billion to its investors before it began the tapering exercise.

Now what is Quantitative Easing? Now don't get bogged down by this largely unexplained phrase and give me an economic description. It's all a play of sophisticated vocabulary. Put simply it means US was on a dollar-printing exercise. By February 2014, US Fed had actually been buying extra dollars that have been printed all these months, and if you include the taper figures since Jan 2014, it had actually flooded the market with a surplus $ 1,415 billion.

How much money did the Oxfam International say that is required to remover poverty four times over? It said $ 240 billion. Now this figure actually is for removing poverty four times over. I think it will be fair to seek investments that can remove poverty twice at least. I think this is a fair calculation considering a lot of overlapping and hidden costs.

If poverty disappear I am sure you will agree that hunger will be completely wiped out. With hunger disappearing, and poverty becoming history the world not only head towards an egalitarian state but also see the economics of happiness coming into play. It's extreme poverty, hunger, disease and squalor that still shames the humanity.

And this makes me wonder if the US can simply print $ 1,415 billion to prop its own sagging economy, why can't it print another $120 billion that is required to wipe out poverty twice over? Well, that's not difficult. Surely, and I believe President Barack Obama has a dream of a world free of hunger and poverty. On Jan 9, 2014 he had named five economically challenged areas of the country that will receive a series of tax incentives and government grants as part of his efforts to combat poverty across the country. His concern for the poor is certainly evident. But what perhaps he doesn't realise it that with a little more effort he can probably lead the world in making poverty history.

Yes, he can.

My appeal to you Mr President is very simple. Please extend your Quantitative Easing programme and give an additional $ 120 billion to a group of international organisations (with backing from G-20) to launch a time bound programme to remove poverty. We all know that the biggest stumbling block in fighting poverty has been the availability of resources. Now we know it is possible. US Fed has shown that availability of money is not such a big problem as we envisaged earlier. Simply print some more money.

This is your opportunity to carve your name permanently in history, Mr President.We don't have to wait for our lifetime to remove poverty. We can certainly do it in the next few years.

Prime Minister ignores the facts. Openly bats for dangerously risky GM crop technology.

In the 20 years since the first GM crops was introduced in US, there is a spurt in diseases. There is certainly no evidence of a direct link but there is also no evidence that this may not be somehow linked. Why not have a scientific investigation? 

Prime Minister Manmohan Singh stirred a hornet's nest when he warned against succumbing to ‘unscientific prejudices’ against genetically modified (GM) crops. Speaking at the 101^st Indian Science Congress at Jammu. He claimed that biotechnology has great potential to improve yields and his government remains committed ‘to promoting the use of these new technologies for agricultural development’.

Prime Minister’s statement lauding the controversial GM technology has not come as any surprise. Two environment ministers – Jairam Ramesh and Jayanthi Natarajan – have been eased out in the recent past essentially because of their opposition to GM crops. Jairam Ramesh was responsible for imposing a moratorium on Bt brinjal which if approved for cultivation would have opened up flood gates for the introduction of many more GM food crops; and his successor Jayanthi Natarajan who is generally believed to have resisted industry pressures to allow field trials of GM crops.

The day after Prime Minister openly came out in support of the dangerously risky GM technology, Monsanto stocks rose by 5.45 per cent. 

The stakes are therefore very high. For the multi-billion dollar industry, India’s refusal to accept GM crops can spell a death knell. Considering that many State governments have refused permission for holding field trials of GM crops, and the swelling opposition from Parliamentary Standing Committee on Agriculture and subsequently the Supreme Court appointed Technical Expert Committee (TEC) the industry has been mounting pressure through the back channels. But let's first understand how true the so-called ‘scientific’ claims of the industry are; and whether GM crops are actually safe for human health and environment.

Prime Minister says that GM technology has great potential to improve yields. This has been claimed by the industry too. But the fact is that it is now 20 years since the first GM crop was introduced in the United States, and there is still no GM crop that increases crop productivity. US Department of Agriculture’s own studies show that the yields of GM corn and Soybean are less than that of conventional varieties.  Even in India, the Central Institute for Cotton Research (CICR) Nagpur, which monitors the cotton crop, has admitted: “No significant yield advantage has been observed between 2004-2011 when area under Bt cotton increased from 5.4 to 96 per cent.”

The argument that the world needs to produce more for the growing population by the year 2050, and therefore it needs GM crops therefore does not hold true. But let’s look at it. Is there a shortage of food in the world? According to the USDA estimate for 2013, the world produced food good enough to feed 14 billion people. In other words, the world produces food for twice the existing population. The real problem lies in food wastage. Nearly 40 per cent of the food produced is wasted. In the US alone $ 165 billion worth of food is wasted, enough to meet the food requirement of the entire sub-Saharan Africa.

In India, which has close to 250 million people going to bed empty stomach, appalling hunger is not because of any shortfall in food production. In June 2013, India had a record food surplus of 82.3 million tones. It has already exported 20 million tonnes out if it, and there are plans to export another 20 million tones so as to reduce the carrying cost of stored food. Instead of increasing food production, the Food Ministry is planning to reduce food procurement and also use the huge stocks with the Food Corporation of India for commodity trading.

The promise of reduction in pesticides usage has also fallen flat. According to Washington State University researcher Charles Benbrook, between 1996 and 2011, farmers in US are applying an additional 181million litres of chemical pesticides. In 2012, on an average 20 per cent more pesticides were applied by GM farmers. This is now expected to go up by 25 per cent with the introduction of the next range of GM crops which will use a cocktail of herbicides including the deadly broad-spectrum chemicals.

In Argentina, the application of chemical pesticides has risen from 34 million litres in the mid-1990s when the GM soybean crops were first introduced to more than 317 million litres in 2012, roughly a ten times increase. On an average, Argentine farmers use twice the quantity of pesticides per acre than their American counterparts. In Brazil, which has recently taken over Argentina as far as the spread of GM crops is concerned, pesticides use has gone up by 190 per cent in the past decade. 

The Chinese farmers are spraying 20 times more pesticides to control pests. In India, the story is no different. Regardless of what the industry claims, the fact remains that the usage of pesticides too has gone up in India. In 2005, Rs 649-crore worth of chemical pesticides was used on cotton in India. In 2010, when roughly 92 per cent area under cotton shifted to Bt cotton varieties, the pesticides usage in terms of value increased to Rs 880.40 crore. 

Equally more worrisome is the emergence of hard-to-kill weeds, called ‘super weeds’. Estimates show that in US over 100 million acres is now infested with super weeds. Besides using a cocktail of chemical pesticides to control it, some US States are going in for hand weeding since chemicals are no longer effective. In neighbouring Canada, more than 1 million acre is infested with super weeds. Studies show that 21 weeds have now developed resistance after GM crops came. Insects too are now developing immunity against GM crops. In India, Monsanto has already accepted that bollworm pest is becoming resistant.

With no benefits accruing as far as increasing crop yields is concerned or reducing pesticides applications and thereby protecting the human health and environment, I don’t know what promise the Prime Minister sees in GM crops. In fact, all evidence now points to an end of the era in industrial agriculture. With soils poisoned, underground water mined ruthlessly, and with the entire food chain contaminated by chemical pesticides and fertilizers leading to more greenhouse gas emissions, the focus is now shifting to ecological agriculture. 

In Andhra Pradesh, nearly 3.5 million acres today is being cultivated without the use of any chemical pesticides. Out of which, farmers do not use even fertilisers in 2.0 million acres. Production is steadily rising, pollution has come down, soil fertility is rising, farmer’s income has gone up and there are no suicides. Isn’t it a model of farming that the Prime Minister should be advocating? If it can be done in 3.5 million acres I see no reason why it cannot be practiced in 35.0 million acres? That’s where the future lies. #

Further reading: 

1. Time to sow the seeds of sustainable farming. Hindustan Times, Feb 10, 2014. http://bit.ly/1bDlyG8

2. Shifting to organic breeding. Deccan Herald. Feb 7, 2014. http://www.deccanherald.com/content/385133/shifting-organic-breeding.html

Are Indian farmers children of a lesser god?

For the Indian farmers, it is hoping against hope  -- Daily Mail picture

Some days back I read an interesting news report. A national general secretary of a political party told the striking sweepers in Punjab that BSP supremo Ms Mayawati had regularised the services of the safai karamcharis in Uttar Pradesh. They are now provided with a basic salary of Rs 18,500 per month. This is certainly good news. A few weeks later, the ruling UPA Govt announced a 10 per cent hike in dearness allowance (DA) for 5 million central govt employees and another 3 million pensioners beginning Jan 1 2014. This was a second double digit hike in a row. It is expected that this time, 50 per cent of the DA hike will be merged with the basic pay. Another good news.

It doesn't end here. A front page news report in Economic Times Feb 3 2014 (Aam Aadmi out of hand, UPA to now woo workers http://bit.ly/1im7A0s) says more sops are likely to be showered on workers in the days to come. Call it election bonanza, but the fact remains that several employment benefits like gratuity, provident fund, bonus and healthcare are now being enhanced. What is on the card includes: 1) Minimum monthly pension of Rs 1,000 for 8.87 crore EPF account holders 2) Raising monthly ceiling for mandatory PF contributions from Rs 6,500 to Rs 15,000 3) Salary ceiling for gratuity contributions may be raised to Rs 15,000 a month 4) Parity in benefits for contract workers and regular employees 5) Minimum guaranteed bonus for workers even if the employer is making losses.

In addition, the report says the ceiling cap for Employees State Insurance Corporation (ESIC) health benefits is also expected to be increased from the existing Rs 15,000 per month to Rs 25,000 per month. This would bring an additional 5 million employees to be the beneficiary of the health security. For the workers in unorganised sectors, constituting 82 per cent of the total workforce of about 40-crore plus, the plan is to increase the health insurance slab to Rs 30,000 per household. Yes, this too is good news.

I still don't have the figures for how much the financial burden would be on the State exchequer. But I am sure you will agree that it would be quite substantial.

Now while all kinds of financial sops are being thrown at the employees and no one is cribbing about the fiscal deficit anymore, I wonder why no one is talking of the dire need to provide immediate financial help to country's 60-crore farmers (which effectively comes to 9.5 crore families). When it comes to farmers, Govt says it can't provide any financial support to such a large population. And that makes me ask a question: Are farmers the children of a lesser god?

Further reading: Farmers need direct income support
http://devinder-sharma.blogspot.in/2009/02/farmers-need-direct-income-support.html