'New and improved' organic

"The new ... package design coincides with the roll-out of several new and improved products including Low Fat Bars, Moist and Chewy Bars, Crackers and Soups," crows a food-processing executive in a press release.

No news in that; "new and improved" has been a cliché for shilling boxed foods since the 1960s, and food-processing execs are forever toying with packaging in hopes of jacking up sales.

The above statement, then, would fit into nearly any food-industry press release since the 1980s (the "low fat" business means it couldn't have emerged any earlier); however, that statement surfaced just a few days ago, from the PR department of none other than Hain Celestial, by its own reckoning a "leading natural and organic beverage, snack, specialty food and personal care products company in North America and Europe."

And thus we view the organic label's inexorable slide into tool for marketing heavily packaged and advertised junk food.

Certainly, there's no surprise in that development. As I've written before, the overall U.S. food market has matured, leaving industry heavyweights to scramble for new markets in the so-called developing world. The other way the food-processing titans such as Kraft and Heinz can eke out growth in a stagnate market is to roll out new products.

But Heinz can only tweak its (high-fructose corn syrup-laden) ketchup so many times, just as there's only so much Kraft can do to its mac and [processed] cheese [food]. One way forward for those companies is to roll out organic products--or buy into existing organic brands. Many readers will already know that Heinz owns 20 percent of Hain. Reader Lulu LaMer (note her blog's independently conjured title) has alerted me to this handy guide to which transnational industrial food giants own which allegedly sustainable-minded "health" food brands.

The attraction is obvious. This 2002 study from the USDA's Economic Research Service (ERS) shows the premiums frozen organic vegetables get at the retail level over their conventionally grown peers. Organic frozen broccoli, for example, is 72 percent more expensive than conventional, while green peas draw a whopping 110 percent premium and green beans get an extra 76 percent by displaying the organic tag.

Thus while these companies maintain their slow-growing cash-cow products like mac and cheese and ketchup (which remain profitable because producing them is so cheap), they're rushing in to leverage organic cachet. The result has been the industrialization and commodification of a movement that arose to fight the industrialization and commodification of food. Here's how ERS describes processed organic food:

There are two basic marketing channels for processed organic foods. In both cases, farmers first produce raw commodities. In the first case, these commodities are then sent to the manufacturer, who converts them into a processed product. A distributor acts as a middleman, moving processed products from manufacturers to retailers. In the second scenario, a middleman (shipper) procures raw commodities from farmers and delivers them to manufacturers. After creating the processed good, the manufacturer moves the products through to retailers. The middleman secures the quantities needed; he or she also ensures that the commodities are high quality and meet the manufacturer’s organic standards.

Thus the power relations of industrial agriculture are preserved; the pricing power goes to the middlemen, the manufacturers, and the retailers, leaving little for farmers, who once again face the "get big or get out" edict of a market controlled by a few consolidated buyers. And farmers stop growing food for people to eat, but rather commodities--inputs in an industrial process that after much energy expenditure creates something like food.

The result may be free of pesticides, but I can't imagine it being delicious or particularly healthful.

The supermarket goes south

The United States has made two great contributions to world cuisine over the last century: the fast-food franchise and the supermarket.

Temples of the cheap-food revolution, both institutions flourished in the 20th century, offering consumers convenience and the cachet of fast life. At the height of the post-war prosperity boom, before the yuppie-led backlash, fast-food and the supermarket occupied the cutting edge of food fashion in a rapidly suburbanizing nation.

At a Grocery Manufacturers Association convention in 1962, an air of hubris and self-celebration held sway that would not have been out of place at, say, a tech trade show in Silicon Valley, circa 1998. As Harvey Levenstein writes:

An executive at the American Can Company told the assemblage that "the package revolution" had helped give the American family not more time for women to work "but more time for cultural and community activities." Charles Mortimer, head of General Foods, boasted that "built-in chef service" had now been added to "built-in maid service" [ie, the dishwashing machine, etc.] implying that housewives could now lead the lives of the leisured upper class. [Quoted by Richard Manning in Against the Grain.]

Among the ironies of these pronouncements was that those very women would soon be sucked en masse into the menial end of the American workforce, as the post-War boom faded and wages could no longer keep up with the dreams of consumption (or in many cases, the bills).

But the supermarket and the "package revolution" marched on. According to Amber Waves, an online publication of the US Department of Agriculture focusing on the "Economics of Food, Farming, Natural Resources, and Rural America," supermarkets controlled between five and ten percent of US food retail sales in the 1930s. By 2001, that figure had risen to 80 percent.

The result has been, to paraphrase Adorno, disaster triumphant: environmental ruin, failing health, and, not least, horrible food. Apologists for the system crow that it at least produces cheap food. I counter that the costs associated with collapsing health and a damaged environment have merely been shuffled off of the balance sheets of the food-processing giants, whose share prices have fattened as much as the waist lines of the people those companies purport to nourish.

The good news, from Bitter Greens Journal's perspective, is that after explosive growth in the post-war decades, growth in overall supermarket sales in the United States has slowed to about 2 percent annually, roughly equal to population growth. It's what Wall Street calls a "mature market"--stable, lucrative, and stagnant.

Stagnation is causing all manner of disruption in the grocery industry. Wal-Mart, for one, is leveraging its low-cost model to steal market share from old-line regional warhorses like Safeway and Kroger. At the high end of the market, health-food chains like Whole Foods and Wild Oats are boosting sales and profits by luring customers from the old-line chains with health claims and yuppie cachet. But the overall grocery pie is not growing, and the stocks of Safeway and it peers are being punished accordingly.

The resulting strategy has been to head south--to globalize. The post-industrial world's grocery market may have matured, but there are still plenty of people in the southern hemisphere who nourish themselves within traditional, localized food networks. As southern-hemisphere governments have opened their markets to foreign investment over the past 20 years, prodded by the IMF and other transnational institutions, an enormous opportunity has arisen for multinational food processors and grocery giants.

"The largest firms, based in Western Europe and the United States, are expanding their sales in numerous foreign markets to maintain growth, while growth in the home markets stagnate," according to the Amber Waves article linked above. They've been extraordinarily successful so far:

Until 1990, there were only a small number of supermarkets in most Asian and Latin American countries, existing mainly in major cities and wealthier neighborhoods and primarily financed by domestic capital. By the early 2000s, supermarkets had penetrated the middle-class neighborhoods, and even the poorer urban neighborhoods and rural areas, particularly in Latin America. While supermarkets accounted for 15-30 percent of the national food retail sales before 1990, they currently account for 50-70 percent of the retail sales in many Latin American countries, registering in one decade the level of growth experienced in the United States in five decades. The development of the supermarket sector in Asia is similar to that of Latin America, but 5-7 years behind in its expansionary process. However, supermarkets in Asia are growing at a faster rate compared with those in Latin America. [Emphasis added]

In the the cold governmentese of the Amber Waves piece, here's how the trend has affected the food systems of these nations:

The changes in the food retail sector have resulted in a trend toward centralization of procurement, whereby large distribution centers have taken over the distribution functions of myriads of smaller centers and middlemen. A Carrefour [multinational French supermarket giant] distribution center in São Paulo may serve 50 million consumers in three different States, and an Ahold wholesaler in Costa Rica may serve the entire Central American food retail market for Ahold.

Translated loosely, that means that farmers and the local middlemen that distribute their goods are getting knocked out of business, and thus off the land and into poverty. The New York Times can be as bland and officious as any government agency. On this topic, however, the paper published a frank article (unfortunately available only for a fee) late last year.

Titled "Survival of the Biggest: Supermarket Giants Crush Central American Farmers," the article states that:

Across Latin America, supermarket chains partly or wholly owned by global corporate goliaths like Ahold, Wal-Mart and Carrefour have revolutionized food distribution in the short span of a decade and have now begun to transform food growing, too.

The megastores are popular with customers for their lower prices, choice and convenience. But their sudden appearance has brought unanticipated and daunting challenges to millions of struggling, small farmers.

The stark danger is that increasing numbers of them will go bust and join streams of desperate migrants to America and the urban slums of their own countries. Their declining fortunes, economists and agronomists fear, could worsen inequality in a region where the gap between rich and poor already yawns cavernously and the concentration of land in the hands of an elite has historically fueled cycles of rebellion and violent repression.

In short, the buyers of farm goods in these countries are rapidly consolidating, giving them huge leverage to dictate price and other terms. Second, these companies push high-margin processed food, which means more profit for processors and less for farmers.

This is a topic I’ll be returning to soon.

Note to readers: This will be my last post for several days. I’ll be attending the "Trading Justice: NAFTA's New Links and Conflicts" conference in Memphis this weekend, and will be reporting on it soon.

Roundup, ready

"Roundup, ready" is an occasional feature of Bitter Greens Journal. Named in honor of Monsanto's famed line of seeds genetically engineered to withstand its herbicide Roundup, this feature will give a brief overview of recent news, trends, and topics in the food-politics world. Each of them is a candidate for expansion in the days and weeks to come.

Whole Foods at the greenmarket gates
In addition to its 23rd St outlet and some sort of megastore at the Time Warner building near Central Park, Whole Foods has opened a 50,000 square-foot store at New York City's Union Square, site of the city's flagship farmers' market.

For those who haven't been, the Union Square Greenmarket is pretty wonderful. Four days a week, you can get everything there from artisanlly made, raw-milk cheese to fantastic organic kim chee to first-rate bread to great milk in glass jars to endless fruits and veggies, both conventionally and organically grown. On a typical Saturday in mid-summer, I can't think of a nutritional need that can't be satisfied, and in great style.

Reader Mitch Mills alerted me to this interesting NY Times piece on what effect the new Whole Foods will have on business at the farmer's market.

The article quotes one farmer who said he wasn't overly worried, but adding that "I've heard others were panicky, afraid they will go out of business because they will have to lower their prices to compete."

Knowing Whole Foods as I do--and we share the same home town, Austin, Texas--it's hard for me to imagine Whole Foods instigating a Wal-Mart-style policy of lowering prices to kill small competitors and then later raising them. It's not that the company is particularly compassionate--this is a publicly traded company, bound by law to maximize profit, and it's done quite well by its shareholders so far.

Rather, the company seems to have, embedded in its corporate DNA (to engage in a bit of the current jargon), an allergy to low prices. It bets--successfully, so far--that people will pay a hefty premium on just about everything, merely for the right to walk about in foodie/yuppie splendor.

In fairness, the article makes it seem as though WF plans to be a good neighbor to the greenmarket--which would be good business. It would not be in its interest to enter a brawl with some of the country's most high-profile small farmers. As Mitch points out, the company pledges to buy 20 percent of its produce from area farmers. That's a good PR move, and a testament to the vibrancy of the NY greenmarket program.

In the end, I agree with Greenmarket vendor and Bitter Greens Journal hero Jonathan White, who told the Times that "People who want strawberries and salad greens in January will go to Whole Foods.... But shoppers at Whole Foods can't talk to a farmer. I think you'll see people shopping in the Greenmarket carrying Whole Foods bags."

Anybody who visits the Union Square greenmarket should find White at his Bobolink Dairy stand at the northwest corner. Get him to give you his great spiel on why cows must be outside, and not penned up. And try his products. Here's Mitch Mills' review: "very nice cheeses and absolutely fantastic woodfired-brick-oven bread."

The trouble with organic
Mitch also dug up this prescient rant from 1993 about the problems the government-certified organic label would pose for small farmers.

The article, as well as the journal that published it, the Rodale Institute's New Farm, is must reading for anyone interested in keeping up with debates surrounding the organic label.

The ethanol trap, continued
Here's the latest mainstream press piece on the ethanol craze, discussed in this post and this post.

My favorite line is this one: "Nicholas Hollis, president of the Washington-based nonprofit Agribusiness Council, called ethanol 'the greatest snake oil of the 21st century' and pointed to a study concluding that it requires more energy to produce than it saves."

What in the world is the Agribusiness Council and why would a group with that name be a bitter critic of ethanol?

A cursory Web investigation did not shed much light on those mysteries, nor find the study "pointed to" by Hollis. Here, though, is a full-on polemic by Hollis, one that accuses Archer Daniels Midland of essentially stealing ethanol plants from farmer cooperatives, among other crimes.

Clearly, the Agribusiness Council and its surprising disdain for ADM call for further investigation.

Food and class, part 2

Find Part I of this article here

Strains within the system are starting to show. Simply put, industrial food is making the people who rely on it sick and fat, to the point that U.S. life expectancy looks set to decline for the first time in two centuries.

In a nation whose biggest employer (and grocer)--Wal-Mart--hangs its business model on its ability to low-ball workers, it's difficult to see how people are going to start, en masse, paying top dollar to niche farmers at farmers' markets.

Evidence of class-based distribution of diet-related maladies abounds. This recent AP article shows that in rural areas the child-obesity rate is even higher than the brisk national average. The evidence dispels "a long-held belief that in farm communities and other rural towns, heavy chores, wide expanses of land and fresh air make leaner, stronger bodies," the article says.

The article points to three factors contributing to the trend of surging child obesity in rural areas: mechanization of farming, the rapid rise of satellite dishes and cable television (which arrived later, but spread much faster, in rural areas than in urban ones), and rising poverty due to the decline in farming and other economic activity.

"The only other place where researchers are finding obesity rates similar to rural America is in the poorest, most troubled urban neighborhoods, suggesting that poverty may be the overriding cause," the article states.

Interesting connection. Just as manufacturing jobs have for three decades been fleeing inner cities in search of cheaper labor to the south, falling commodity prices for farm goods have been throwing farmers out of work. Likewise, the rural jobs provided by extractive industries like coal-mining are inherently short-lived. As a development strategy, mountain-top removal has natural limits, and when they're reached, capital must and does move on.

But why would poverty, which has historically led to starvation, cause people to be overweight? The U.S. spends less per capita on food than any nation in the world, probably than any nation since the rise of the nation-state. The cheap-food machine we've created--fuelled by our cheap-oil policy and underwritten by billions each year in commodity-agriculture subsidies--means that poor people can get almost limitless calories. Nourishment, however, is not part of the game.

How, then, can the sustainable-food movement mount a challenge to industrial food's hold on the bulk of the population? People aren't just addicted to the jolt provided by food laden with high-fructose corn syrup; they're also addicted to the cheap price tag.

In many urban areas, rising demand for quality food has provided a robust market for small farmers in outlying areas. For seven or eights months out of the year in New York, for example, a consumer who makes a conscientious effort and who has sufficient expendable income can satisfy just about all of her caloric needs from delicious food grown within 100 miles of the city. That's true for an even greater part of the year in California's population centers.

Theoretically, as demand for sustainably gown food grow in such places, increased supply will push its price down, meaning that lower-income people can afford it. And groups like Just Food in New York and efforts like Alice Waters' Edible Schoolyard in Berkeley are doing important work toward broadening the range of sustainable food in urban areas.

But there's an important limiting factor at work here.

According to a US Dept of Ag study, in the period of 1994-1996, the average price for an acre of agricultural land was $850. But the an acre of land in an area defined as "urban-influenced"--close enough to a city to be attractive for suburban or second-home development, eg, NY's Hudson Valley--was $1880. Land in non-urban-influenced areas—ie, out in rural areas—was $640. (Precise citation to come.)

Here lies the paradox of the sustainable-food movement. Demand for locally and sustainably grown food is concentrated in cities; but prices for farmland near cities are severely inflated by development pressure. Where farmland is cheap, people are poor and accustomed to industrial food. Where people are wealthy and attracted to healthy food, farmland is dear.

And that dearness limits the entry of new farmers into areas such as New York’s Hudson Valley. In short, a young person who’d like to buy 20 acres to grow heirloom tomatoes to sell into the thriving NYC market has to compete against deep-pocketed developers thinking about second homes for corporate lawyers (the same people, ironically, who provide a market those tomatoes.)

Pricy land limits supply; limited supply keeps prices up; high prices maintain the class problem of the sustainable-food movement.

And rural areas? From what I can tell, despite all the devastation of the last 50 years, the dream of industrial agriculture burns bright. March 20, the first day of spring, has been declared National Agriculture Day. Here’s how the Union County Advocate in rural Kentucky heralded the holiday:

Modern farmers have to be efficiency experts, engineers, scientists and marketing gurus. Life down on the farm is not what it used to be.

"The face of agriculture is changing--more rapidly now than ever before," says Sam Moore, president of Kentucky Farm Bureau. "From a team of horses and a good memory in the early 1900s to tractors with the power of 300 horses and computer-controlled cropping systems today, American farmers provide consumers with better quality food at a lower price."

That's the message of National Ag Day, which is being celebrated March 20, 2005, ….

No mention of niche farming or organic techniques.

Likewise at ag career day for high school kids in Sioux City, Iowa, chronicled here.

Bitter Greens Journal has been criticized for the undeniable gloom of its pronouncements. Why fixate on the inexorable rise of Monsanto’s stock price, and not celebrate the robust performance of Whole Foods?

But the bright-side view obscures the tremendous amount of work that needs to be done to create a sustainable and just food system in the United States.

Food and class, part I

The sustainable-food movement has a class problem.

Slow Food, for example, is an essential organization, with its declaration of a universal "right to taste" and its mandate to:

oppose the standardisation of taste, defend the need for consumer information, protect cultural identities tied to food and gastronomic traditions, safeguard foods and cultivation and processing techniques inherited from tradition and defend domestic and wild animal and vegetable species.

The group has undeniably done important work internationally toward those goals; yet its US branch tends to throw pricey events accessible only to an economic elite.

Examples like this abound. Dan Barber, chef of Blue Hill in New York, has been a tireless champion of small farmers and local food. Yet his restaurants, where dinner plus wine easily surpasses $100, must by necessity cater to Wall Streeters and wielders of corporate expense accounts.

Here at Maverick Farms, we've pledged to "promote family farming as a community resource"; yet we ask $40 a head for our biggest fund raiser, our farm dinners. (We do offer a lower-priced work-exchange option.)

The problem is essentially structural. Small-scale farming is labor-intensive. We charge chefs $20 a pound for salad greens; but our produce is meticulously hand-picked and rinsed, "graded in the field," which means chefs can take our greens from the bag to the plate without culling bad leaves.

From a business perspective, it's a bad model. Despite our $40 dinners and $20 bags of greens, no one here gets paid a dime beyond room and board. We'd be much better off pooling our resources and buying a McDonald's franchise.

Historically, people of limited means have tended to scrape by on what's locally available, while the wealthy have used their resources to draw in fancy food from far away. Now, that situation has turned upside down.

Economies of scale brought on by increasing consolidation, vast subsidies, and wholesale, unchecked exploitation of immigrant labor have created a system of cheap, plentiful, and dreadful food.

Industrialization, mass culture, wage stagnation, and Puritanism (eg, prohibition) have almost completely destroyed traditional foodways here, allowing McDonald's and the home convenience-food industry to fill the void. A bad-feedback loop thrives; the food industry shovels billions of dollars into marketing and controls school lunches, leaving vast swaths of the population innocent of alternatives and ignorant of what real food tastes like.

In the meantime, a backlash against industrial food is gaining force in the Anglo-American world. It started when Americans like Julia Child and Brits like Elizabeth David travelled to southern Europe at the precise point when industrialization was swamping our food culture. A prosperous middle class, buoyed by the post-War boom, travelled to Italy and France and tasted farm-fresh food prepared with flavor--not portability, volume, and profit--as the primary motivating factor. Hence the birth of the yuppie food revolution.

But middle-class wages have since stagnated; real growth in wages since the early '70s has been minimal, save for a blip in the 1990s. So the bulk of the people who frequent Dan Barber's restaurant or Alice Waters' place in Berkeley tend to be pretty well-heeled.

Chefs gained celebrity status starting in the 1980s, when the yuppie food revolution gained force. I predict that in places like New York and San Francisco, the age of the rock-star farmer is not far off.

I am reminded of a line from Baudelaire’s notebooks:

If a poet demanded of the State the right to have a few bourgeois in his stable, people would be very much astonished, but if a bourgeois asked for some roast poet, people would think it quite natural.

Welcome to the era of roast farmer. Micro-farms dot the areas outside of metropolises, producing hand-picked, highly nutritious, and pungent microgreens to be plopped on lawyers', accountants', and high-tech professionals’ plates astronomical prices. Meanwhile, the people who staff the vast services economy get the dreck served up by thriving companies like Smithfield Foods.

Find Part II of this post here.

The milky way

Responding to this post, reader and old college friend Mitch Mills asks:

Do you have any idea if there are any Niman Ranch-style operations for dairy farmers (i.e. ones that buy milk from small producers and then market it (and associated products) for them in a coordinated way)?

The short answer is, yes.

But before I answer that question directly, let me lay out a strategy for consumers looking for the best milk products but who also want to support their local economies.

First, think beyond officially certified organic, and look first for a local source of sustainably produced milk. "Organic" is fast becoming a marketing tool leveraged by the industrial giants, who have found organics to be the fastest-growing segment of the food market (hence stuff like Heinz Organic Ketchup; I'm pretty sure those "organic" tomatoes are grown on a vast industrial farm in California). Many small farms, Maverick Farms included, have decided that the organic label is more trouble than it's worth; we deal directly with our customers, who know we don't use artificial pesticides and fertilizers and can visit us to check, and thus don't need to submit ourselves to FDA approval.

Mitch lives in New York City. When I lived there, I bought most of my milk from Ronnybrook Farm. Ronnybrook is a true family farm in the Hudson Valley. An article on them a couple of years ago in Gourmet, evidently unavailable on the Internet, described it as a multi-generational business struggling with the brutal economics of small farming and barely staying afloat. They were considering going organic, which would allow them to sell into a Niman Ranch-style cooperative, but decided it was too much paperwork, and were instead amping up production of their value-added products such as drinkable yogurt.

Bottom line: the product is great, the cows feed on pasture in the summer and farm-grown hay in the winter, and they don't use growth hormones and only treat the animals with antibiotics when they're sick. Here is the FDA harassing Ronnybrook in 2003 for putting "hormone-free" on its label. The venerable government agency is here carrying water for Monsanto, sole maker of recombinant bovine growth hormone, or rBGH.

One way to find locally made food, milk included, is to check with your local food co-op, if you're lucky enough to have one in your area. (If you're not, try starting one.) Brooklyn has a magnificent one called the Park Slope Food Coop. That co-op sells an excellent, Norteastern-based milk brand called Nautural By Nature. These guys seem pretty serious about the pasture aspect of organic production, and the buyer at the PS Coop told me that many of the farms that sell to NBN are close to NY.
To answer Mitch's question, NBN is a Niman-style operation available in NY.

A good coop, like the one in Brooklyn. is really a buying club supporting local agriculture: It pools consumers' buying dollars into a lot big enough to buy farmers' products in bulk, delivering a fair price to both parties. The PS Coop also has an excellent selection of sustainably raised meats from nearby farmers, and at least one additional brand of milk, also of excellent quality, from an individual NY State farm.

Finally, there's Organic Valley, a nationally available conglomeration of farms that has a much better reputation that Horizon. They seem pretty serious about pasture.

Here at Maverick Farms, we have access through the local health-food store to milk from a Ronnybrook-style dairy called Homestead Creamery, located in the Blue Ridge mountains of Virginia, not far from here. But we'd rather buy direct from the only remaining dairy farm in our area.

There used to be a couple of dozen dairy farms lining the lovely rolling pastures of Bethel; declining prices for bulk milk has left only one standing. The farmer pastures his cows in the summer and feeds them his home-grown corn in the winter. He sells his stuff to Pet (owned by Dean Foods, which processes fully one-third of the fluid milk consumed in the US), the only processor in the area, for whatever price Pet is willing to pay.

Sometimes, however, it's inconvient for us to make the 20-minute trek out to the dairy farm. In that case, we buy Homestead Creamery.

Roundup, ready

"Roundup, ready" is an occasional feature of Bitter Greens Journal. Named in honor of Monsanto's famed line of seeds genetically engineered to withstand its herbicide Roundup, this feature will give a brief overview of recent news, trends, and topics in the food-politics world. Each of them is a candidate for expansion in the days and weeks to come.

Monsanto's cotton grab
I'm woefully behind in covering the doings of genetically modified seed giant Monsanto (MON).

Last month, the company dropped $300 million to snap up Emergent, which investment Web site Motley Fool calls the "third-largest cotton seed company in the U.S. and India."

Reuters reports that Emergent controls 12 percent of the US cottonseed market and had already been using Monsanto GM technology through licenses. Its strong position in India might have been particularly alluring. If the US government is serious about reducing its generous subsidies to large-scale U.S cotton farmers, then so-called developing countries might see a jump in cotton production.

Monsanto got a lift on March 4 when India lifted a ban on GMO cotton in its northern region (it already allowed GM cotton in some southern and central states). Monsanto's cotton germoplasm containing Btacillus thuringiensis, a bacteria that kills cotton-loving boll worms, weilds a GM monopoly in India, according to the Associated Press. In the above-linked article, AP states:

Monsanto's BT [Btacillus thuringiensis] cotton is the only genetically modified crop allowed in India, a reluctant entrant into the world of biotechnology. Ever since three varieties of the seed were given three-year licenses in 2002, the company has faced stiff opposition from environmental groups. But it managed to get approval for one more strain in 2004.

Before its acquisition by Monsanto, Emergent had licensed Monsanto's BT technology for sales in India. India's lifting of the ban pushed Monsanto shares up 4.4 percent on March 4.

In 1998, Monsanto made a $1.9 billion bid for cottonseed titan Delta and Pine Land, which failed under antitrust pressure form the US Justice Department. No one expects the Bush justice department to question the Emergent deal.

Monsanto's Agent Orange escape
A federal judge rejected a class-action suit by 4 million Vietnamese against US chemical manufacturers, including Monsanto, for selling the herbicide Agent Orange to the US government during the Vietnam War.

The government used Agent Orange to defoliate the countryside in places it thought enemy insurgents were hiding. Associated Press reports:

Many U.S. veterans and Vietnamese have long blamed Agent Orange for a variety of illnesses, including cancer, diabetes and spina bifida. The U.S. government claims there is no direct evidence linking dioxin [Agent Orange's active ingredient] with the illnesses. However, about 10,000 Vietnam War veterans in the United States receive disability benefits related to Agent Orange exposure.

Clinging to the tenuous fig leaf provided by official US government denial, a spokesman for Monsanto's co-defendent Dow Chemical declared Wednesday that: "We believe that defoliants saved lives by protecting allied forces from enemy ambush and did not create adverse health effects."

A Monsanto spokesman added: "This was a good decision for law. I think the judge recognized the problems with the plaintiffs' case."

The ethanol trap revisited
The Wall Street Journal ran an excellent article yesterday on the craze among Midwest farmers for investing in ethanol plants, a topic I touched on here.

The piece is unfortunately only available to WSJ.com subscribers, so I'll hit a few key points.

The article warns that the rush to produce ethanol facilities could create a glut of the stuff, meaning lower prices and, possibly, failed investments. It notes that Archer Daniels Midland, the leading producer of ethanol and the world's biggest buyer of corn, has "tellingly" declined to boost its own production. "Production is growing faster than demand," a top ADM exec tells the Journal.

And it quotes credit-rating agency Standard & Poor's as calling the new facilities "highly speculative."

The saddest thing reported in the article is that farmers are not only betting their own money on the plants, they're also borrowing money to invest, a practice Wall Street calls investing "on margin." The article profiles one farmer who's investing $100,000 in a facility--$20,000 of his own, the rest coming from a bank. If the investment fails, the guy will not only be out 20k, he'll also owe 80k to a bank!

All the signs of a bubble waiting to burst are here. The article states:

David Nelson, a farmer who's chairman of the two-year-old Midwest Grain Processors ethanol plant in Lakota, Iowa, is well aware of the overexpansion threat. "It's starting to get crowded around here," says Mr. Nelson, 52, sipping a Corona in the smoky bar of Cattleman's Steak & Provisions near his Belmond, Iowa, farm. "In the back of our minds, we know there is to be a day of reckoning."

But his solution isn't to cut back. It's to grow big enough to survive a shakeout. Midwest Grain Processors sold about $17 million more stock in January to double the size of its plant. That means this plant alone will be able to make 100 million gallons a year. And its farmer owners are already thinking about where to build a second plant. (Emphasis added.)

That sort of thinking, multiplied, will cause a huge glut of ethanol to hit the market, resulting in a nosedive in price. As I said before, all ADM has to do is sit back and wait.

How now, organic cow?

Do you allow your cows to pasture?

In compliance with the USDA Organic Regulations, all Horizon Organic cows have access to nutritious pasture during the seasons of the year when it is available. For example, in Maryland, the entire herd (of about 698 cows) have daily access to 120 acres of well-managed perennial grass pasture which makes up a significant portion of their diet from March through December.
From Horizon Organic Dairy's FAQ

According to The Cornucopia Institute, that's a lie--or at least a legalistic twisting of the truth. The Wisconsin-based group, which dedicates itself to fighting "for economic justice for the family-scale farming community," has been campaigning against what it calls "large industrial dairy farms producing 'organic' milk.' "

It's taken its case straight to the Food and Drug Administration, which oversees organic-certification code. Miraculously, Cornucopia won over an FDA advisory panel, which recommended tightening rules regarding milk cows' access to pasture. What the FDA will actually do with the recommendation remains in doubt. As reported here, Bush recently appointed a shameless industry tout as head of the FDA.

Access to pasture lies at the heart of any meaningful definition of organic cattle-raising. I don't have time to spell out why, so I'll defer to two great authorities on pasture grazing: Virginia meat farmer Joel Salitin and NY State dairy farmer/cheese maker Jonathan White.

Cornucopia contends that Horizon is subjecting certified-organic dairy cows to feedlot conditions at two industrial-style operations, one in Idaho and one in California.

"According to reports, both the Idaho and California operations differ little from conventional confinement dairies other than having their high-producing cows fed certified organic feed," says Mark Kastel, Cornocopia's senior farm policy analyst, in a press release. "Real organic farms have made great financial investments in converting to pasture-based production — enhancing the nutritional properties of the milk and for enhancing animal health—while it appears that these large corporate-dominated enterprises are happy just to pay lip service to required organic ethics."

The group has launched an "Organic Integrity Project," which will act as a "corporate watchdog assuring that no compromises to the credibility of organic farming methods and the food it produces are made in the pursuit of profit. We will actively resist regulatory rollbacks and the weakening of organic standards to protect and maintain consumer confidence in the organic food label."

Amen.

The cash cow

Like a cow pumped full of Monsanto's growth hormones, the U.S. farm-subsidy program has been gushing prodigiously since 1995--"the costliest decade in the 70-year history of government farm subsidies," according to the Environmental Working Group.

That heroic organization has broken down the US farm-subsidy system in all its sordid grandeur, and put the results up on a wonderful Web site (brought to my attention by an article the yesterday's Washington Post referenced here).

Start here, with the EWG's analysis of the data it generated. According to EWG, the U.S. government dropped a cool $131 billion on subsidies between 1995 and 2003. However,

It's not as if the subsidies are 'saving the family farm.' Of the 2,128,982 farms enumerated by the most recent Census of Agriculture, for 2002, only 33 percent received government payments. Two-thirds of the nation's farmers get no subsidy payments whatsoever. For the most part they don't qualify because they grow the 'wrong' things. If you want to see what the wrong things are, stroll through the produce aisle or meat department of your local supermarket. The farmers who produce most of America's food do so without a check from taxpayers.

That's because the large-scale farms have managed to dominate the government milk teat, the report goes on:

The real action is at the top of the farm subsidy food chain, where 10 percent of the recipients—just over 305,023 individuals, partnerships, corporations, estates and myriad other entities—took in 72 percent of the total payments taxpayers provided for conservation, commodity and disaster programs over the 9 years. (That's an upward tick of 1 percent in concentration for the top 10 percent over the eight-year analysis EWG presented last year.) They collected, on average, $309,823 each, roughly $34,000 annually. The elite in this world of government dependency collected even more. The top four percent of recipients, for instance, number just over 122,000. Yet they cost taxpayers about $65 billion over 9 years, which works out to an average of $529,000, or nearly $59,000 per year.

The report goes on to detail just how skewed the system is toward subsidizing large-scale, environmentally ruinous commodity farming vs. funding sustainable-farming efforts. It states:

The public hears a lot of soothing, bi-partisan talk about the vital importance of conservation and protecting the environment whenever it's time to move an ungainly farm subsidy bill through the body politic. But once the flow of commodity payments has been locked in, Congress proceeds in the out years to cut funds from the very conservation programs that provide broader, public interest cover when subsidy bills are under fire.

Case in point: For all the wailing among red-state politicians about how Bush's proposed 2006 budget would cut commodity subsidies (see this post), I've heard no complaints from any major politician about how the budget would affect conservation funding. The indispensable National Sustainable Agriculture Information Service hasbroken down just what the budget would do to conservation programs, and it's not pretty.

I guess we'll have to wait until it's time to promote the next Farm Bill before politicians start prattling about conservation funding again. Meanwhile, the disparity is stark. Between 1995 and 2003, the government paid out $103.7 in commodity support, vs. $16.3 billion for conservation. The report also details how the large farms game the government on disaster aid.

Once you've read the analysis, it's time to play with the state-by-state data base. It's fun.

Take Texas, my home state and Bush's. Twelve or so years ago, current governor Rick Perry, longtime stable boy for the state's large-scale ranchers, edged out Jim Hightower as the state's Ag commissioner. (Say what you want about Hightower, but there he was in the late '80s and early '90s, promoting organic agriculture and hormone-free beef as ag commissioner of Texas.) The state snatched $432 million in livestock subsidies between 1995 and 2003, with the largest 10 percent of the recipients hoarding 57 percent of the take.

I always hated how, in New York City, Washington apples were ubiquitous in stores, while state-grown apples were rare and more expensive. Well, Washington soaked up $134 million in subsidies between '95 and '03, while NY state farmers got only $29.1 million. I doubt the apple farmers whose produce I so treasured in the farmers market got much of the action. The top 20 percent of recipients snared more than half of the goodies.

Check out what's happening with ag subsidies in your state, and then pressure one of those rogue U.S. Reps to do something about it.

Bush ag cuts roil GOP

It's impossible not to savor a bit of shadenfruede at the expense of GOP farm-state legislators.

These people clearly knew during the 2004 presidential election that the federal government's generous underwriting of large-scale agriculture couldn't last unabated. Bush is shelling out $5 billion a month trying to maintain order in his fiefdoms in Iraq and Afghanistan. That flow of cash won't likely stop anytime soon. According to Counterpunch, the insurgency controls all main roads to Baghdad--an astonishing claim, missing from the mainstream press, that would explain the Occupation's failure to stop a plague of car-bombings.

That, plus a generous regime of tax cuts for high earners, and a nice increase for military spending ex-Iraq, spells deficits that would have made Reagan himself blush. Who didn't know that, after the election, Bush's moneymen would produce their knives and parse the Federal budget for "fat"?

By cutting the maximum level of subsidies and other tactics, the proposed Bush budget would trim about $5.7 billion in federal support over the next ten years, enough to finance approximately five weeks of "peace keeping" in Iraq and Afghanistan. Based on formulas from the 2002 Farm Bill, farmers will get about $17.8 billion in subsides this year (the amount of support changes with market conditions).

Now those Red State rascals have to explain to their constituencies, mostly in areas where subsidized farming is one of the few areas that pay, that the gravy train is losing a good deal of its gravy. Of course, if they want to stick around in Washington, they'd better put up a good fight first, and they are, as this terrific article in today's Washington Post shows.

The article states that tensions are particularly running high in the south, the bedrock of Bush's electoral success. That's because the large-scale flight of the textile industry to cheap-labor havens overseas has left cotton farmers searching for a market. And their political friends have done a nice job of fixing one up for them. The Post article states:

It costs an average 65 cents for a farmer in the United States to produce a pound of cotton; the adjusted world price in late February ran less than 40 cents. This has made U.S. cotton growers unusually dependent on the government. A program called "Step 2" essentially subsidizes cotton exports and protects home producers from foreign competition.

Step 2, which has cost taxpayers more than $2 billion since 1990, pays a rebate to textile mills that buy U.S. cotton when foreign cotton is cheaper. Brokers who sell U.S. cotton abroad for less than what they paid at home can get the government to reimburse them for the difference.

By taking advantage of a raft of federal subsidies and legal loopholes, cotton farmers can boost their income to more than 70 cents a pound -- double the recent world price. Emphasis added.

Now, don't think some Mississippi dirt farmer with 40 acres out back is cashing in on this windfall. The article states that "One percent of those [cotton farmers] receiving subsidies collected 28 percent of the money paid out between 1995 and 2003," adding that only 30 percent of Mississippi's cotton farms are large enough to be eligible.

Meanwhile, it should be noted, African cotton farmers, many of whom were prodded into commodity farming by various international institutions, have suffered bitterly as subsidized US cotton swamps their markets. Brazil recently won a claim through the WTO against the US for essentially dumping its cotton on foreign markets. The Post article notes that Bush’s proposed cuts wouldn’t reduce the cotton subsidy to a level that would comply with the WTO ruling.

Speaking generally, Bitter Greens Journal supports an end to all commodity-farming subsidies. In their place, we'd like to see federal grants for setting up viable local and regional food systems. How much? Five billion a month would certainly do the trick.

Meanwhile, we’ll enjoy watching GOP congressmen squirm.

Mortification of the flesh

What he dreads is that, during a lull in the conversation, someone will come up with what he calls The Question--"What led you, Mrs. Costello, to become a vegetarian?"--and that she will get on her high horse and produce ... the Plutarch Response. After that, it will be up to him to repair the damage. The response comes from Plutarch's moral essays. His mother has it by heart. He can reproduce it only imperfectly. "You ask me why I refuse to eat flesh. I, for my part, am astonished that you can put in your mouth the corpse of a dead animal, astonished that you do not find it nasty to chew hacked flesh and swallow the juices of death wounds." Plutarch is a real conversation stopper. It is the word juices that does it. Producing Plutarch is like throwing down the gauntlet; after that, there is no telling what will happen.
--From Elizabeth Costello, by JM Coetzee

Given the way meat animals are raised in this country, it's hard not to cede the whole game to the vegetarians--or even to the vegans, for the lot of laying hens and milking animals isn't much (if any) better.

"It was a typical modern dairy," writes Nicolette Hahn Niman, in an Op-ed in today's NY Times, "with cows living indoors in a metal building with concrete floors, rather than in the bucolic setting many of us imagine."

When the title of her piece, "The Unkindest Cut," popped up on my daily "agriculture" search, I assumed it was a shrill complaint from some GOP red-state Rep about Bush's farm-subsidy cuts. Rather, the article is about the practice, now standard in factory farms, of cutting off the tails of milk cows and pigs. The usual procedure, reports Niman, does not include the use of anesthetics.

She writes:

I have often observed just how useful tails are to cattle. At certain times of year, cows' tails are in constant motion, flicking away flies and other insects that gather on their backs. Other than predators, which most farm animals don't have to worry about very much, flies are the bane of a cow's existence. And confinement dairies, which often have dense fly populations, are places where cows are especially in need of their tails.

A farmer tells Niman that she has chopped the tails off of her cows because "it's just easier to milk them that way"--evidently, tails get in the way of the heavy machinery used to extract milk.

Things are just as grim on hog farms, where the preferred surgical instrument is the wire cutter. Niman writes:

Like a dairy cow, a pig uses its tail not only to shoo away insects but also to communicate. Like dogs, pigs wag their tails when they are happy, twitch them when they are nervous, let them drop straight down when they are sick. They may stick them straight out behind them when they are frightened or alarmed.

The pork industry's rationale for tail docking is that pigs bite each other's tails and that the tails can then become infected. When pigs' tails are cut off, the stubs stay intensely sore and so, the theory goes, the bite will cause so much pain that the bitee will move away from the biter. (The industry refers to this as "avoidance behavior.")

She then establishes that tail-biting is a behavior engaged in only by pigs raised in dense confinment--and she then debunks the claim that the tail-chopping practice curtails biting.

Niman then raises the hope that the Department of Ag will ban the practice, noting that Britain, Norway, the Netherlands, Sweden and Switzerland have all banned dairy-cow tail chopping and the EU banned routine snipping of pig's tails in 1991.

I doubt the USDA will do any such thing. The current director, Mike Johanns, made his political bones as governor of Kansas. It's hard to imagine him challenging the agri-interests that have pushed him up the ladder.

The villain here is a food system that drives farmers to ever-more heroic measures to preserve profitability amid falling prices for their goods. In dairy, every region has one or two buyers (around here it's Pet) that essentially dictate prices. Then there's the disaster of bovine growth hormones (brought forward by our friends over at Monsanto), which when widely adopted in the early 1990s, boosted production, leading to lower prices. With prices for their goods falling, I can see why farmers would be tempted to squeeze more cows into their production line, and reduce some of the increased labor by "docking" their cow's tails.

As artisanal cheese maker and small-scale dairy farmer Jonathan White likes to joke, conventional dairy farmers lose money on every gallon, but try to make up for it with volume.

As for the pork farmers, well, that industry is so consolidated and "vertically integrated" that it's a wonder there are any hog farmers left. The ones that survive tend to be locked into contracts with the big processors like Smithfield.

Since the early 1980s, the number of hog farms in the nation has plunged from nearly 500,000 to only 85,000. And following its striking consolidation, hog production has also shifted rapidly into supply chains…. A recent survey by researchers at the University of Missouri found that the share of hogs sold to processors under some type of contractual arrangement climbed above 80 percent in January 2001, up from about 65 percent in 1999.

That quote, from a 2001 study, comes not from some left-wing ag economist, but from none other than the U.S. Federal Reserve, through the Center for the Study of Rural America in the Fed's Kansas City office. Here is a list of downloadable publications from that group; the one quoted above is called "The New U.S. Meat Industry," second quarter, 2001. Read it.

The contracts in question give processors enormous price leverage; they have farmers taking desperate measures to cut costs, including stuff like chopping off pigs' tails with wire cutters.

Have I mentioned recently how much I hate Smithfield Foods?

Rather than surrender to vegetarianism, consumers can seek out and support sustainably and humanely produced meat. She was too classy to state it, but the above-quoted Nicolette Hahn Niman is the wife of Bill Niman, founder of Niman Ranch. Bitter Greens Journal reveres Niman Ranch. It carefully selects small farms that do things right--free ranging animals on grass pastures--and gives them a good price on their goods. It then processes and packages the product itself.

Full disclosure: Maverick Farms has used NR pork at our farm dinners more than once; it's magnificent. NR's hog-processing facilities, and assocaied hog farms, are in Iowa and North Carolina.

Other sustainable meat sources we know and love around here are Redgate Farms, an NC-based, smaller-scale version of Niman that does first-rate pork; and Hickory Nut Gap Farm, close to Asheville, NC, which sustainably raises pigs, chickens, cows, turkeys, and lambs. The farmers there, Jamie and Amy Ager, are producing terrific stuff and doing a great job of caring for the pasture they occupy. Rather than the hell-on-earth feel of factory meat farms, their place is gorgeous and smells as sweet as a spring rain. Their barn recently burned down--a devastating blow to a small farm.

Find your own source of local, sustainably raised meat and support it, or seek out Niman Ranch. You'll be paying a premium, but you can be sure that a farmer is getting a much bigger cut of the action. The low price of the stuff on the supermarket shelf reflects subsidies to large-scale farmers (remember, those miserable animals are eating highly subsidized, genetically altered corn and soy) and economies of scale squeezed out of the hides of farmers by the likes of Smithfield.

My beef with Smithfield

I hate Smithfield Foods, that paragon of industrially raised, industrially processed meat.

I hate the flavorless garbage it sells. I hate its labor practices, so egregious that they inspired a blistering report from Human Rights Watch. (That report is the black book of industrial meat. All McDonalds eaters and Wal-Mart grocery shoppers should read it. It tells the story of how the meat-packing industry, with Smithfield helping lead the way, busted the unions, reversing 40 years of progress in wages and safety and returning conditions and pay to levels that would make Upton Sinclair seethe.)

I hate the way its stock chart stands essentially as a mirror image of the trajectory of wages and conditions in its plants, rising implacably as the lot of its workers declines. I despise its pioneering use of immigrant labor--since it can't take its plants overseas, it essentially recreates the miserable power relations prevalent in places like southern Mexico, importing people from there who've been kicked off the land over the past 20 years.

The HRW report states that:

When Smithfield opened its Tarheel plant in 1993 [a pork-processing plant in North Carolina], fewer than 10 percent of its hourly employees were immigrants. Today, an estimated half of the plants workers are Hispanic immigrants. African-Americans make up about 40 percent of the workforce.

I hate the way it pioneered a "vertical integration" strategy in pork production. It's both the biggest producer and processor of hogs (see this post). Its pork-production arm--it raises 825,000 sows per year--gives it what farmers call a formidable "captive supply." Thus it can manipulate the price of hogs on the open market to suit its own ends. Withhold hogs and the price rises, boosting its production arm. Add hogs to the market and the price declines, giving a break to its processing arm.

And I hate the feedlot style of raising animals, which maximizes cruelty and creates a huge waste problem, imbuing entire counties with the stench of shit and polluting rivers and streams.

Having vented all of that spleen, I can comment on Smithfield’s latest quarterly report. Bottom line: for the three months ending Jan. 30, the company netted about $97.5 million in profit. That's about twice what it made in the same period a year before.

The main driver was its hog-producing arm, which flourished as demand for pork rose amid panic about mad cow disease in beef. (Here's a nice take on the mad-cow scare from Richard Manning.)

Not surprisingly, its beef operations contributed nothing to its bottom line. The company has had a presence in the beef-processing and the beef feedlot businesses, but hasn't been a top-four player in either.

Until last Tuesday, that is. On the same day as it released its quarterly report, the company announced it was merging its beef-feedlot operations with those of ContiBeef, the nation's second-largest feedlot operator.

The as yet unnamed entity, a 50-50 venture, will operate as the world's largest cattle-feeding operation, according to an industry observer quoted in the article above.

The news barely made a ripple in the business press. The only substantial commentary on it I've found come from the Organization for Competitive Markets, a Naderite non-profit that bills itself as a coalition of "farmers, ranchers, academics, attorneys and policy makers dedicated to reclaiming the agricultural marketplace for independent farmers, ranchers and rural communities."

In its press release, the group declared that "“We are very worried about potential market impacts resulting from this merger ... Smithfield grew from meager beginnings in Virginia in the early 1980’s to become the major force integrating the hog industry and destroying market access for tens of thousands of independent hog producers in the Southeast and later the Midwest.”

It points out that the beef-packing firm that had been the industry leader before the merger, Cactus Feeders, has been using a captive-supply strategy similar to Smithfield's in pork. "We now have the pioneer of captive supply in hogs overtaking the pioneer of captive supply in cattle as the dominant feeding company in America," the release states.

It then speculates that Smithfield will next purchase a large beef packer, giving it dominant vertical integration in both beef and pork.

The Monsanto samba

Brazil's congress voted to legalize genetically modified (GM) crops yesterday. President Luiz Inacio "Lula" da Silva still has to approve the legislation before it can go into effect; there's little doubt he will, despite Greenpeace's best efforts.

Brazil's official capitulation is big news for Monsanto. As most BGJ readers know by now, the agri-giant's Round Up Ready seeds already control about a third of Brazil's fast-growing soy output. Farmers have been buying Roundup Ready seeds for years on the black market. The new law will grant the agri-giant legal standing to enforce intellectual property rights claims on farmers whose soybeans can be shown to be genetically identical to Roundup Ready, whether through illicit buying on the black market or cross-pollination.

The windfall could be huge and ongoing. As the AP put it Thursday, "Brazil is second only to the United States in soy production, but easily has the potential to become the world's largest soy producer because of cheap land, low labor costs and plentiful water."

Monsanto saw its stock nudge up nearly 1 percent on the news Thursday. That's a pretty modest rally, but then, part of the reason the stock has risen so steadily over the past year is that investors have been factoring in Brazil's surrender to GM crops.

The company immediately repaid the favor, announcing Thursday afternoon that its Brazil unit would spend $20 million over the next few years to conjure a soy seed containing an insectide to combat specific domestic pests.

"The new soybean variety would employ techniques already used in new varieties of corn and cotton that have genes from the Bacillus thuringiensis, or Bt, bacteria, which produces a natural toxin to kill bugs that feed on crops," Reuters reported Thursday.

That's Bt soy, right in the middle of one of the world's richest wildlife areas.

Same old story. Farmers and government officials sell out to agribusiness in hopes of creating higher yields. When the bumper crop arrives, prices drop, and the buyers--those same agribusiness firms--score a windfall. Farmers then fall into despair (see this post), and all sorts of environmental and social damage piles up. All the while, over on Wall Street, they're bidding up the share prices of the agri-stocks.

Meanwhile, government officials and Monsanto execs in Argentina are rubbing their hands together at the prospect a corn seed that contains both the Bt and Roundup Ready functions.

The ethanol trap

According to the report referenced in this post, the only area of agricultural production not succumbing to increasing consolidation is ethanol, the fuel derived from corn.

Archer Daniels Midland is the largest individual ethanol producer, conjuring up some 1.07 billion gallons of the stuff each year. But the top four producers of ethanol control just 49 percent of the market--not so much, by U.S. standards, and down steadily since the top four controlled 73 percent in 1987 (ethanol king Bob Dole's heyday in the US senate.)

And the report tells us that "Farmer-owned ethanol plants accounted for 1.276 billion gallons per year or 37.3% of total capacity." Surprisingly, facilities owned by farmers as a whole produce more ethanol than ADM!

Farmers throughout the corn belt are investing in cooperatively owned ethanol plants. One farmer told the St. Louis Post-Dispatch (“Midwest Farmers become major investors in ethanol plants,” 2/20/2005, unavailable online) why he was considering plunking down $20,000 to invest in such an operation: essentially, to gain a measure of power in a business controlled by giants.

“We don’t have control. We call up and somebody says, ‘This is the price we’ll give you,’ ” he told the paper.

All over the Midwest, cooperatives are forming to build new plants. One project, Illini Bio-Energy, is enticing farmers with the prospect of 22.8 percent annual return on investment for their $20,000 outlay. A Illini Bio-Energy functionary told the Post-Dispatch that the group hoped to raise $25 million in direct investment from farmers before seeking a bank loan to make up the difference on building a $96 million ethanol production plant.

In an age of vast overproduction and long-term pressure on corn prices (see this post ), farmer-owned ethanol plants are, at first glance, an alluring way to keep farmers in business while wrestling some market control away from the agri-giants.

Yet Bitter Greens Journal cannot hail this trend as a way forward for sustainable farming.

First of all, ethanol owes its existence to government subsidy. As recently as November 2004, the credit-rating agency Standard & Poor’s declared that:

The industry simply cannot survive without the subsidy. The growth in the industry is mainly driven by favorable public policy expectations...a change in governmental policy … could devastate the ethanol industry. (Quote taken from The Oil Daily, Nov. 22, 2004.)

When a product can’t exist without subsidies, that means that it costs more to make than it can fetch on the market.

The U.S. Congress, lured by generous campaign donations from the likes of Archer Daniels Midland, has been subsidizing ethanol production since the 1970s. In October, Congress extended through 2010 the 5.4 cent per gallon exemption ethanol enjoys from the 18.4 cent per gallon federal excise tax on gasoline. That encourages oil refiners to buy more of the stuff.

Bush signed on, which didn’t hurt his push for votes in the rural states. Expressing blustery, make-no-mistake support for ethanol subsidies has long been a rite of passage for presidential candidates, Democrat and Republican alike.

Meanwhile, the energy bill currently before Congress would require refiners to use a minimum 5 billion gallons of ethanol annually. “Farm interests plan efforts in the coming weeks to raise that floor, perhaps to 8 billion gallons,” reports the Post-Dispatch. Moreover, several states, Missouri among them, provide additional support for ethanol.

One source, the admittedly self-interested American Petroleum Institute, puts the total value of government support for ethanol (federal and state programs combined) at about $1 billion per year.

Now, much of this cash ultimately ends up in the coffers of Archer Daniels Midland. Despite the recent deterioration of its market share, ADM’s ethanol arm netted $135.4 million in operating profit for the second half of 2004. That’s not a bad take for a business line that relies on Uncle Sam’s generosity for its existence.

Remember, the company produces a billion gallons of ethanol a year--about a third of all production--and has essentially limitless resources to increase capacity. If ADM wants to put small companies like Illini Bio-Energy out of business, all it has to do is significantly jack up production, which would lower the price of ethanol.

Also, the Gold Rush-style push to build new plants could itself be disastrous for ethanol prices, and the farmers who are investing in cooperatives. The Oil Daily for Nov. 22, 2004 reported that:

If too many producers jump into the market, there could be a "glut" of ethanol, leading to large stocks of unused fuel and reduced profits, Elif Acar and Arthur Simonson, authors of the S&P report, told Oil Daily in an interview. "That's what happened in the power industry and it could happen in ethanol, too," they said.

In that case, all ADM would have to do is sit back and wait for the small fry to fail before regaining its old dominance.

Thus a farmer who bets $20,000 on getting a nice cut of the ethanol action is playing a risky game. The house always wins at blackjack.

Nor is ethanol the “clean-burning fuel” hailed by ADM and its allies on Capitol Hill. The process of transforming corn to fuel requires large inputs of fuel—typically including decidedly dirty-burning coal. If ethanol generates more energy than it requires for production, then it has crossed that threshold only recently. The most optimistic assessment, from the USDA, claims it takes 1 gallon of fossil fuel to generate 1.24 gallons of ethanol.

I’m not sure if that number accounts for all the fertilizers needed to grow corn, or all of the gas burned hauling it to processing plants.

As Richard Manning argues in Against the Grain, you can’t assess the wisdom of growing fuel from the ground without accounting for the steep environmental costs of industrial agriculture. He points to a massive dead zone in the Gulf of Mexico, where all sorts of marine life once flourished, caused by heavy use of fertilizers in the Midwest. The practice ends up washing loads of nitrogen into the Mississippi River, which in turn finds its way into the Gulf, where it causes large algae blooms that squeeze out other forms of life.

What the ethanol subsidies are really about, he argues, is finding an outlet for the officially sanctioned overproduction of corn. (The other main outlet for the corn surplus is high-fructose corn syrup; more on that later.)

Bitter Greens Journal believes that no sane agricultural model can be based on overproduction and mono-cropping. We wish those farmers in the Midwest well, but we also wish they’d use their resources to diversify into other crops, transition away from reliance on chemical inputs and genetically modified seeds, and work toward creating viable local markets for their goods.

Note to readers

Please write me at tphilpott@skybest.com if you want me to put you on a list to receive an e-mail every time I update my blog.

Highly concentrated

Like the great bulk of the orange juice it produces, the U.S. food system tends to be highly concentrated.

The latest evidence: Mary Hendrickson and William Heffernan of the University of Missouri's Department of Rural Sociology have come out with a pithy, no-nonsense compilation of concentration rates across the industry, available for download here at the National Farmers Union site.

Here are some of the report's telling revelations:

• The top four beef packers--Tyson, Cargill, Swift, and National Beef Packing--control 83 percent of the packing market, up from 72 percent in 1990. (Tyson's buyout of IBP a couple of years ago accounts for much of that jump.) That means if you're a cattle farmer, there aren't a whole lot of buyers out there clamoring for your stuff. You pretty much take what the big boys offer.

• The top four pork packers own 64 percent of the market, up from 37 percent in 1987. Smithfield foods, which reports earnings today (expect a post on that tomorrow) stands atop the pork-packing heap. Interestingly, it's the largest pork producer, too (the top four hog producers account for about half the overall market). That means Smithfield weilds huge power over hog prices. It can bring hogs onto to the market when it wants to lower the overall price, which helps its packing business; it can withhold hogs from the market to boost the price, which helps its hog raising business.

• The top three soybean crushers--BGJ perennial favorites Archer Daniels Midland, Bunge, and Cargill--control 71 percent of that market. (Soybean crushing feeds the large and growing market for soybean oil, the craze for soy protein in processed foods, and soy supplements into animal feed.) The three are also powerhouse soy traders. Their market heft, plus low soy prices engendered by U.S. farm subsidies and increased production in Brazil and Argentina, spells great profitability for these giants.

• Wal-Mart has bulled its way to the top of the global grocery market. It grossed $244 billion in global grocery sales in 2004; the number two player, France's Carrefour, managed $64.7 billion. Domestically, Wal-Mart rang up $66.4 billion. Its closest competitor is Kroger, which snagged $46 billion in sales. Wal-Mart's dominance of the domestic grocery market underlines the U.S. food system's reliance on cheap labor for profitability. This important article in The New York Review of Books (12/16/04) summarizes the recent literature on the retail behemoth's authoritarian strategies for keeping its vast workforce overworked and underpaid--a habit that's central to its business model.