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“We are free today substantially, but the day will come when our Republic will be an impossibility. It will be an impossibility because wealth will be concentrated in the hands of a few. A republic can not stand upon bayonets, and when that day comes, when the wealth of the nation will be in the hands of a few, then we must rely upon the wisdom of the best elements in the country to readjust the laws of the nation to the changed conditions.”  –JAMES MADISON – Fourth President of the United States (1809-1817).

By John K. Hansen
By R. Dennis Olson
BY Jennifer Tershak
By Christopher S. Rugaber
By Christopher S. Rugaber
By Organization for Competitive Markets
By Bethany Clough
By Michael Doyle

By John K. Hansen          
President Nebraska Farmers Union
August 21, 2007

From my vantage point, as someone who has been up to his elbows in the fight for a fair, family farm agriculture friendly federal Farm Bill since 1972, I think the discussion of payment limits needs to be put into perspective. Rather than deal with the vast differences between per unit values, costs, and market values of various ag commodities, the political realities of what was or was not done on the payment limit issue in the House without sinking the whole Farm Bill, I would like to bring forward ten points to consider as the battle moves to the Senate.

First, production agriculture, on a good day is a high risk, low margin business that faces uncontrollable variables from nature, such as heat, frost, flooding, hail, drought and insects to name a few. While the House Farm Bill authorized a permanent emergency disaster assistance program, it did not fund it. That needs to get fixed in the Senate.

Second, production agriculture buys its inputs from an increasingly concentrated and noncompetitive seed, chemical, machinery, fertilizer, insurance, and capitol sector, Then, it sells its ag products into an even more noncompetitive system of shared monopolies. The House Farm Bill, with the exception of passing mandatory COOL, did not address a multitude of competition and market reform issues. The Senate must do much  better.

Third, unlike most businesses, for the most part, production agriculture either cannot or does not set the price of its products and pass along its cost of doing business. That must be remembered when we talk about the rationale for an income safety net for agriculture.

Fourth, the current Farm Bill legal structure and public policy direction is a hand in glove product of our nation’s trade policy, which is primarily set by the noncompetitive ag processors and U.S. based international grain and meat cartel who want to be able to access, control, and use enough of the world’s agricultural production so that it can drag the price of raw material products in the major production pools down to the lowest cost of production in the world. That lowest cost of production level is far below the cost of production for the developed nations, including the U.S., Canada, and Europe.

This kind of world wide sourcing is being used to dismantle the world’s traditional system of family farm agriculture in developed, undeveloped, and undeveloping nations, which I put the U.S. in. Current U.S. trade policy  is being used to move world food production towards the international cartel food production model, which is tow down owned and controlled, industrialized, vertically and horizontally integrated agriculture that is the international corporate version of the failed former Soviet Union food production system. We must stay focused on the need to overhaul, not fine tune current U.S. trade policy.

Fifth, since the passage of the 1996 Farm Bill, which was the most massive change in the structure and management of domestic Farm Programs since they were first created in 1933, the grain traders were able to eliminate the traditional price supporting public policy tools that forced raw material prices up. As a result, with expected results, the market place value of the six primary commodities, corn wheat, soybeans, cotton, rice, and grain sorghum $10.12 billion per year from 1997 thru 2006, a 16.2% non-inflation adjusted drop.  

That means ag processors DID NOT pay farmers $101.17 billion during that ten year period compared with the watershed year of 1996. In fact, only once in that ten year period has the value of ag commodities exceeded the cumulative market place value of those six commodities. In 2006, farmers received 10.8% more for the six crops than in 1996, which is less than 1996 if inflation is factored in. This legalized looting of rural America must stop. There must be a renewed focus on the need to pay family farmers a fair price for the products we grow.  

Sixth, let’s remember that in 1996, the promise to production agriculture from Congress and 1996 Farm Bill proponents was: “Don’t worry about getting rid of price supporting farm programs because when ag prices go down, Congress will stand with you to provide decoupled, welfare like, income transfers to make up for the LOST market place value.” Production agriculture is reaping the public policy black eye that comes with decoupled, welfare like, income transfer approaches. The grain traders are laughing at us all the way to the bank with our money. They get the gold, we get the public perception shaft. The real subsidy beneficiaries of the current system is the cartel.  Seventh, the commodity title of the Farm Bill represented .4% of federal spending. That is right, less than one half of one percent of federal spending was in the last Farm Bill. That level of spending represented nearly half of all net farm income on average over the last five years. That is to say, without it, production agriculture, on average, would go broke. The current CBO baseline for ag commodities in Title 1 of the Farm Bill is a 43% decline from the past Farm Bill.

Eighth, a major payment reform opportunity was lost when Farmers Union was unable to get enough support from the rest of the ag and commodity organizations to dramatically reduce the fixed direct payments and replace them with a funded permanent disaster assistance program, the one passed by the House authorized the program, but did not fund it, and replace the direct payments with counter cyclical payments that only kick in when prices fall and additional income is needed to keep ag producers in business. The fixed direct payments cause the greatest inequity.

Ninth, if we want to eliminate federal subsidies for farmers, then, why is there no discussion whatsoever about the best way to get rid of the NEED for the subsidies in the first place? The Bush Administration’s trade and Farm Bill policy is to reduce and then eliminate all ag commodity income supports. They want to get rid of the subsidies without getting rid of the need for them.  Where is the outrage and sense of betrayal? Where is the political accountability for the Bush Administration? Remember, they wield a mighty stick in this process.

Tenth, we must ramp up producer involvement in the Senate if we are to strengthen the weak spots in the House Farm Bill. Payment limits is one of many issues in one of eleven Titles of the Farm Bill. Our Farm Bill competition, the grain and meat cartel, think and act structurally. If family farmer agriculture is to effectively counter them, so must we. They love the fact we are fighting over payment limits, and not focusing on the need for real ag market reform, including an effective ban on packer feeding, contract producer Bill of Rights reforms, an overhaul of USDA’s Packer and Stockyards Administration, and new more effective ways to identify and administer anti-trust laws. We need lots of reforms, none of which will come if ag producers sit on the sidelines.

By R. Dennis Olson         
Institute for Agriculture & Trade Policy
August 21, 2007

I must take exception to the claim . . . that price supports and grain reserve didn’t work in the past. In fact, we had price supports and grain reserves in place from 1933-1953, and the result was to require Cargill et al. to pay the actual cost of production in the market place without government payments. Instead of costing taxpayers $20 billion per year, the New Deal farm program actually made the federal government money — about $13 million during this period — because farmers paid back their nonrecourse loans with interest, while market prices were stabilized around the real cost of production. The resulting economic recovery helped pay for the successful war effort, and then fed the United States and the world.

Supply management works, and the only reason it hasn’t worked well lately is because agribusiness interests have worked hard and effectively to dismantle it’s core mechanisms since the end of World War II; for example, through the notorious Committee for Economic Development (CED) and other agribusiness front groups–including some so-called farm organizations.  They finally got most everything they wanted in the passage of NAFTA in 1994  and the 1996 Freedom to Fail Farm Bill.

This agricultural market and trade deregulation model promised to “get the government out of agriculture,” expand export markets and end subsidies. Yet since then farm subsidies have hit record levels making farmers more dependent on the government than at any time in our history. Instead of exporting our way to prosperity, the U.S. is now poised to become a net importer of food for the first time in a half century.

Today, the last U.S. supply management program left — with a true price floor still provided by a nonrecourse loan, combined with strategic stock reserves held by the Commodity Credit Corporation — is the U.S. sugar program. It ensures that farmers receive the cost of production from the market place without subsidies and at no cost to taxpayers. The beet industry is 90% cooperatively owned by farmers, and the cane industry is about 60% farmer-owned. All the sugar beet factories in the Red River Valley are unionized, paying fair wages and benefits to workers.  Most sugar factories in the U.S. are union as well.

The sugar program is the only U.S. commodity program that does not allow multinational agribusiness cartels to dump surpluses on the markets of poor farmers in developing countries. Contrast the sugar program’s track record with the rest of the current U.S. commodity programs. The other programs allow costly and unsustainable overproduction of surpluses to force market prices below the cost of production for the benefit of food processing corporations. They cost billions of dollars in taxpayer subsidies making U.S. farmers more dependent on the government. They strangle the economies of rural communities. And, they empower agro-exporters to dump farm commodities onto developing country markets at below the cost of production, forcing small farmers to migrate to the urban areas or to the United States.

The main reason supply management hasn’t been working is that we have allowed it to be all but abandoned except for the sugar program. (And the future of the sugar program is up in the air with the final removal of the remaining agricultural tariffs scheduled for January 1, 2008.) Instead of setting a price floor though the nonrecourse loan, the loan deficiency payment allows Cargill et al to drive down market prices as far as they can. The loan deficiency program is market deregulation, with taxpayers being forced to make up the difference for the benefit of low feed prices received by Cargill, Tyson, et al.

New research from Tufts University estimates that below-cost feed prices caused by the current deregulation model provided over $20 billion dollar in hidden, indirect subsidies to Cargill, Tyson and other multinationals for their industrial poultry and hog factories. Diversified farmers who grow their own feed for their their own livestock pay the actual cost of production for their pasture, corn, soybeans or other feed crops. So they can’t compete with meat produced in industrial animal factories that can buy feed on the market at 20% below the cost of production. That’s one of the big reasons why chicken wings are 39 cents per pound, while grass-fed steaks are $16 per pound. If you want diversified farmers to have a fighting chance to compete, we need supply management policies that ensure stabilize market prices for feed crops at their actual cost of production in order to remove this enormous indirect subsidy to the industrial animal factories owned or controlled by Cargill, Tyson et al.

You can’t have a supply management program without tariffs. That’s why the first demand of the corporate trade agenda in NAFTA, CAFTA, the WTO is for all countries — including the United States — to unilaterally disarm by eliminating all tariffs, i.e. “get the government out”, which are the code words for “deregulation” of national borders everywhere — including the U.S.  So of course supply management can’t work in the context of in agriculture market and trade deregulation. If you allow Cargill and other importers to dump unlimited amounts of sugar from Brazil at half the cost of production, it will inevitably overwhelm the supply management system.  This is exactly what the Bush Administration and their allies at Mars and Coca Cola are trying  to do in order to sabotage and discredit the sugar program by continually increasing sugar imports through NAFTA, CAFTA, FTAA and other trade deregulation agreements.

Supply management is antithetical to agricultural market and trade deregulation. Farmers don’t export or import. Countries don’t export or import. Agribusiness cartels export and import:  They get us coming and going.   And their primary policy demand to facilitate their increasing control over agricultural markets is unfettered deregulation of agricultural markets through the current farm bill;  and unfettered deregulation of national borders through international trade agreements.

A real market is a wonderful thing — but only if it’s open, transparent and actually provides for real price discovery. When 95% of independent cattle producers in the Pacific NW have only one buyer to sell to, that is not a market. Teddy Roosevelt understood that markets sometimes fail. When some companies got big enough to predatorily price competitors out of business, he led the charge for government intervention to rein in the predatory practices of the oil trusts through passage and enforcement of new antitrust laws.  

Same story with the breakup of the meatpacking industry after passage of the Packers and Stockyards Act in 1921. New laws and regulations were developed and implemented to correct the market failures of the deregulated stock market after the 1929 crash. Market failures happen, and there is an appropriate role for the government to intervene to correct them, including in agriculture-whether it’s antitrust enforcement, strategic grain reserves for disasters, or utilizing historically proven supply management mechanisms like acreage set asides and the nonrecourse loan to provide a minimum price floor to farmers, thus helping to level the playing field against the increasing threat of the concentrated market power wielded by agribusiness cartels.

By Jennifer Tershak           
Dow Jones Newswires
August 21, 2007 .

Cargill Inc. Tuesday said its fiscal fourth-quarter earnings rose 75% to $628 million from $358 million in the year-earlier period.

The Minneapolis-based provider of food, agricultural and risk-management products and services said all five business segments exceeded the prior year’s earnings performance. Among the five, the risk-management and financial, industrial, and food ingredients and applications segments were the largest contributors to fourth-quarter earnings.

For the fiscal year, Cargill earned $2.34 billion, up 36% from $1.73 billion a year ago. Revenue for the year rose 17% to $88.3 billion

By Christopher S. Rugaber      
Associated Press
August 21, 2007

Competition from conventional supermarkets would prevent Whole Foods Market Inc. from significant price hikes if it acquires rival organic grocer Wild Oats Markets Inc., a federal judge’s ruling said. Judge Paul L. Friedman released the reasoning Tuesday for denying the federal government’s request Thursday to block the transaction.

The Federal Trade Commission has appealed Friedman’s decision and has asked for a stay that would delay the merger pending the appeal’s outcome. The appeals court has asked the agency and the companies to provide additional information on the request this week. Tuesday’s release of Friedman’s 93-page opinion shows that he rejected the FTC’s argument that Whole Foods and Wild Oats are close competitors that restrain each other’s pricing power in a way that other supermarkets do not. Instead, Friedman wrote, supermarket chains, such as Safeway Inc. and Kroger Co., are selling more fresh and organic produce and redesigning many of their stores to compete with Whole Foods. About 60% of natural and organic food products sold comes from conventional stores, he noted.

If Whole Foods were to raise prices or cut service after acquiring Wild Oats, Friedman wrote, “many customers could and would readily shift more their purchases to any of these alternative sources of natural and organic foods, often stores where they already shop.” Friedman’s opinion largely ignores the internal e-mails and other documents by Whole Foods chief executive John Mackey that the FTC cited in its effort to block the transaction.

For example, Mackey said in a February e-mail to a company board member that the deal would enable Whole Foods to “avoid nasty price wars” with Wild Oats in several cities. The deal would also “eliminate forever, or almost forever” the possibility that another grocer could buy Wild Oats to establish a “competing national natural/organic food chain,” Mackey’s e-mail said. Friedman did not refer to that e-mail. Instead, he cited internal documents by Whole Foods executives that discussed increasing competition from conventional supermarkets.

Paul Denis, Whole Foods’ lawyer, said the opinion “clearly communicates why the realities of the marketplace, particularly the behavior of consumers and supermarket chains across the country, compel the conclusion that this merger will not lead to any anticompetitive effects.”

David Balto, an antitrust attorney who filed court papers opposed to the acquisition on behalf of the Consumer Federation of America and other groups, criticized the judge’s ruling. “Under the court’s approach a merger between Coke and Pepsi would be kosher because everyone also drinks water,” he said. “This would permit a green light for almost any merger.”

Mitch Katz, a spokesman for the FTC, said the agency wouldn’t comment on the ruling.

By Christopher S. Rugaber            
Associated Press
August 20, 2007

A federal appeals court said Monday that it needs more time to consider whether to block Whole Foods Market Inc.’s takeover of rival Wild Oats Markets Inc. The U.S. Court of Appeals for the District of Columbia Circuit temporarily put the $565 million deal on hold until it can hear more arguments. The three-judge panel said, however, that the decision “should not be construed in any way as a ruling on the merits” of the case.

The Federal Trade Commission asked the court Friday to stay a decision by U.S. District Judge Paul Friedman that allowed the transaction to proceed. The agency has appealed Friedman’s decision and wants to block the deal on antitrust grounds.

Whole Foods is blocked “from taking any further steps to acquire the stocks, assets or any other interest” in Wild Oats until the appeals court issues a further ruling, the panel said Monday. Whole Foods has until Wednesday afternoon to respond to the FTC’s request for a stay, the court said. The agency has until Thursday to counter Whole Foods’ response. The accelerated schedule suggests that the court plans to move quickly.

The companies agreed last week not to begin closing the transaction until noon Monday to give the appeals court time to rule on the FTC’s stay request, which is the remaining obstacle to moving ahead. “We … hope for a quick ruling that legally clears the way for the merger to move forward,” Paul Denis, a lawyer for Whole Foods, said Monday. The company also said it has extended its tender offer to buy all outstanding shares of Wild Oats until next Monday.

More important than the tender offer is the purchase agreement the companies reached in February, which includes a target date for completing the deal of August 31. Denis said during a District Court hearing August 1 that the transaction might fall apart if it hasn’t been completed by then. If the appeal court grants a stay pending the FTC’s appeal, which could take months to resolve, the deal could potentially be in jeopardy.

The FTC declined comment.

By Organization for Competitive Markets
August 20, 2007        

The Organization for Competitive Markets is pleased with yesterday’s decision by an appellate court to temporarily block Whole Foods Markets’ acquisition of Wild Oats Markets. The order comes from U.S. Court of Appeals for the District of Columbia. A lower court, last Thursday, refused to grant a Federal Trade Commission (FTC) request to block the merger pending a trial. The companies are number one and two in the natural foods supermarket industry. The decision today arose from an expedited appeal filed by the FTC.

The Court of Appeals Order, which is not a ruling on the merits, stated: “that Whole Foods Market, Inc. be enjoined from taking any further steps to acquire the stock, assets, or any other interest in Wild Oats Markets, Inc., directly or indirectly, pending further order of the court. The purpose of this administrative injunction is to give the court sufficient opportunity to consider the merits of the motion for an injunction and should not be construed in any way as a ruling on the merits.”

OCM has supported FTC in its efforts, believing that further consolidation in the natural foods supermarket sector will reduce prices for farmers, raise consumer prices, and depress choice and innovation in this sector. Whole Foods internal documents provided, in OCM’s view, proof that the intent of the merger was to close Wild Oats stores, increase market power, and reap monopoly profits. OCM believes there are few, if any, pro-competitive benefits.

The lower court’s 93 page ruling last Thursday has not been made public, but OCM and other commentators believe the decision hinged on the court’s determination that the relevant market is the entire supermarket sector, not the natural foods sector. Concentration in the national supermarket industry will not be significantly increased by the merger under the lower court’s view.

However, OCM believes the economic realities are shown by Whole Foods internal predictions of 80-90% profitability increases by closing at least thirty Wild Oats stores. Such large profit increases do not materialize from efficiency gains arising from economies of scale. Market power is the source of these large predicted profit gains.    The Organization for Competitive Markets is an nonprofit organization working for open and competitive markets as well as fair trade for American food producers, consumers and rural communities.

By Bethany Clough           
The Fresno Bee
August 14, 2007

Thousands of dead milk cows and crops rotting in the fields could be the result of new U.S. Department of Homeland Security rules, farmers said Monday. More than 70 farmers, labor contractors and food processors angrily detailed what could happen under new rules announced Friday that crack down on employers who hire illegal workers.

An estimated 70% of workers in the state’s $32 billion agriculture industry are in the country illegally. “It’s going to be disaster,” said Ralph Pistoresi, who farms more than 5,000 acres of grapes, olives and pistachios from Merced to Kern counties. “If there’s no one to do the work, it’s not going to get done.”

Starting next month, the federal government will send letters to employers whose workers submit Social Security numbers that don’t match their names. If employers don’t prove the worker is legal within the allotted time — 90 days — they must fire the employee. Employers can be fined up to $10,000 per worker. The construction, janitorial, landscaping, hotel and restaurant industries also are expected to be affected.

Homeland Security Secretary Michael Chertoff and Commerce Secretary Carlos Gutierrez said they were forced to enact such penalties after Congress did not pass an immigration-reform bill. “We had hoped that immigration reform on a comprehensive basis would give us a much wider set of tools; we don’t have that,” Chertoff said during a news conference last week. “But until the laws change, we are enforcing the laws as they are to the utmost of our ability, using every tool that we have in the toolbox.”

But Monday afternoon, farmers gathered at the Fresno County Farm Bureau office in Fresno and vented about the worst-case scenarios of firing a large percentage of their workers. Among the effects mentioned: Fruits and vegetables will go unpicked. Thousands of dairy cows will die. Legal workers in packinghouses will be laid off because packinghouses close down due to lack of product to process. Foreign competitors’ products will take over American grocery shelves and hurt American farmers as buyers look for other sources of produce.

Other businesses across the central San Joaquin Valley will suffer as out-of-work farmworkers stop spending money.

Manuel Cunha Jr., president of Nisei Farmers League, encouraged farmers to flood their federal, state and local representatives with phone calls, faxes and e-mails. He called for farmers to support a failed Senate immigration bill, which included a way for illegal immigrants to become citizens. “You flat out tell them you want Ag Jobs done now,” he said. The bill was defeated, with opponents saying it would reward lawbreakers.

Representatives from the offices of Rep. Jim Costa, Dem.-Fresno, and Sen. Dianne Feinstein, Dem.-California, also attended the meeting and encouraged farmers to contact their elected representatives.

Barry Bedwell, president of the California Grape & Tree Fruit League, said farmers don’t want to be on the wrong side of the law. “We’ve always wanted a legal work force but haven’t had the tools to do that,” he said.

By Michael Doyle       
Fresno Bee
August 19, 2007

Labor tensions threaten the California almond industry’s ability to tap taxpayer funds for overseas advertising. In recent years, the Agriculture Department’s Market Access Program has steered millions of dollars into almond export efforts. Congress wants to provide even more, as part of a new farm bill.

But now union activists are trying to cut the Blue Diamond Growers cooperative out of the politically popular program. The escalating fight holds consequences for other fruit and vegetable growers who cultivate foreign markets.

Citing a National Labor Relations Board finding that Blue Diamond violated labor laws, the International Longshore and Warehouse Union wants to block the company from the export program. Politically, that’s probably a hard sell. Blue Diamond processes about one-third of California’s almonds, and both Congress and the Agriculture Department work closely with the industry. “These were minor technicalities. They have fixed the issue, and there are no more problems,” said Rep. Devin Nunes, Rep.-Visalia.

The Agriculture Department, nonetheless, is considering the union’s proposal as it updates program rules. A sparsely attended July 25 public hearing initiated the formal review.

In the crossfire is the Market Access Program, currently authorized at $200 million a year and long a favorite of California’s fruit and vegetable exporters. The House in late June approved a new farm bill that boosts annual funding to $225 million. “Without a doubt, it’s the No. 1 priority for the fruit and nut [industry],” said Dan Haley, a lobbyist for the California Walnut Commission and other farm groups.

Between 2003 and 2006, Blue Diamond and the Almond Board of California received $6.7 million in program funds.

Established two decades ago, the Market Access Program pays for ads, conventions and other export-related efforts. Documents obtained by The Bee under the Freedom of Information Act shed light on the spending. In 2006, for instance, the California Walnut Commission proposed $1 million plus industry matching funds for a German campaign combining consumer ads, promotional contests, point-of-sale materials and more. “Key messages will be California origin, quality, taste, health and versatility,” the walnut commission advised the Agriculture Department. “The primary focus is on German women ages 25 to 49.”

In Japan, the commission stressed health messages including “sara sara shinayaka,” which the commission translated as “makes the blood flow smooth.”

Similarly, documents show the Fresno-based California Table Grape Commission planning in 2004 to ship press kits to 400 Australian media outlets prior to the California grape season. The stated goal was a “minimum of 50 articles on California grapes, including no adverse articles.”

It’s more difficult to track Blue Diamond’s spending. The Agriculture Department, which consulted with the company, redacted documents aggressively; even blacking out, for instance, the names of company executives. In general, though, the almond industry funds promotional activities in countries including China, India and Taiwan. “It’s been very effective, although it’s only a very small part of our overall marketing budget,” said Marsha Venable, spokeswoman for the Almond Board of California.

Blue Diamond public affairs director Susan Brauner added that “export shipments over the past decade have been phenomenal,” rising 35% in just the past five years, thanks in part to the program.

The union is targeting the federal program, as it tries to organize Blue Diamond’s 700 or so Sacramento-area workers. Last year, the National Labor Relations Board ordered Blue Diamond to rehire two workers deemed to have been unjustly fired. Although the labor board subsequently rejected other union claims, union activists say labor violations should render the company ineligible for federal aid.

“A decision by USDA to terminate or suspend assistance to any entity based on a record of serious violations against workers [would] send a strong signal to other MAP participants to adhere to the law and treat their workers with respect,” testified Lindsay McClaughlin, legislative director of the longshoremen’s union.

Lobbyist Julian Heron, who represents Blue Diamond in Washington, said that the union has failed to rally workers after years of organizing efforts, and so now is trying to intimidate company management. Continued federal export assistance, Heron added, is crucial.