February 1, 2012

The American Food System.

How Major Corporations Reign Supreme over Farming in America.

While the Occupy Wall Street (OWS) movement’s spark has recently dimmed, they have successfully illuminated discrepancies about who is controlling our food system. The OWS movement stated that “corporations — which place profit over people, self-interest over justice, and oppression over equality — run our governments.”

They specifically indict Wall Street for the quandary the food system is currently experiencing and further state, “They have poisoned the food supply through negligence, and undermined the farming system through monopolization.”  To see how our corporations currently control our food system, we must take a look at the major events that prompted their current reign. Agricultural policy as we know it did not exist until the 1930’s when it manifested as a part of Franklin D. Roosevelt’s New Deal. It was mostly constructed to address the financial strain experienced by the agriculture sector, and America in general, due to the Great Depression.

Photo courtesy of Worldchanging Team

Two factors were considered to be the main contributor to agriculture’s predicament: overproduction and price volatility. To combat overproduction, farmers were encouraged to produce less by putting some of their farm land aside, which benefited land conservation as well. In doing so, they received a government payment, or subsidy. This continues today in the Conservation Reserve Program (CRP). To tackle price volatility, the government offered to store the farmer’s harvest if prices were low at harvest time. This allowed the farmer to wait until prices rose and then sell their harvest for a better price. Negative incentives were in place to encourage farmers to not overproduce perishables, such as milk. Here price support and supply management worked together to stabilize the agriculture industry.

Born a few years after the Depression in 1946, Henry “Hank” Paulson, would eventually become an indirect, but key player in America’s food system. First working for the Nixon administration and then making the move to the private sector obtaining a position at Goldman Sachs, a multinational banking and investment firm. In 1996, as globalization took root, the focus of the farm bill shifted to agricultural trade expansion, mostly on an International level.

To achieve this, farmers were encouraged to produce as much as they could, but would no longer receive government payments for setting aside land. This resulted in more farm land being farmed and more food being produced. However, farmers were unable to get fair prices for their harvest and foreign markets resisted doing business with America. The markets became flooded with too much food and farmers were unable to sell it.

To remedy this situation, Congress enacted a series of $20 billion emergency bailouts.   In 2004, Henry Paulson, by then chief executive officer of Goldman Sachs, successfully lobbied for an exemption from the rule that investment and commercial banks do not have to keep money in reserves to cover unsuccessful trades. Now with excess money available, banks such as Goldman Sachs were able to place high risk bets in the form of “investments”.  When the investments did not work out, these companies either went bankrupt (Lehman Brothers) or were bailed out by the US Government (Goldman Sachs.) This deregulation on Wall Street set in motion a domino effect of negative reactions. Internationally, our financial distress triggered global hunger rates to rise. Domestically, agricultural markets have become more volatile while market concentration increases; family farms are being assimilated by larger corporate ones.

Photo by Manu H.

Wall Street’s reaction to this has been to continue to pour billions of dollars into Washington via lobbying and campaign contributions that support their deregulatory agenda, especially since the passing, in 2010, of the Dodd-Frank Financial Reform Bill, designed to limit Wall Street’s current unrestrained power.

In 2006, Henry Paulson left his position as Chief Executive Officer at Goldman Sachs to once again work in the private sector as the 74th United States Secretary of the Treasury, just before its financial crisis. Here, it becomes clear that big business and the Government are linked. The line between corporations, Wall Street, and our Government is quite hazy, intertwined and often inappropriately crossed. The men who run major corporations are able to influence our government and able to affect decisions related to the farm bill.

These decisions usually benefit the corporations, leaving the farmers of America to pick up the pieces of a failing food system.


Ed: Kate Bartolotta.

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