US Agribusiness and Ethanol

Current structure of American Agriculture Food production, farm credit, processing and distribution are controlled by a small number of large-scale, multi-national corporations, including Cargill, ArcherDainelsMidland, Tyson Food, Smithfield Farms, and Monsanto Currently only 2 percent of the US labor force works in agriculture. So why is agricultural so politically important? US consumers spend only 2-5% of their income on food versus % in the rest of the developed world. Three major grain crops receive billions of dollars of direct and indirect subsidies: corn, soy, and wheat –Direct subsidies include money for production inputs, crop loss, purchasing of surplus, and transportation costs. –Indirect subsidies include money for research on these crops and protection from international competition.

Agro-Food geography Increasingly geographers have sought to understand the ways in which contemporary agricultural production in the US resembles other industrial sectors. –Has food production become similar to car production?

Fordism A production strategy that dominated in the US for most of the 20 th century Fordist production strategies: The legacy of Henry Ford –Mass production of a single commodity: lowered costs, limited consumer choice. –Labor force divided to do simple, repetitive tasks: Deskilling labor. – Unionized labor, higher salaries, and job security: Demand driven growth. –Economies of Scale

Post-Fordism: Late 20 th century capitalism Neoliberalism and Industrial Re-structuring –Free movement of money and goods: flexible labor and flexible production. Destruction of unionized labor Diminishing benefits for labor Global sourcing and production: contract production and the transfer of risk to producer Production side growth: greater profits versus greater employment Vertical Integration –Diversity of products for a diversity of markets. Niche markets

Fordist Agriculture Mass production of foods for a homogenous market: for example the potato, more than 400 varieties exist but Russet Potatoes are the primary variety grown. Why? Agricultural labor force divided and mechanized. Labor Unions had a voice: Farm workers Union worked to raise minimum wage, increase farm safety and promote job security

Post-Fordist Agriculture: The birth of the Baby Carrot Increased vertical integration of agriculture: A small number of companies control the production, processing, distribution and marketing of food world wide. –Counter seasonal vegetables Increased numbers of contract growers: Limits power of labor and mitigates risk for agribusiness. Niche food markets and food fads: demanding consumers and flexible production

The Post-Fordist Pig Smithfield Farms controls the global hog market. Smithfield provides contracts to growers, offers them inputs and markets. Producers assume the risk of production. Smithfield processes hogs into hundreds of different products for diversified market.

Does nature make agricultural different from other industries? The organic nature of food Appropriation and Substitution of Nature and vertical integration: GMO’s, fertilizer, hybrid seeds, mechanization, pesticides and herbicides: The Beefeater Tomato. Concern for the environment: The Precautionary Principle and organic agriculture.

World Trade Organization and Agriculture Current debates over the Doha round of WTO negotiation –Can countries protect their agricultural markets based on the precautionary principle? –Europe and America versus emerging markets

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Ethanol What is Ethanol? –First motor designed by Ford ran on ethanol –Process for making E85 Does corn ethanol actually make energy?

Ethanol in Brazil Pro-Alcool Program –Began after oil crisis of 1973 –Utilizes sugarcane to produce ethanol –Has reduced the number of gasoline powered cars by 10 million.

Lessons from Brazil Positive lessons: –Marginally reduced Brazil’s dependence on foreign oil. –Improved air quality in the cities. –Generates revenue by exporting ethanol to other countries: US restricts the import of ethanol from Brazil

Lessons from Brazil Negative lessons: –Increased cane fields: these are burned which damages air quality. –Social unrest: cane workers paid only $3-5 dollars a day.

Ethanol in the US Corn production in the US: –One of the most highly subsidized crops in US. –Surplus of corn makes it cheap to use as animal feed, food additive (high-fructose corn- syrup), and as food aid. –Vertically integrated agribusinesses reap massive profits from subsidies at different points in the commodity chain.

Ethanol in US 2005 renewable fuel standard mandate the use of 7.5 billion gallons of ethanol by 2012 –Corn as a source of energy provides it with new subsidy opportunities. –Ethanol refineries: some owned by family farms, most owned by agribusiness. A new point in commodity chain for profit making

Conclusion Ethanol provides a means for continuing the massive farm subsidies in the US, most of which benefit agribusiness. Cleaner environment is not the concern: Why not import ethanol from Brazil? Despite the US leading the global shift to neoliberalism, agriculture continues to be heavily protected: what does that mean for developing countries?