US Agribusiness and Ethanol

1. US Agribusiness and Ethanol

2. 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 12-15% 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.

3. 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?

4. Fordism • A production strategy that dominated in the US for most of the 20th 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

5. Post-Fordism: Late 20th 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

6. 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

7. 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

8. 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.

9. 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.

10. 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

11. Break Time, Be back in 5 minutes

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

13. 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.

14. 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

15. 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.

16. 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.

17. 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

18. 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?