The U.S. Food System Was Also Deregulated in the 1990s and the Stakes are Much Higher than the Current Economic Meltdown

An Editorial Comment by
Larry Matlack, President, American Agriculture Movement
September 24, 2008

The nation may be at even more risk due to a deregulated food system than the economic meltdown which has resulted from the deregulation of our financial systems. Just as the financial markets were deregulated in the 1990s, so was our food production system because of the ratification of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), which established the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and more specially, the 1996 Freedom to Farm Act.

While Freedom to Farm was sold to farmers as a way to allow them the freedom to plant what ever they wished, that promise was actually oversold and under-delivered since fruit and vegetable production is still prohibited on tens of millions of acres of U.S. farmland.

But much more catastrophic to our food system is the fact that Freedom to Farm eliminated almost all of the nation's food reserves, eliminated minimum pricing mechanisms for farm products thereby forcing farm families to rely on federal subsidies to survive and also eliminated all supply management authority.

The current financial crisis might be mitigated by going to the Federal Reserve Bank and the U.S. government to tap capital reserves. But what happens if we have a devastating drought or other natural or man-made disaster which results in a food crisis in the U.S.? There are no food reserves! The United States has a Federal Reserve Bank for money, and a Strategic Petroleum Reserve for oil, but absolutely no federally reserve for grain and other emergency foodstuffs. There exists authority for a modest reserve in the Bill Emerson Humanitarian Trust, but it is also completely empty.

On the economic side of the food system equation, if the $800 billion of your money that Congress is about to spend to bail out the financial sector had come in the form of more adequate net farm income over the last 30 years and that $800 billion had been allowed to rollover in the U.S. economy, we would have experienced a sound economy built from the ground up and not built on national, corporate and personal debt. People throughout our economy would have earned real income to buy houses, put their children through college and save for retirement. But because we abandoned Parity for agriculture most, if not all, Americans were forced to deeply borrow, creating such a debt society.

Our nation must to return to a sound food policy just as we must return to sound financial policy. They are interconnected and critical for the survival of our democracy.

AAM stands for food and fiber producer and commodity PARITY. Parity is a term that denotes a fair commodity price adjusted for inflation to the commodity prices. The Statutory Parity Index, established during the depression of the 1930s, reflects prices received in 1910-1914 (considered to be the last 5 normal years prior to the outbreak of World War I) when producers, middlemen, and consumers had a balanced income. Today, many commodities average less than PARITY. Meanwhile costs of trucks, combines, implements, tractors, and hired help have risen dramatically. AAM still demands a parity price for commodities. Go to AAM's website: http://www.aaminc.org/ for more information.