1. Social Aspects of Food Systems, Sustainability, and Climate Change February 26, 2015

2. What are the “commons” relevant to dairy farming in SC Wisconsin? Take 5 minutes at your “pod” to discuss Commons refers to common property resources as described in the Elinor Ostrom 1999 article.

3. What are the “commons” relevant to dairy farming in SC Wisconsin? Profitability (high output and low input prices) The environment Rural communities

4. What are the “commons” relevant to dairy farming in SC Wisconsin? Prices – Land – Credit – Inputs – Outputs – Labor The environment As SOURCE: – Soils, Water, Land availability for cropping/ spreading As SINK: – Water pollution, soil erosion/ exhaustion, GHG emissions, biodiversity loss, aesthetics Rural communities – Keeping money local – Maintaining community cohesion – Trust between different types of farmers – Trust between farmers and urbanites.

5. Environment

6. U.S. GHG Emissions

7. Carbon & Nitrogen Added Carbon & Nitrogen & Phosphorus Added Water pollution caused by livestock farms Source: Lathrop, 2008

10. What scale of governance is implied by these common property resources? Lake Mendota eutrophication Gulf of Mexico dead zone GHG emissions What governance challenges do these scales imply?

11. What factors affect how farmers manage the commons?

12. The framework we’ll be talking about today considers dairy farmers as both: – having agency having the free will to make decisions Having the political and economic power to be effective – being constrained by global political and economic forces World market prices, market imperfections, national environmental and land use laws, uneven distribution of political power

13. What values motivate WI dairy farmers?

16. What are the “commons” relevant to dairy farming in SC Wisconsin? Prices – Land – Credit – Inputs – Outputs – Labor The environment As SOURCE: – Soils, Water, Land availability for cropping/ spreading As SINK: – Water pollution, soil erosion/ exhaustion, GHG emissions, biodiversity loss, aesthetics Rural communities – Keeping money local – Maintaining community cohesion

18. What influences Wisconsin Land Prices?

19. Inflation rate = 11% Influences: Capital gains taxes Currency fluctuations Monetary policy Oil prices Trade agreements Development regulations Negative real interest rates

20. WI 12% (22 nd ) NJ 82%

21. What are some solutions to high farm land prices?

22. What macro-economic changes could lower farm prices? Anything that changes (currently artificially low) interest rates. Phasing out direct and indirect subsidies to construction and development Increase capital gains taxes

23. Policies to keep farm prices down Wisconsin Working Lands Initiative – Purchase of Agricultural Conservation Easement (PACE) grant program – Agricultural Enterprise Area (AEA) program. This are voluntary program similar to mandatory programs in Europe. They prohibit development Passed in June 2009

24. Policies to keep farm prices down PDR TDR Zoning – No non-farm structures allowed Reduced taxes on agricultural land

25. What are the “commons” relevant to dairy farming in SC Wisconsin? Prices – Land – Credit – Inputs – Outputs – Labor The environment As SOURCE: – Soils, Water, Land availability for cropping/ spreading As SINK: – Water pollution, soil erosion/ exhaustion, GHG emissions, biodiversity loss, aesthetics Rural communities – Keeping money local – Maintaining community cohesion

26. Increasing input prices

27. What influences farm input prices?

28. Market concentration and oligopolies.

29. Often these top 4 are the same across sector

31. Some Agribusiness Oligopolies Agro-chemical, seed companies that make inputs for farmers – Monsanto, Dow, DuPont, Bayer, Syngenta Processing companies that buy raw products from farmers – Cargill, Archer Daniels, ConAgra, Tyson/IBP, Smithfield Food manufacturing companies that create brands – Nestlé, Philip Morris, Unilever, PepsiCo, Coca-Cola, Mars

32. What are the “commons” relevant to dairy farming in SC Wisconsin? Prices – Land – Credit – Inputs – Outputs – Labor The environment As SOURCE: – Soils, Water, Land availability for cropping/ spreading As SINK: – Water pollution, soil erosion/ exhaustion, GHG emissions, biodiversity loss, aesthetics Rural communities – Keeping money local – Maintaining community cohesion

34. I checked these numbers…

35. What causes falling real farm-gate output prices?

36. Over-supply relative to demand. Monopoly/Oligopoly in output markets – Concentration in processing – Concentration in distribution – Concentration in retail Low supermarket prices

37. Milk production has increased

38. Milk consumption has decreased

39. For a gallon of 2% milk: Farmers received about 46% Cooperatives 6% Wholesale processors 36% Retailers >12%

41. Loss of Producer Economic Power In most U.S. metropolitan areas, one company, Dean Foods, has acquired the majority of fluid plants. Two corporations dominate the cheese sector; Kraft Foods at the retail level and Leprino Foods at the food service level. Regardless of which cooperative a U.S. producer markets his milk, at the end of the day the majority of milk is purchased by only three major buyers that dictate each market. Cooperatives in the U.S. handle over 80% of the total milk production. However, not all cooperatives actually process their members’ milk; some only market the milk collectively for their members.

43. Wal-Mart tries to consider no more than two suppliers for each food product it features in its stores across the U.S.

44. Some graphics of concentration in the organic agri-food sector…

48. USA6.7 Singapore6.7 Switzerland8.9 United Kingdom9.3 Canada9.5 Austria9.9 Australia10.0 Ireland10.4 Denmark11.2 Netherlands11.8 Qatar12.0 Germany12.0 Sweden12.2 Finland12.5 Norway13.0 South Korea13.4 Japan13.6 Taiwan13.6 Bahrain13.7 France13.8 Belgium13.8 Spain13.8 United Arab Emirates14.1 Italy14.1 Hong Kong, China14.3 Israel15.2 Slovenia15.2 New Zealand15.4 Chile15.6 Brazil15.7 Czech Republic16.1 Greece16.6 Hungary16.8 Bulgaria17.6 Poland17.7 Slovakia17.8 Colombia17.9 Uruguay18.4 Kuwait18.5 Portugal18.6 Latvia18.8 South Africa19.2 Estonia19.6 Venezuela19.9 Costa Rica20.2 Montenegro20.5 Argentina20.7 Malaysia20.7 Turkey22.0 Tunisia22.7 Ecuador23.1 Lithuania23.7 Dominican Republic24.1 Iran25.0 Mexico25.1 Saudi Arabia25.5 China26.1 Serbia27.4 Thailand28.0 Romania28.3 Bolivia28.7 India29.6 Russia30.5 Uzbekistan30.8 Croatia31.1 Bosnia-Herzegovina31.3 Indonesia33.2 Georgia33.2 Macedonia34.2 Vietnam35.5 Morocco35.8 Peru36.5 Belarus37.3 Egypt37.4 Jordan37.5 Ukraine38.6 Turkmenistan38.8 Guatemala40.1 Philippines42.4 Algeria42.6 Kazakhstan43.5 Azerbaijan45.3 Cameroon45.8 Kenya46.9 Pakistan48.1 Nigeria56.7 Percentage of Income spent on Food USA – 6.7% France – 13.8% Mexico – 25.1% Peru – 36.5% Pakistan – 48.1%

49. What causes falling real farm-gate output prices? Over-supply relative to demand. Monopoly/Oligopoly in output markets – Concentration in processing – Concentration in distribution – Concentration in retail Low supermarket prices

50. Bottom line – constraints on farmer agency A cultural and political emphasis on free- market competition rather than cooperation Market imperfections – Oligopoly and market concentration Concentration of economic wealth, and thus political power, in the hands of those who benefit from the status quo makes it hard to organize for change.

51. What can farmers (and civil society) do to improve output prices? What have they done in the past?

52. Organize !

53. 1933 Wisconsin Farmers Protest

54. Results of political and cooperative organizing in 1930s Cooperatively owned processing plants that differentiated by quality of product Cooperative marketing Legislation – Milk marketing orders of 1937 (federal law)  Higher farm-gate (mailbox) milk prices

55. What can farmers (and civil society) do to improve output prices? What are current options?

56. Inequality in political and economic power Wealth inequality video: https://www.youtube.com/watch?v=QPKKQnij nsM

57. What can farmers (and civil society) do to improve output prices? Control supply  Increase farm-gate prices  Decrease GHG emissions Prices must reflect product differentiation based on: – Quality – Environmental performance – Social performance Farmer prices Farm community welfare