The Outsourcing of Food
Ronny Sloan is a farmer to his roots. Sloan's father was a farmer, and so was his grandfather, and his great grandfather, and everyone that family history can remember since the Sloans moved from Kentucky to Illinois in the early 19th century. Today Sloan and his four sons farm near the tiny town of Pana, Illinois, where they grow corn, soybeans and oats.
The Sloans are successful farmers, their 6,000-acre operation large by local standards. In recent years, however, they have had to grapple with a problem never encountered before -- foreign competition.
"Things are tough, the farm economy is tough," says Sloan, his voice a rural twang that sounds closer to Mississippi than Missouri. "We used to be the big player and had 75 percent of the soy market. That's not the case. We're now second place, behind Brazil. That's definitely hurting us."
The Sloans are not alone. From the apple orchards of western Washington to the tomato fields of Florida to the potato heartland of Idaho, American farmers are battling a new kind of pest -- imports from international rivals who can produce essential foodstuffs cheaper than they can be grown here.
After decades of being the world's top food producer, the U.S. is poised to become a net importer of agriculture products, according to data from the US Department of Agriculture. By the end of the decade, Brazil is expected to eclipse the U.S. as the number one food grower.
Call it the outsourcing of food. Following in the footsteps of blue-collar workers and, more recently, white-collar employees, the U.S.'s two million farmers face the prospect of being offshored as well.
The shift to foreign food production is clearly bad news for farmers, who have struggled for years to get their sale prices to match the costs of production. The outsourcing of food is also troubling for the U.S.'s ever-growing debt burden, since agricultural products were among the few bright spots in the country's deficit-burdened trade balance. For now, consumers benefit by getting lower food prices. But, say some food policy analysts, the U.S. could, in the long run, face a food security threat if present trends continue.
The U.S. has always been an importer of commodities that can't be cultivated here -- coffee and cocoa, bananas and mangos. But now U.S. markets are being flooded with products that Americans are accustomed to growing themselves. An increasing percentage of the produce you buy at the grocery store comes from fields and orchards thousands of miles away. If you've had any apple juice lately, it's more than likely that the concentrate used to make it was produced in China. Those raspberries you love may have been grown in Chile, the tomatoes in Mexico, and the avocados in Central America.
Even those most American of foods -- good old meat and potatoes -- often are imported. Scandinavia, for example, exports baby back ribs to the U.S., while a portion of our spuds come from abroad. Potato processing giant J.R. Simplot recently laid off 625 workers at one of its French fry factories in Oregon and plans to have the work done overseas.
Reggie Brown, vice president of the Florida Tomato Exchange, a trade group that represents the state's $500 million tomato industry and which has suffered serious loses in the last decade, puts the issue succinctly: "The fundamental question is, 'Is it America's long term interest to produce these crops here, or to have them produced elsewhere and shipped in?' We feel it's in Americans' best interest to be a producer of our own food supply. But there doesn't seem to be a national agenda to do that. The opposite seems to be the national agenda."
Trading Away the Farm
Many farmers and academics say that a decade of free trade agreements is responsible for the plight facing U.S. agriculture. During the heated debates over the creation of the North American Free Trade Agreement (NAFTA) and the establishment of the World Trade Organization (WTO), the Washington political establishment told U.S. growers that the new trade deals would be a net benefit for farmers. In hindsight, it appears that the politicians promised too much.
"A lot of growers would be negative or skeptical toward trade agreements," says Desmond O'Rourke, a former professor at Washington State University and editor of a newsletter for the fruit and vegetable industry. "They would say, 'What has it done for me? Not a whole lot.'"
The problem, according to Phillip Abbot, a professor of agricultural economics at Purdue University, is that other nations have successfully grabbed the markets U.S. farmers were counting on. Exports of the U.S.'s biggest commodities -- cheap commodities such as corn, soybeans and wheat -- have been flat for a decade as other nations boost production. At the same time, imports of pricier items like fruits, vegetables, processed foods and some meats are surging. The largest challenge for American farmers is that foodstuffs -- just like televisions or T-shirts -- can be produced more cheaply in low-wage countries. It's simply less expensive to grow oranges and soybeans in Brazil than in Florida or Illinois.
While the new trade deals have reduced the political barriers to food imports, technological improvements in refrigeration and irradiation have reduced the physical barriers to shipping food long distances without spoiling. All of which leaves American farmers on shaky ground, desperate to keep their costs as low as possible in a market environment in which their harvest prices are not increasing. Thousands of farmers have not been able to keep up and are now out of business.
"I've seen a lot of farmers go broke because of NAFTA," says a California-based land manager for a major American food corporation who asked that his name and company not be identified for fear of getting in trouble with his supervisors. "We can't compete with the labor. In Mexico they pay $5 a day. We pay $8 to $10 an hour. It's a shame -- there are greenhouses for sale up and down the state."
Asparagus is one of the crops hit hardest by the wave of food imports. Since the 1930s, Washington state has been the center of U.S. asparagus production for the processed market. But in the last decade, overseas asparagus, most of it from Peru, has devastated the state's growers. According to an official at the Washington Asparagus Commission, who says the industry is in a "state of collapse," two-thirds of Washington's asparagus fields have been taken out of production since 1990, and 2004 marked the first time in more than 60 years that there was no asparagus processing in the state.
Jim Middleton, one of Washington's few remaining asparagus growers, says that the industry's collapse has caused an irreplaceable loss of natural and financial capital. Because asparagus is a perennial that takes several years to come to maturity and then lasts for 15 to 20 years, tearing out an asparagus stand isn't as simple as plowing in a row of broccoli -- it's more like bulldozing an apple orchard.
"It's not something you do lightly," says Middleton, whose family has been growing asparagus since 1966. "It's a tough decision to pull out your crops. But if you're making no money, what choice do you have?"
Middleton says the near destruction of the asparagus industry -- which is labor intensive in both picking and processing -- has cost thousands of people their jobs. "This has always been a real stable part of the farm economy," he says. "And now those jobs are lost. I hope our state and federal governments do what they can to keep this industry alive. The jobs it provides are really important to us."
If the increase in food imports is a raw deal for many growers and farm workers, then in whose interest does the situation serve? Agriculture analysts say all you have to do is follow the money -- and that leads straight to major processors and commodity brokers such as Cargill and Archer Daniel Midland (ADM), corporations that continue to post impressive profits even as farmers struggle.
"Who does this really work for? It's a system set up to benefit the large food companies," says Ben Lilliston, spokesman for the Institute for Agriculture and Trade Policy, a Minneapolis-based think tank. "They are playing farmers in the U.S. off of farmers in Brazil, India, Australia, even China. These companies don't care where the food comes from. They just want the cheapest price possible."
By encouraging more food imports, corporations such as Cargill and ADM -- along with the major supermarket chains like Wal-Mart and other food processors like Philip Morris's Nabisco -- keep their costs low and their profit margins high. The major food companies' first priority is cheap food, regardless of where it comes from. If it seems as if the rules have been written mostly to the advantage of the big agribusiness companies that trade on the international markets, that's because they are. For example, a former Cargill vice president, Dan Amstutz, drafted the original text for the WTO's agriculture regulations.
The large agribusiness companies also have sought to protect their interests by halting "country of origin" labeling. The 2002 Farm Bill called for the USDA to start identifying where all imported food comes from. But agribusiness allies in the House of Representatives -- led by Texas representative Tom Delay--have delayed implementation of the labeling and are trying to make it voluntary.
Stickers or decals stating food's country of origin may be small, but the issue is a major one. That's because consumer surveys consistently show that most American shoppers would prefer to buy food that comes from the U.S. If country of origin labeling became universal, it could cramp the major food processors' business model.
"The food companies are afraid," IATP's Lilliston says. "They [the corporations] have set up a global food chain. But they know Americans want to eat local when they have the opportunity. If you're in a supermarket and have a choice between American beef and Australian beef, most people will choose American beef even if it costs a little more."
For the 270 million Americans who enjoy three square meals a day, more imported food has real benefits -- among them, lower food prices and greater variety at the supermarket. Some analysts, however, caution that being dependent on other nations for a large share of our food endangers U.S. security in an unstable world. Of course, there is little risk of nationwide food shortages any time soon; when it comes to total calories produced or tonnage of food harvested, the U.S. remains the biggest farmer in the world. Yet as the U.S. becomes more reliant on food imports, the country's vulnerability to events in far-off places increases.
Phil Howard, a researcher at the Center for Agroecology and Sustainable Food Systems at the University of California-Santa Cruz, says the U.S. is losing a key element of self-sufficiency. "This isn't like computer chips from China -- we can live without that," says Howard. "If we keep importing our food, we'll be completely dependent on other countries. Are we going to send the military around the world to protect our food imports as we do now to protect our oil imports?"