07 October 2009

Are agricultural subsidies the way to go?

In the U.S, I’ve come to know organic consumers as somewhat of food elitists. Sure maybe they’re healthier for it. But after watching the type of customers that stroll down the aisles of Whole Foods Market, I can’t agree that they are aware of anything more than the price they are paying for it. Being caught in the act of buying organic food, what I call “I’m better than you” food, reflects the power U.S. subsidies has on not just the producer side but consumer side of agriculture.

I never really thought whether this was the same behavior of consumers in Thailand or not; I more or less assumed it would be at least in comparing consumers between Bangkok and Isaan. But I realized through a week of exchanges with Northeastern farmers in Thailand that it’s clearly not the same. In an exchange with some members of Yasothorn’s first Organic Green Market, I felt it important to bring up the question of price dynamics and the difficulty poor Thai consumers may have in switching to buying a more expensive product. Apparently, my question was completely irrelevant as they informed me that organic vegetables are priced no differently than chemically-grown vegetables, sometimes even cheaper.

Later in the week we had another exchange with contract farmers at a sugarcane farm. Again, I felt a necessary question was something along the lines of “do you get paid differently for selling the company organic sugarcane versus chemically-grown sugarcane?” They quickly responded that despite all the terrible agreements they knowingly and unknowingly signed for in their contracts, the company had no preference whatsoever on the manner in which their product was grown so long as the appropriate yield was received.

So here’s the explanation from the perspective of a farang (white person) working with farmers in Isaan: The only reason prices are actually different in the States is due to the agricultural subsidies which create artificially low prices for large-scale cash crops. Without the aid of premiums, organic farmers are forced to sell at a higher price, but in doing so reflect the true costs of producing. Fair enough, I learned something new, still shocked.

My reflection over this unit brought back these thoughts of America’s agricultural subsidies. I really feel that increasing consumer demand would be a successful attempt in expanding the amount of organic farmland in Thailand. Furthermore, I want to think that a way to do that would be by incorporating subsidies in which Thailand could take advantage of promoting organic food as a better product and eventually push for a more organically grown, environmentally-safe agriculture industry- assuming consumers begin demanding it the way in which American consumers do. But at the same time, it could so easily take a turn for the worst too, as I have observed in the States. Take for instance, the latest push for Fair Trade products in the U.S. Another very interesting fact that I learned in my time here was that in order to get a certification label for a “Fair Trade” product, the company need only 2% of its product to actually be certified, a percentage lowered from 5% after Starbuck’s fought it down.

Although Fair Trade is not necessarily associated with organic, certainly it relates to my point in that regardless of the benefits in increasing consumer demand for organic food, it creates the potential for companies to exploit that demand by manipulating well-intentioned policies to fit their own agenda, thereby throwing out the purpose of such policies in the first place. So then how should Thailand or any country really, go about appropriately convincing its citizens that the way to farm is organic?

Kara Heumann
Indiana University


Rani said...

I think the thought of businesses exploiting products that are healthier for consumers is both a scary and true realization. As a shopper of organic food in America, I never had a problem dropping the extra money for products that I thought were superior to their competitors. But I never asked why I was paying so much. However- you make me realize the question isn’t as much why I am paying so much, but why food that is not as healthy for me is priced so low. This then poses the question- where does the government priorities lie? Thailand is a developing country, yet they seem to have one on the U.S.- every consumer is given equal opportunity to purchase organic or nonorganic products. The government also has the opportunity to provide subsidies to organic farmers, and start a whole new wave of organic agriculture in Thailand. I’m afraid it’s too late for America to change their precedence.

Jordan said...

I think you make a good point about companies manipulating policies to suit their best interests, but considering the system is unlikely to change any time soon, I feel it is the responsibility of consumers to be conscious of where the products they purchase are coming from. Admittedly, this is no easy task, but leading by example can be powerful.

I do, however, agree with you that in the U.S. often times buying organic is a status symbol. So I can't help but question the actual number of consumers that are serious about eating organic. Are people willing to go the extra mile and hold companies responsible for their organic advertising claims? Or do they just like the warm feeling they get inside after purchasing their "fair trade, organic" Starbucks coffee each morning, telling themselves they are doing their part to help out?

akostioukova11 said...

Going off of what has been said so far, although consumer choice and awareness is a powerful tool, eventually most people would come to the conclusion that the infrastructure itself needs to change. Given enough public pressure, the government has the responsibility to enact some fundamental changes in food production policies. However, few would be willing, or brave enough, to open the Pandora’s box of what a food reform in the U.S. would mean. An example of this is the current battle over reforming our health care system.
Actually, food and a health care system reforms should go hand in hand considering “we’re spending $147 billion to treat obesity, $116 billion to treat diabetes, and hundreds of billions more to treat cardiovascular disease and the many types of cancer that have been linked to the so-called Western diet.” 1
Corn is a perfect example of American food and government subsidies at their worst. 45 percent of all corn is turned into high-fructose corn sweeteners, which is one of the main factors contributing to why in America it is most often much cheaper to buy processed packaged food versus a salad. Further, most of the grain the United States produces goes to livestock, which would be content eating the grass in fields rather than farmed grain in pens. Ironically, consumers end up paying more for grass-feed beef. Why — because our infrastructure is twisted.
However, farmers aren’t exactly thriving either, the average farmer sells corn at almost a dollar less than it takes to grow. Subsidies on corn remove the price floor and encourage selling the corn at any price since the government will directly make up the difference to farmers. The lower the price falls, the more corn will be produced, driving the soil into degradation and the farmers into bankruptcy.
“Agriculture’s always going to be organized by the government; the question is, organized for whose benefit? Now it’s for Cargill and Coca-Cola. It’s certainly not for the farmer.” 2 – George Naylor, Iowa corn farmer

Quick Reference-
1) http://www.nytimes.com/2009/09/10/opinion/10pollan.html?scp=2&sq=michael%20pollan&st=cse
2)Michael Pollan Omnivore’s Dilemma, Chpt 2, ‘The Farm’

Surin Farmers Support said...

I think that subsidies would only be appropriate in supporting farmers' organic certification. Organic farming in Thailand is all about self-reliance and at the same time, all food prices are kept artifically low because of a system in which producers are permanently in debt and willing to take whatever price the middleman gives them - which is driven by consumer demand. Thailand produces more than enough food to feed itself, and when certain crops are produced, they tend to flood the market (which also keeps prices low). This is an outcome of the mono-cropping strategies promoted by the Green Revolution. Anyway, this is a very interesting discussion, and I think the way forward for organic production is with farmers themselves - no body wants to use chemicals, but they aren't yet convinced by the alternative. This will take more information and time...

Matt said...

I believe consumers can make the biggest impact to fight the market distortion caused by subsidies. Although the recent popularity of organic products is just a start, it shows the power of consumers. Due to a greater demand for healthy and organic foods many companies have shifted their position to cater to more conscious customers. After all, a company needs to react to the preferences of their consumers or else they will not sell their products and not be successful. I would even make the argument that those consumers buying only to showcase status help. No matter their motivation, by buying organic products they are supporting with their dollar and helping build the market for organic products.

Katie Steinhardt said...

I agree that consumers have a lot of power in that they are the ones who drive the market. Yet it is hard for many consumers to expel any power on the issue of the availability of organic produce. Unfortunately, because organic produce in America, unlike in Thailand, is sold at such an inflated price, many people do not have the option of purchasing it. Hence, they do not have any powers as consumers. Furthermore, are those who are able to use their consumer ways to put pressure on the food industry simply telling the market to continue to produce more over-priced organic goods, or are they telling the market that they want those products to continue to be produced but at a much lower cost to the consumer? If the food industry, and stores such as Whole Foods, is booming due to consumer demand, why would the government ever withdraw their subsidies? Clearly, a new market has been created for high-priced, high-quality (organic) food. While I think that it’s great that so many people are more conscious of what they’re eating, I still believe that the power of consumers must also focus on not simply demanding more organic food but also making sure that that the purchase of organic food is financially feasible for everyone.

Kati Cahn said...

These are some really interesting points that I had on my mind as well during the Yasothorn unit. The farmers in Isaan want to switch to growing organic products for the most genuine of reasons- to improve the health of them, their families and consumers. Living with the farmers in Yasothorn and hearing how passionate they are about chemical free agriculture sheds light onto the reality that in America, organic food is indeed the "I'm better than you" food for so many individuals. I had never questioned this before, assuming that organics in America are more expensive for legitimate reasons. Knowing that this is not the case, I would hope that increasing consumer demand for organic products in the U.S., and creating awareness about the correct way to do this (as to not run into another 2% Starbucks situation) could hopefully eventually lead to the end to this problem. As a college student, I am very conscious of how much money I spend on food. Though I seek out organic food when possible, until the prices are lowered I will probably go on only treating myself to organic produce on special occasions.