March » 2015 » TripleCrisis

No Friendship in Trade

Unequal Exchange in the Global Coffee Economy

Sasha Breger Bush, Guest Blogger

The global coffee economy, a chain connecting different parts of the global division of coffee labor to one another, takes us downstream from the green coffees harvested in the field by farmers, through various traders and processors, to the cups of roasted coffee consumed by final consumers.

The diagram below illustrates how the global coffee economy operates and the severe inequalities that characterize it. International traders and roasters operate in a very uncompetitive market setting— they are monopolists. The six largest coffee trading companies control over 50% of the marketplace at the trading step along the coffee chain (Neumann Kaffee Gruppe from Germany and ED&F Man based in London are the largest international traders). The roasting stage of coffee production is even more concentrated, with only two companies (Nestle and Phillip Morris) controlling almost 50% of the market. Market power gives these modern-day robber barons influence over prices and other terms of trade, allowing them to place downward pressure on prices they pay to farmers, and upward pressure on the prices they charge to consumers.

Breger Bush 1

Read the rest of this entry »

What We’re Writing, What We’re Reading

What We’re Writing

Kevin Gallagher and Ilene Grabel, Capital Controls and the Global Financial Crisis

Matias Vernengo, On Being a “Real Keynesian”

What We’re Reading

Hasan Comert and Mehmet Selman Colak, Can Financial Stability be Maintained in Developing Countries After the Global Crisis?: The Role of External Financial Shocks

John Ikerd, The Failure of Modern Industrial Agriculture

Prabhat Patnaik, Growth and Hunger

Triple Crisis welcomes your comments. Please share your thoughts below.

Triple Crisis is published by

World Health Organization: GM-Crop Herbicide a Probable Carcinogen

Timothy A. Wise

The World Health Organization (WHO) apparently has not gotten the memo about the supposed consensus on GMOs being safe. On March 20, 2015 the WHO’s International Agency for Research on Cancer (IARC) released a new analysis of the evidence on five organophosphate pesticides, including glyphosate, the herbicide in Monsanto’s Roundup weed-killer. The international scientific body concluded that glyphosate is “probably carcinogenic to humans.”

The WHO analysis puts the lie to the supposed “scientific consensus” on the safety of GM crops, declared but not proven by National Geographic, the Gates Foundation, and the Cornell Center for Science, among others. (See my previous article, “The War on Genetically-Modified-Food Critics.”)

The WHO findings, summarized in an accessible two-page monograph and in The Lancet Oncology, raise alarms. Glyphosate is by far the most widely used herbicide because it is the weed-killer that genetically modified corn and soybeans are engineered to “tolerate.” With GM varieties now accounting for 90 percent or more of the U.S. market for corn and soybeans, glyphosate is being liberally sprayed over ever-more-vast tracts of farmland with farmers secure in the knowledge that their crops won’t be harmed by the herbicide.

Apparently humans may not be so tolerant, and animals in feeding trials certainly aren’t.

Read the rest of this entry »

Geographical Poverty Traps in Rural Areas: A Growing Global Problem

Edward Barbier

More than one-third of the rural population in developing countries lives on less-favored agricultural land, according to global spatial datasets from 2000. How, then, does this distribution influence the incidence of poverty in these countries?

To address this question, our paper “Poverty and the Spatial Distribution of Rural Population” investigates two types of spatial distributions across 83 developing countries over a 10-year period: rural populations on less-favored agricultural lands and in less-favored agricultural areas. Less-favored agricultural lands are constrained by difficult terrain, poor soil quality, or limited rainfall. Less-favored agricultural areas include less-favored agricultural lands plus favorable agricultural land with limited access to markets (i.e. five hours or more travel to a market city with a population of at least 50,000).

Read the rest of this entry »

Macroeconomics in the Age of Climate Change — streaming video

The lectures and award ceremony for the 2015 Leontief Prize are happening tonight at 5:30pm. Here is information about this year’s prize winners. Click here or on the image above for streaming video.

Ruling Capital

Emerging Markets and the Reregulation of Global Finance

Kevin Gallagher

Triple Crisis welcomes your comments. Please share your thoughts below.

Triple Crisis is published by

Averting a Greek Tragedy – For Now

Jayati Ghosh

The citizens of Greece are not the only ones who have been watching the tense negotiations between the new government in Athens (led by the radical party Syriza) and the European Union (led de facto by the Germans). Not just in Europe, but everywhere in the world, people are watching with bated breath this most recent skirmish, part of a battle in what may turn out to be a protracted war between democracy and finance. Because this current struggle is really about much more than whether Greece should continue with its fiscal austerity programme or the contradictions of remaining within the Eurozone. It puts to test one of the more critical questions of our times: can elected governments actually take measures to fulfil their promises to the people in the face of opposition from global finance and their agents in establishment?

Consider the immediate background. Ever since the Eurozone crisis broke around five years ago, the economy of Greece has suffered unmitigated decline. National income has declined by around a quarter; unemployment has increased dramatically and the official open unemployment rate is now at 25 per cent, with youth unemployment almost 50 per cent. These high rates of unemployment persist even though the labour force has shrunk, with bright educated people leaving Greece in ever larger numbers and discouraged workers simply abandoning the search for jobs, with little or no prospects of employment in the country.

Fiscal austerity imposed by the hated “troika” (the EU, the ECB and the IMF) has involved massive cuts in public sector jobs and wages and compression and even elimination of all sorts of public services. This has dramatically worsened the quality of life and has even led to public health crises, as diseases like malaria and HIV-AIDS that were under control even a decade ago have made massive comebacks. The social effects are also frightening, with rising inequality and incidence of crime, violence against migrants and the emergence of extremely rightwing and openly fascistic neo-Nazi groups like Golden Dawn.

Read the rest of this entry »

Seeds of Change

Corporate Power, Grassroots Resistance, and the Battle Over the Food System

Elizabeth Fraser and Anuradha Mittal, Guest Bloggers

For most of history, farmers have had control over their seeds: saving, sharing, and replanting them with freedom. Developments in the course of the 20th century, however, have greatly eroded this autonomy. Legal changes, ranging from the Plant Variety Protection Act (1970) in the United States to the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), have systematically eroded farmers’ rights to save seeds for future use. By the end of 2012, Monsanto had sued 410 farmers and 56 small farm businesses in the United States for patent infringement, earning over $23 million in settlements. Here, we describe some of the key developments further intensifying corporate control over the food system. It is not, however, all bleak news. Civil society groups are using everything from grassroots protest to open-source licensing laws to ensure that the enclosure and privatization of seeds comes to an end.

Corporations Have Consolidated Their Control of Seeds and Agrochemicals

In 2011, just four transnational agribusinesses—Monsanto, Dupont Pioneer, Syngenta, and Vilmorin (Groupe Limagrain)—controlled 58% of the commercial seed market. Four—Syngenta, Bayer CropScience, BASF, and Dow AgroSciences—controlled 62% of agrochemicals worldwide. The top six companies controlled 75% of all private plant breeding research, 60% of commercial seed sales, and 76% of the global agrochemical market. This consolidation of power has been aided by a large string of mergers and acquisitions, leading the Canada-based Action Group on Erosion, Technology and Concentration (ETC Group) to conclude that “there just aren’t many seed companies left to buy.”

The World Bank, too, has played a role in this increased consolidation. In 2014, a report from the Oakland Institute provided details on the World Bank’s efforts to open African markets to private seed companies. (Full disclosure: The authors of this article both work at the Oakland Institute.) The report, titled “The World Bank’s Bad Business with Seed and Fertilizer in African Agriculture,” paints a stark picture of the possible consequences of these actions: removing farmers’ rights to save seeds and implementing intellectual property claims over seeds does not improve food security, but rather undermines farmers’ autonomy and further increases profits for the existing seed oligopoly.

Read the rest of this entry »

Mandating Food Insecurity

The Global Impacts of Rising Biofuel Mandates and Targets

Timothy A. Wise

In collaboration with ActionAid USA, I just co-authored a new study on the high social and environmental costs of government mandates and targets for biofuel consumption. As the summary below suggests, when oil prices are low such mandates, such as the Renewable Fuel Standard (RFS) in the United States, prop up biofuels markets. As the study shows, the United States is the worst biofuels offender. On our present course, we will remain by far the largest global consumer in 2025, contribute the most new demand to global consumption, and do so using the feedstock – corn – that provides the fewest environmental benefits and most directly competes with food and feed markets. Reform is desperately needed, and current proposals in Congress to scale back RFS mandates should be enacted.

Expanding demand for biofuels, fed significantly by government policies mandating rising levels of consumption in transportation fuel, has been strongly implicated in food price increases and food price volatility most recently seen in 2008 and 2011-2012. First-generation biofuels, made from agricultural crops, divert food directly to fuel markets and divert land, water and other food-producing resources from their current or potential uses for production of feed for animals and food for human consumption.

A key policy driver of biofuel consumption is government mandates to increase or maintain rates or levels of biofuel blends in transportation fuel, the U.S. Renewable Fuel Standard and the E.U. Renewable Energy Directive being the most prominent cases. Mandates prop up demand for biofuels, particularly at times when oil prices are relatively low. In a new GDAE Working Paper, Timothy A. Wise and Emily Cole assess the spread of such mandates and targets, finding that at least 64 countries now have such policies. A related policy report from Action Aid USA calls for immediate policy reform.

Read the rest of this entry »