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Agriculture’s Glass Ceiling

Who knew that agriculture had kept its dirty little secret, an impenetrable glass ceiling, hidden for so long? The FAO has just released a report comparing the position of women in agriculture — cash and subsistence crop producers as well as laborers — to men in roughly 50 countries that bothered to undertake the survey. Even for someone who tries to expect the unexpected, this was eye-opening. It felt like a throwback to a discussion that began more in earnest 50 years ago in other sectors and that still hasn’t produced the results that are needed. This is the last piece I comment on this week. But don’t take my word for it; read the piece and the FAO report, linked below.
This week I want to address the issue of how we use the market to generate the resources needed to make producers and the global food system more sustainable and resilient. For years I have heard retailers and brands say that they would buy only more-sustainable products if they didn’t cost more. Years ago, when I asked the CEOs of five of the largest trading companies what it would take, they said long-term contracts. They couldn’t change their supply chains and segregate product for a single sale, but if companies would give them long-term contracts of 5-10 years (depending on the crop) with price finding mechanisms (to reflect the actual prices at the time of the sale) they would be willing to cover the costs of separating the product. Sounds simple, right?
They lied. When I went to the downstream buyers, they started backpedaling. Their customers want the cheapest products all the time. They didn’t want to be locked into contracts that wouldn’t let them find cheaper sources. After years of discussion and back and forth, most larger downstream buyers have started to use long-term contracts as a cornerstone of their strategy. But the traders have rejected the idea, meaning companies have to pay more for the product because everyone along the value chain, not just the producers, had to be incentivized to change. In fact, this was again asserted by a global trader just this week.
So, is there a solution? Yes, but we need a different and bigger vision to transform today’s food system. We need tourniquets, not Band-Aids. Here are some principles:
  • More of the same will not transform the food system.
  • We need to address the speed and scale of the impact of commodity production on climate change and of climate change on commodity production.
  • Consumers need to pay the actual cost of what they consume including the environmental and social impacts, which are now externalities.
  • Food production shouldn’t mine the natural resources of present or future generations.
  • We need to use existing market mechanisms to cover the costs of producing more sustainable commodities.
  • We need the efficiency of commodity trading, but commodities must be legal, traceable, and transparent and carry substantially reduced embedded GHG emissions. Today they don’t.
  • There should be one price for a commodity — any product not meeting precise requirements should be docked, and any that exceeds requirements should receive more.
One proposed commodity fund structure in Brazil is transformational. It consists of a 1% environmental levy on the FOB price of all deforestation-linked commodities. The goal: 100% of these funds would help producers become legal, traceable, and transparent. Funds would support reforestation of lands as required by law and/or that are less suitable for production, support legal titling, set up credible traceability systems, comply with market requirements, etc. Unlike financial mechanisms from other sources (e.g. traders), producers would be able to sell to anyone. There would be no segregation.

This strategy would level the playing field — all buyers would pay the same price for commodities and all commodity sales would finance the transformations and improvements needed. The system would also provide funding to invest in more resilient production to address the impacts of climate change. Most importantly, this mechanism would generate significant funds to help producers become legal and access markets. In fact, it would generate more funding in a single year than all the soy trader commitments to date. Think about it. – Jason

Poland Prohibits Food Imports from Ukraine to Soothe FarmersThe Washington Post
Poland’s government said it has decided to temporarily prohibit grain and other food imports from Ukraine as it seeks to soothe the rising anger of Polish farmers, who say they are losing huge amounts of money to a glut of Ukrainian grain on the market. The regulation also includes a prohibition on imports of sugar, eggs, meat, fruits, vegetables, milk, and other dairy products.
JC: This is not entirely unexpected. Still, it is disappointing. It appears that the Polish farmers were hoping for a windfall with food prices rising throughout the EU. If Ukraine had been able to sell its crops without the interruption of the Russian invasion, we would not be having this discussion. And the prices would certainly have been lower. It seems that Polish farmers don’t realize that the Russian invasion is what has largely created the market instability that they want to take advantage of at this time. It wasn’t so many years ago that Poland had its own issues with Russia. And at the rate this is going, it may not be that long before it happens again. The issue it seems is whether we have the ability to have long-term perspectives when the short-term windfalls can be so profitable.  This issue will keep coming up in many ways and many places, but one consistent one is food.
Inflation Has Yet to Dent Big Food’s EarningsThe Economist
For America’s packaged-food firms, the past decade was a cycle of famine and feast. Lean years before the pandemic ended when restaurants closed amid coronavirus and people stocked their pantries. Then in 2022 people began dining out again, putting pressure on. As big food’s results show, the industry is managing to ride out the latest tumult. 
JC: Previously I wrote about the record level of earnings of traders over the past year. Now it’s food brands that are increasing their shareholder value. The traders made their money the old-fashioned way, e.g. from riding price hikes and scarcity both up and down, as well as by raising their margins on trade. Food brands, meanwhile, have benefited from consumers both coming out of the pandemic and looking for new and different products and experiences. Perhaps more important for the food brands, just as people have come out of isolation, they are also showing interest in diversifying their investment portfolios. We still haven’t heard from retailers about how they’re straddling both the bricks-and-mortar operations as well as an increase in delivery. What I wonder about is how are farmers doing? I know that is a complicated question depending on the geography, the crops, and the markets. However, a healthy food system depends over the long term on the economic viability of the producers. Has anyone seen an estimate on the income level of farmers as they rode out the pandemic? If so, I would love to hear from you. 
Private Equity’s Food Binge Goes SourThe Wall Street Journal
Private-equity funds went on a buying binge for food companies before markets crashed in 2022. The financiers projected that staple goods would keep making profits no matter how the economy fared. But that forecast changed, with the food industry soon hammered by higher labor costs, supply-chain disruptions, and surging inflation.
JC: This is a twist on the old question, “Do you know how to make a small fortune?” Clearly the answer is to invest a large fortune in something you don’t know enough about. While we need to invest more in our food system, in the US and globally, this isn’t how to do it. Extreme weather and an increase in rolling global shortages mean we need to be investing in more resilient production systems while also diversifying our sources. We might also want to seriously consider the establishment of food banks. As the saying goes, wealthy people don’t go hungry. While true locally, that may not be true for the global food system. It is going to depend on the disruption of supply chains. Still, I wouldn’t want to be living in a country that imports most of its food — at this point, that could already be a significant portion of the world’s countries.
US Becomes First Major Fishing Nation to Ratify Subsidies DealReuters
The United States has become the first major fishing nation to ratify a deal to cut subsidies contributing to overfishing. The WTO’s 164 members reached a deal last year that aims to cut billions of dollars in harmful subsidies that are emptying the ocean of marine life. But it needs two-thirds of the members to sign on to take effect and only a handful of smaller countries have accepted it so far.
JC: This is good news. Subsidies will most likely be essential to support the kind of transformational change we need in fishing (or the rest of food as well). But they should support the systems we need rather than those that we have inherited from the past, which contribute to overfishing and the literal emptying of the oceans of fisheries that must be made more resilient and kept intact for future generations. Now that the US has been so early to ratify the subsidies agreement, is it possible that we might sign the Convention on Biological Diversity (CBD)?  In this case, we and the Vatican are the last two entities to sign the CBD.
Grocery Prices Drop for the First Time in 2.5 Years, but Shoppers Remain HesitantFood Navigator
Grocery prices may finally be falling after stubbornly going up for more than two and a half years, even as annual inflation across other categories and overall have dropped in recent months, according to the most recent data from the Labor Department.
JC: The US seems to be bouncing back from peak grocery prices faster than the EU. On first blush, one might be tempted to say that the war in Europe has made a bigger impact on those economies than on the US. However, the price increases have been going on for two and a half years — twice as long as the war. Before any of us jump to any conclusions about how resilient the US food system is (much less the global one), we need to see whether the drop is maintained or continues downward. Climate change is still having a larger impact sooner than was predicted. At the rate we are reducing GHG emissions in the US and globally, the impacts will only continue to intensify.
Women Still Occupy "Marginal" Place in Food Production: FAOAfrica News
They own less land, earn less money and are more vulnerable to crises. Essential to feed the world, women still occupy a "marginal" place in food production, says the FAO, in a rare report on the glaring inequalities of the sector.
JC: This is a sobering piece. Everyone should click on the link and read it or better still, read the full FAO report. In brief, here are some of the findings: in agriculture, women are confined to more precarious occasional or part-time, informal, low-skilled jobs. The reduction of gender disparities stalled during the pandemic and some gaps have widened. During the first year of COVID, 22% of women lost jobs in the agri-food sector compared to 2% of men. Women make up more than half the agricultural workforce in many Sub-Saharan countries and just under half in Southeast Asia. Due to a lack of resources and inputs for women farmers, male-owned farms are 24% more productive. For wage earners there is a dirt ceiling — women make 18% less than their male counterparts. Due to the lack of resources and access to information, women have less capacity to adapt and less resilience to climate change.
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