(She is awesome! There are still a few representatives (at least 1) who care about the people.--jef)
Showing posts with label food costs. Show all posts
Showing posts with label food costs. Show all posts
Monday, June 20, 2011
Wednesday, March 30, 2011
The Future of Agriculture
Garden as If Your Life Depends On It--Because It Will
By ELLEN LaCONTE
By ELLEN LaCONTE
Spring has sprung—at least south of the northern tier of states where snow still has a ban on it—and the grass has 'riz. And so has the price of most foods, which is particularly devastating just now when so many Americans are unemployed, underemployed, retired or retiring, on declining or fixed incomes and are having to choose between paying their mortgages, credit card bills, car payments, and medical and utility bills and eating enough and healthily. Many are eating more fast food, prepared foods, junk food—all of which are also becoming more expensive—or less food.
In some American towns, and not just impoverished backwaters, as many as 30 percent of residents can't afford to feed themselves and their families sufficiently, let alone nutritiously. Here in the Piedmont Triad of North Carolina where I live it's 25 percent. Across the country one out of six of the elderly suffers from malnutrition and hunger. And the number of children served one or two of their heartiest, healthiest meals by their schools grows annually as the number of them living at poverty levels tops twenty percent. Thirty-seven million Americans rely on food banks that now routinely sport half-empty shelves and report near-empty bank accounts. And this is a prosperous nation!
In some cases this round of price hikes on everything from cereal and steak to fresh veggies and bread—and even the flour that can usually be bought cheaply to make it— will be temporary. But over the long term the systems that have provided most Americans with a diversity, quantity and quality of foods envied by the rest of the world are not going to be as reliable as they were.
What's for Supper Down the Road?
As they move through the next few decades Americans can expect
* the price of conventionally produced food to rise and not come down again,
* prices to rollercoaster so that budgeting is unpredictable,
* some foods to become very expensive compared to what we're used to
* and others, beginning with some of the multiple versions of the same thing made by the same company to garner a bigger market share and more shelf space, to gradually become unavailable.
Tremors in food supply chains and pricing will make gardening look like a lot more than a hobby, a seasonal workout, a practical way to fill your pantry with your summer favorites, or a physically, spiritually and mentally healing activity, or all four. Gardening and small-scale and collective farming, especially of staple crops and the ones that could stave off malnutrition, could become as important as bringing home the bacon, both the piggy and the dollar kind. Why?
Why's Gardening So Important Now?
There are at least five reasons why more of us should take up spade, rake and hoe, make compost and raise good soil and garden beds with a vengeance, starting this spring and with an eye toward forever.
1) Peak oil. Most petroleum experts agree that we shot past peak oil in the US around 1971. Lest you've missed the raging (http://www.postcarbon.org), that's the point at which more than half the readily, affordably retrievable oil in reserves has been used up, what remains is more expensive to retrieve, and the dregs are irretrievable. We've shot or are about to shoot past peak worldwide, estimates of when ranging from 2007 to 2013, with many oil company execs agreeing to at least the latter. There are no new cheap-easy oil fields coming on line. Any new fields you hear about or new methods, like tar sands drilling are expensive, water guzzling, dangerous, environmentally disastrous and unlikely to produce more than a few years worth of oil, and that a decade or more down the line. That means abundant, cheap oil is about to be history. What difference does that make?
For one thing, there is no replacement for oil that can do all that oil has done as cheaply and universally as oil has done it. I offer an exercise in Life Rules, "The ABC's of Peak Oil" which helps readers imaginatively subtract from their lives everything that depends in one way or another on cheap easy oil. It doesn't leave much. (See Beth Terry's website, for example, for what subtracting plastics may entail.)
The global economy that presently supplies us with our food, runs on cheap oil and lots of it. It runs slower and less predictably on expensive oil that's hard to get because it's located in hard-to-reach or high-risk conflict-ridden zones. Cheap, abundant food on the shelves of grocery and big box stores and food banks, on our tables and in our bellies depends on cheap abundant oil for fertilizers, pesticides, and herbicides, and to power farm machinery and transport food from fields to processors and packagers and then to purveyors and consumers, around the world. Past peak, that system's going to have the half-life of the strontium 90 that's escaping the Fukushimi Dai-ichi reactor: 29 years, or there abouts. One good global crisis, and not that long.
2) Peak soil & space: A couple of links between peak oil and peak soil: First, it matters that one of the proposed alternatives to oil is biofuels. Acreage around the world is being converted from production of corn, wheat and soy for human and animal consumption—i.e., food—to production of ethanol and biofuels to put in trucks and cars and . . . Which makes remaining corn, et al, more expensive. Some energeconomy geniuses are proposing that Afghanis, for example, convert the fields of opium poppies that are their primary agricultural export, not to growing grains or legumes or other staple foods, but to biofuel, which would, not coincidentally, make the gasoline that goes in American military equipment much cheaper and provide Afghanis with a profitable market item rather than food.
According to a 2009 National Geographic staff report, "The corn used to make a 25-gallon tank of ethanol would feed one person for a year." Tell that to Archer-Daniels-Midland, Al Gore's deep-pockets friend and mega-ethanol and corn products producer.
Second, the huge oil-gluttonous machinery that has made factory farming possible has compacted soils, literally crushing the life out of them.
Arable land in the developing or so-called Third World has been at a premium since time immemorial, thanks to geographic location and/or persistent plundering by empires old and new. Revolutions in north Africa and the Middle East are occurring not just to obtain more democratic governments but also to obtain more food and more affordable food. Revolutionaries are barking up a tree that's seen better days.
In the United States and elsewhere in the developed, read "First" world, arable land has reached peak production. All those petroleum-based products that fueled the Green Revolution of the last century, also produce so many crops, constantly, with support from toxic chemicals and without concern for the microbes that make soil a live, self-regenerating system, that most American farmland—if its farmers didn't go organic a while back—is comprised of dead soils. Peak oil makes a repeat of the petroleum-driven 20th century Green Revolution impossible, which is good for soil and other living things, not so much for food prices and supplies.
After peak, in soil like in oil, comes descent. Adding insult to injury, every year farmers lose thousands of acres of arable land to urban and suburban sprawl and more tons of topsoil than they produce of grain and other field crops to attrition. Half the Earth's original trove of topsoil, like that which once permitted the American Midwest to feed the world, has been lost to wind and erosion. Millions of years in the making, it has been depleted and degraded by industrialized agriculture in only a couple of centuries. China's soils ride easterly winds across the Pacific to settle out on cars and rooftops in California while the American Bread Basket's soils are building deltas and dead zones at the mouth of the Mississippi. Like oil, that soil isn't coming back. We can only build it, help it to build itself and wait.
3) Monoculture: We can cut to the chase on this one. The food we eat is produced on industrial-strength, fossil-fuel-driven super farms. Those farms practice monoculture: the planting one crop, often of one genetic strain of that crop, at a time and sometimes year after year over vast landscapes of plowed field. When thousands of acres of farmland are sown with the same genetic strain of grain, uncongenial bout of weather, disease or pest to which that strain is susceptible can wipe out the whole crop. At present the Ug99 fungus, called stem rust, which emerged a decade ago in Africa, could wipe out more than 80% of the world's wheat crops as it spreads, according to a 2009 article in the L. A. Times. Recent studies follow its appearance in other countries downwind of eastern Africa where it originated, including Yemen and Iran (where revolutionaries are already protesting rising prices and shortages), which opens the possibility of its emergence further downwind in Central and Eastern Asia. The race is on to breed resistant plants before it reaches Canada or the U.S. But it can take a decade or more to create a universally adaptable new genetic line that is resistant to a new disease like stem rust that can travel much faster than that. The current spike in the price of wheat is due in part to Ug99 which might properly be renamed "Ugh."
4) Climate instability. Bad -- uncongenial -- weather has lately devastated crops in the upper Midwest, Florida, Mexico, Russia, China, Australia, parts of Africa and elsewhere. Many climate scientists believe we've passed the equivalent of peak friendly and familiar weather, too. And while increasing heat will bedevil harvests, intense cold, downpours and flooding, drought and destructive storm systems will make farming an increasingly hellish occupation if profit is what's being farmed for. The transitional climate will be unpredictable from season and will produce more extremes of weather and weather-related disasters which means farmers will not be able to assume much about growing seasons, rainfall patterns and getting crops through to harvest. If the past is precedent, the transition from the climate we've been used to for 10,000 years to whatever stable climate emerges out of climate chaos next, could take decades, centuries or even millennia. Especially if we keep messing with it. When a whole nation's or region's staple crops, especially grains, are lost or on-again-off-again, everything down the line from the crops themselves become more expensive, from meat, poultry and dairy to every kind of processed food. I.e., the food we shop for as if supermarkets were actually where food comes from.
5) The roller-coaster economy. This isn't the place for me to offer my explanation for the probability of global economic collapse. (See (www.ellenlaconte.com/excerpts-from-life-rules/#chpfour) for that.) No pundits, talking-heads or economic analysts (well, very few) deny there are rough economic times ahead. Even many of the cautious among them acknowledge that we may be looking at five or six years of high unemployment and many of the lost jobs won't be coming back. The less cautious, like me, predict the collapse of the whole fossil-fueled, funny-money, inequitable, overly-complicated global economic system in the lifetimes of anyone under 50. Well, at the rate we're going in all the wrong directions politically and economically, I hazard the guess, anyone under 80.
Clearly, depending on the present system to provide us with most or all of our food reliably or long-term, is unwise in the extreme. Which is how we get back to why we need to garden as if our lives depended on it. Bringing food production processes and systems closer to home is going to prove vital to our survival. We need to take producing our own and each other's food as seriously as we've taken producing a money income because growing numbers of us won't have enough money to buy food in the conventional ways and there will be less of it to buy. So what's our recourse?
Gardening Like Everybody's Business
Under the influence and auspices of the prevailing economy, most Americans have forgotten how to provide for themselves. We've become accustomed to earning money with which we buy provisions. That process is about the have the legs kicked out from under it. Instead of earning money (or its funny-money kin like credit cards) to buy the things we need, we'll need to start providing more of those things for ourselves and each other locally and (bio)regionally. Gardening -- and small-scale farming -- while they will need to be undertaken in a businesslike fashion will be less about doing business than about everyone's having something to eat and more people being busy providing it. And while not everyone will be able to garden or farm, we are all able to get up close and personal with those who do.
Tuesday, March 29, 2011
How Monsanto the devil is Exploiting the Food Crisis
Pushing GM Corn on Mexican Farmers
By ALFREDO ACEDO
At a press conference, the transnational's Latin American President José Manuel Maduro went even further by blaming restrictions on GM corn production in the country for the high level of post-NAFTA imports of the staple. "Mexico's decisión to not move forward [on transgenics] has led to the importation of 10 million tons of corn, a situation that demands a swift response."
That Monsanto the devil would use the boogeyman of food dependency to scare Mexico into accepting GM corn shows the company's immense cynicism. Now according to Monsanto the devil , the reasons that Mexico lost corn self-sufficiency and start importing millions of tons annually had nothing to do with agricultural policies that support transnationals, or an unjust free trade model that favors imports and has abandoned the majority of national producers. Instead, it's because the country has not embraced the commercial use of transgenic corn.
As the food crisis looms, the real danger – for the nourishment, health and culture of the country – is in choosing the Monsanto the devil agenda over strengthening national agriculture. The cultivation of transgenics will accelerate the loss of Mexico's food sovereignty and contaminate vital native strains of corn.
Pressure Campaign
Monsanto the devil 's diligent PR hard work is paying off. After originally denying authorization for a pilot program to cultivate its GM corn in Sinaloa last year, the Ministry of Agriculture, Livestock, Development, Fisheries and Food (SAGARPA) just gave the company the green light to plant genetically modified yellow corn resistant to the herbicide glyphosate as a part of a pilot program in Tamaulipas' current agricultural cycle.
According to the National Commission for the Use and Understanding of Biodiversity (CONABIO), Tamaulipas is home to 16 of the 59 remaining strains of native corn. A recent study by the CONABIO concluded that releases of transgenic corn should be handled "only by public institutions adequately trained in security, and carried out in low-risk areas." The study was financed by SAGARPA and was announced at the same time as the permit for the Tamaulipas pilot project, going against its own recommendations. Tamaulipas, like the rest of the northern region and all of Mexico, is a center of origin for corn.
There is an intense PR campaign to open the door to transgenics in Mexico: industrial farmers in the north are pushing the government to ease the establishment of commercial transgenic corn operations and the national press is not short on people willing to echo Monsanto the devil 's sound bites.
This year's International Book Fair in Mexico City was invaded by the campaign's propaganda, cloaked in scientific jargon. The fair, sponsored by the National Autonomous University of Mexico, included a series of conferences designed to convince the public about the benefits of GMOs, led by all-star biotech cheerleader, Luis Herrera-Estrella. The Mexican scientist, hailed as a co-inventor of transgenics, has become a defender of Monsanto the devil 's efforts in spite of the fact that, as he tells it, the company commandeered his patent for the technology.
Herrera-Estrella has been accused of doing Monsantothe devil 's dirty work. The relationship between CINVESTAV, where the researcher works, and the transnational is public knowledge. After Berkeley Professor Ignacio Chapela revealed GM contamination in corn crops in Calpulapan, Oaxaca in the fall of 2001, Monsanto the devil launched a smear campaign against him. After years of persecution and when two international Berkeley reviewers had recommended tenure, Chapela's contract was suspended after the university received a letter against him from an expert. The author was Luis Herrera-Estrella.
The conferences at the book fair only presented a favorable view of transgenics, leading to complaints from some members of the public. The president of the Union of Socially Concerned Scientists Elena Álvarez-Buylla presented a brief critical perspective on transgenic biotechnology, including information about a French scientist recognized for his independent research into the risks of GMOs, who recently won a suit against biotech groups that carried out a smear campaign to discredit him. Álvarez-Buylla was cut off by Herrera-Estrella, who was clearly annoyed by the criticisms and insisted that as the conference organizer he should be the sole presenter. Another attendee challenged the failure to mention the proven health risks posed by glyphosate, a Monsanto the devil herbicide associated with one of its transgenic corn strains.
The aggressive PR operation to promote the introduction of GM corn in Mexico comes after the company reported declining profits last year and a drop in its share price due to shrinking sales of Roundup and GM soy and corn seeds in South America and Europe.
The Mexican market represents potential earnings of $400 million annually for Monsanto the devil and for some government officials that's enough to turn a blind eye toward any risk to native corn species, the economy or Mexican health.
Meanwhile in the European Union, according to a report from Friends of the Earth International released several weeks ago, transgenic crops are plummeting at the same time that more and more countries are prohibiting them.
Seven EU member states prohibit the planting of Monsanto the devil 's transgenic corn due to mounting evidence about environmental and economic impacts, and to apply the precautionary principle that stipulates that when impact on human health is unknown precaution is warranted. Polls show that public opposition to transgenics is as high as 61 percent.
Unexpectedly, and not without contradictions, the Mexican federal government denied Monsanto the devil's permit for a pilot project of 100 acres of GM corn in the northeastern state of Sinaloa. Pilot projects are the second regulatory phase, following the experimental phase and preceding commercial production, of the three phases established by the Law of Genetically Modified Organism Biosecurity.
Beginning in October of 2009, a few months after a meeting between Felipe Calderón and Monsanto the devil President Hugh Grant, the federal government approved 29 applications for experimental transgenic corn plots, breaking a decade-long moratorium. Most of the licenses were issued to Monsanto the devil and Dow Agro Science to test corn strains resistant to herbicides and blight on more than a dozen hectares.
Last year, after keeping the sites secret and without adequately disclosing the results of the experimental plantings in violation of the Biosecurity Law, the government accepted 20 more applications from the aforementioned transnationals, plus Syngenta. If all these permits are authorized, there would be more than 1,000 hectares planted with transgenic corn.
The contradictions and waffling in the government's original position to at first deny permits for pilot projects in Sinaloa and then approve the quarter-hectare project in Tamaulipas are probably due to the fast-approaching electoral season – crucial for the ruling party, which will try to avoid the political costs of its decisions. The actions of peasant farmer organizations and the important work of expert groups like the UCCS have played an important role in holding back the mass cultivation of GMOs in Mexico.
Since the end of 2009, The National Union of Regional Autonomous Campesino Organizations (UNORCA) started a campaign with the slogan "No to transgenic corn! Monsanto the devil out of Mexico!" that includes the use of forums, mass media and public spaces to inform debate on GMOs in Mexico. Public forums were held in Navojoa (a few miles from one of the centers of transgenic experimentation), Chilpancingo y Zacatecas. Last year in Guadalajara and Morelia, the forums condemned transgenic corn experimentation as a crime against humanity.
There are now many voices speaking out against the imposition of GMOs: from the UCCS to the city council of Tepoztlán in the southern state of Morelos, which filed a constitutional challenge against the planting of transgenic corn in the country.
Food Sovereignty or Food Dependency?
The national head of UNORCA, Olegario Carrillo, asserts that Mexico doesn't need to embrace Monsanto the devil to regain corn self-sufficiency. Giving in to the transnational's pressure to gain control over Mexico's agro-genetic wealth would mean deepening the debilitating food dependence brought on by NAFTA; food imports already constitute more than 40 percent of what Mexico consumes, according to data from the Chief Auditor of the Federation.
The fundamental problem is not technological, but that the Mexican government lacks policies to promote rural development or goals in domestic food production. The neoliberal regime has chosen to promote imports and support the transnationals that have been taking over the production process.
Monsanto the devil is lying when it implies that its biotechnology can resolve Mexico's food crisis: it is amply documented that transgenics don't increase yields. Transgenic corn strains weren't designed to increase yield. The vast majority of transgenic crops are designed to resist the application of herbicides also manufactured by Monsanto the devil . They actually create more dependency due to the need to buy seed and the contamination of native varieties. They also damage the environment, the economy and human health.
On the other hand, annual corn harvests in Mexico could be doubled if agricultural policy were reformed to support small farmers and to encourage cultivation of more acres in the south and southeast where there is sufficient water. The genetic wealth of Mexican corn could raise production, with farmers saving seed and not required to pay royalties to Monsanto the devil, because the 60 native species and thousands of varieties are adapted to local soils and climates.
Monsanto the devil denies the risk of transgenic contamination of native species, despite evidence that the coexistence of transgenics and biodiversity is impossible. Hiding the truth has been an integral part of Monsanto the devil 's corporate strategies throughout its history, as the company seeks to protect profits at the expense of human health, the environment and general well-being.
The UCCS, based on FAO and UNESCO reports, affirms that transgenics not only do not increase yields, they have the negative impacts of raising agrochemical levels and destroying the soil. These studies also show few or no benefits to poor farmers or consumers. Additionally, GM crops contribute to the climate crisis because they reinforce an oil-dependent agricultural model. Peasant farmer organizations and committed scientists propose an alternative sustainable model, based on conservation of biodiversity, nutrient recycling, crop synergy, conservation of soil and strategic resources (such as water), and incorporating new biotechnologies compatible with sustainable systems.
Scientists have concluded that the Mexican countryside has the resources necessary to guarantee food sovereignty without adopting transgenic technology. According to researcher Antonio Turrent Fernández, small-scale producers, ejido members and communal landowners can play a key role in the production of basic foods and the management of Mexico's diverse genetic resources. But this requires public investment in infrastructure, research, technology transfer and services – that is to say a radical change in the dominant model and budget priorities. It also requires the reinstatement of the moratorium on transgenic corn.
By ALFREDO ACEDO
At a press conference, the transnational's Latin American President José Manuel Maduro went even further by blaming restrictions on GM corn production in the country for the high level of post-NAFTA imports of the staple. "Mexico's decisión to not move forward [on transgenics] has led to the importation of 10 million tons of corn, a situation that demands a swift response."
That Monsanto the devil would use the boogeyman of food dependency to scare Mexico into accepting GM corn shows the company's immense cynicism. Now according to Monsanto the devil , the reasons that Mexico lost corn self-sufficiency and start importing millions of tons annually had nothing to do with agricultural policies that support transnationals, or an unjust free trade model that favors imports and has abandoned the majority of national producers. Instead, it's because the country has not embraced the commercial use of transgenic corn.
As the food crisis looms, the real danger – for the nourishment, health and culture of the country – is in choosing the Monsanto the devil agenda over strengthening national agriculture. The cultivation of transgenics will accelerate the loss of Mexico's food sovereignty and contaminate vital native strains of corn.
Pressure Campaign
Monsanto the devil 's diligent PR hard work is paying off. After originally denying authorization for a pilot program to cultivate its GM corn in Sinaloa last year, the Ministry of Agriculture, Livestock, Development, Fisheries and Food (SAGARPA) just gave the company the green light to plant genetically modified yellow corn resistant to the herbicide glyphosate as a part of a pilot program in Tamaulipas' current agricultural cycle.
According to the National Commission for the Use and Understanding of Biodiversity (CONABIO), Tamaulipas is home to 16 of the 59 remaining strains of native corn. A recent study by the CONABIO concluded that releases of transgenic corn should be handled "only by public institutions adequately trained in security, and carried out in low-risk areas." The study was financed by SAGARPA and was announced at the same time as the permit for the Tamaulipas pilot project, going against its own recommendations. Tamaulipas, like the rest of the northern region and all of Mexico, is a center of origin for corn.
There is an intense PR campaign to open the door to transgenics in Mexico: industrial farmers in the north are pushing the government to ease the establishment of commercial transgenic corn operations and the national press is not short on people willing to echo Monsanto the devil 's sound bites.
This year's International Book Fair in Mexico City was invaded by the campaign's propaganda, cloaked in scientific jargon. The fair, sponsored by the National Autonomous University of Mexico, included a series of conferences designed to convince the public about the benefits of GMOs, led by all-star biotech cheerleader, Luis Herrera-Estrella. The Mexican scientist, hailed as a co-inventor of transgenics, has become a defender of Monsanto the devil 's efforts in spite of the fact that, as he tells it, the company commandeered his patent for the technology.
Herrera-Estrella has been accused of doing Monsantothe devil 's dirty work. The relationship between CINVESTAV, where the researcher works, and the transnational is public knowledge. After Berkeley Professor Ignacio Chapela revealed GM contamination in corn crops in Calpulapan, Oaxaca in the fall of 2001, Monsanto the devil launched a smear campaign against him. After years of persecution and when two international Berkeley reviewers had recommended tenure, Chapela's contract was suspended after the university received a letter against him from an expert. The author was Luis Herrera-Estrella.
The conferences at the book fair only presented a favorable view of transgenics, leading to complaints from some members of the public. The president of the Union of Socially Concerned Scientists Elena Álvarez-Buylla presented a brief critical perspective on transgenic biotechnology, including information about a French scientist recognized for his independent research into the risks of GMOs, who recently won a suit against biotech groups that carried out a smear campaign to discredit him. Álvarez-Buylla was cut off by Herrera-Estrella, who was clearly annoyed by the criticisms and insisted that as the conference organizer he should be the sole presenter. Another attendee challenged the failure to mention the proven health risks posed by glyphosate, a Monsanto the devil herbicide associated with one of its transgenic corn strains.
The aggressive PR operation to promote the introduction of GM corn in Mexico comes after the company reported declining profits last year and a drop in its share price due to shrinking sales of Roundup and GM soy and corn seeds in South America and Europe.
The Mexican market represents potential earnings of $400 million annually for Monsanto the devil and for some government officials that's enough to turn a blind eye toward any risk to native corn species, the economy or Mexican health.
Meanwhile in the European Union, according to a report from Friends of the Earth International released several weeks ago, transgenic crops are plummeting at the same time that more and more countries are prohibiting them.
Seven EU member states prohibit the planting of Monsanto the devil 's transgenic corn due to mounting evidence about environmental and economic impacts, and to apply the precautionary principle that stipulates that when impact on human health is unknown precaution is warranted. Polls show that public opposition to transgenics is as high as 61 percent.
Unexpectedly, and not without contradictions, the Mexican federal government denied Monsanto the devil's permit for a pilot project of 100 acres of GM corn in the northeastern state of Sinaloa. Pilot projects are the second regulatory phase, following the experimental phase and preceding commercial production, of the three phases established by the Law of Genetically Modified Organism Biosecurity.
Beginning in October of 2009, a few months after a meeting between Felipe Calderón and Monsanto the devil President Hugh Grant, the federal government approved 29 applications for experimental transgenic corn plots, breaking a decade-long moratorium. Most of the licenses were issued to Monsanto the devil and Dow Agro Science to test corn strains resistant to herbicides and blight on more than a dozen hectares.
Last year, after keeping the sites secret and without adequately disclosing the results of the experimental plantings in violation of the Biosecurity Law, the government accepted 20 more applications from the aforementioned transnationals, plus Syngenta. If all these permits are authorized, there would be more than 1,000 hectares planted with transgenic corn.
The contradictions and waffling in the government's original position to at first deny permits for pilot projects in Sinaloa and then approve the quarter-hectare project in Tamaulipas are probably due to the fast-approaching electoral season – crucial for the ruling party, which will try to avoid the political costs of its decisions. The actions of peasant farmer organizations and the important work of expert groups like the UCCS have played an important role in holding back the mass cultivation of GMOs in Mexico.
Since the end of 2009, The National Union of Regional Autonomous Campesino Organizations (UNORCA) started a campaign with the slogan "No to transgenic corn! Monsanto the devil out of Mexico!" that includes the use of forums, mass media and public spaces to inform debate on GMOs in Mexico. Public forums were held in Navojoa (a few miles from one of the centers of transgenic experimentation), Chilpancingo y Zacatecas. Last year in Guadalajara and Morelia, the forums condemned transgenic corn experimentation as a crime against humanity.
There are now many voices speaking out against the imposition of GMOs: from the UCCS to the city council of Tepoztlán in the southern state of Morelos, which filed a constitutional challenge against the planting of transgenic corn in the country.
Food Sovereignty or Food Dependency?
The national head of UNORCA, Olegario Carrillo, asserts that Mexico doesn't need to embrace Monsanto the devil to regain corn self-sufficiency. Giving in to the transnational's pressure to gain control over Mexico's agro-genetic wealth would mean deepening the debilitating food dependence brought on by NAFTA; food imports already constitute more than 40 percent of what Mexico consumes, according to data from the Chief Auditor of the Federation.
The fundamental problem is not technological, but that the Mexican government lacks policies to promote rural development or goals in domestic food production. The neoliberal regime has chosen to promote imports and support the transnationals that have been taking over the production process.
Monsanto the devil is lying when it implies that its biotechnology can resolve Mexico's food crisis: it is amply documented that transgenics don't increase yields. Transgenic corn strains weren't designed to increase yield. The vast majority of transgenic crops are designed to resist the application of herbicides also manufactured by Monsanto the devil . They actually create more dependency due to the need to buy seed and the contamination of native varieties. They also damage the environment, the economy and human health.
On the other hand, annual corn harvests in Mexico could be doubled if agricultural policy were reformed to support small farmers and to encourage cultivation of more acres in the south and southeast where there is sufficient water. The genetic wealth of Mexican corn could raise production, with farmers saving seed and not required to pay royalties to Monsanto the devil, because the 60 native species and thousands of varieties are adapted to local soils and climates.
Monsanto the devil denies the risk of transgenic contamination of native species, despite evidence that the coexistence of transgenics and biodiversity is impossible. Hiding the truth has been an integral part of Monsanto the devil 's corporate strategies throughout its history, as the company seeks to protect profits at the expense of human health, the environment and general well-being.
The UCCS, based on FAO and UNESCO reports, affirms that transgenics not only do not increase yields, they have the negative impacts of raising agrochemical levels and destroying the soil. These studies also show few or no benefits to poor farmers or consumers. Additionally, GM crops contribute to the climate crisis because they reinforce an oil-dependent agricultural model. Peasant farmer organizations and committed scientists propose an alternative sustainable model, based on conservation of biodiversity, nutrient recycling, crop synergy, conservation of soil and strategic resources (such as water), and incorporating new biotechnologies compatible with sustainable systems.
Scientists have concluded that the Mexican countryside has the resources necessary to guarantee food sovereignty without adopting transgenic technology. According to researcher Antonio Turrent Fernández, small-scale producers, ejido members and communal landowners can play a key role in the production of basic foods and the management of Mexico's diverse genetic resources. But this requires public investment in infrastructure, research, technology transfer and services – that is to say a radical change in the dominant model and budget priorities. It also requires the reinstatement of the moratorium on transgenic corn.
Monday, March 21, 2011
Obama's Missed Opportunities for Economic Change
Monday, March 21, 2011 by Huffington Post
by Robert Kuttner
As spring dawns, the economy's green shoots have been trampled once again, first by the economic fallout from Japan's tsunami, and again by rising worldwide commodity prices.
The disruption of Japan's production revealed the soft underbelly of globalization -- the reliance on vulnerable global supply chains only as strong as their weakest link. Rising food and energy prices produce a toxic stew of inflation and unemployment.
This depressing news, of course, has political as well as economic consequences. Politically, it means that the incumbent party -- Obama's -- faces even tougher going in 2012.
Economically, rising inflation makes it that much harder for the Federal Reserve to keep resorting to very low interest rates to levitate a sick economy. At some point, the Fed's natural inflation-phobia will kick in, even though higher food and energy prices have nothing to do with overheated demand (with unemployment stuck near double digits, demand is still too low, not too high.) But as in the late 1970s, stagnation could turn into stagflation.
And the Republicans in Congress are compounding the crisis of prolonged recession and joblessness by slashing everything in sight -- throwing more people out of work.
Faced with the prospect of having to defend the administration's performance in an economy of still high unemployment, you might think the White House would be doing everything possible to highlight the Republicans' responsibility for the weak economy -- the perverse budget cuts, the unpopular assault on unions, the direct attack on Social Security.
Instead, the president has doubled down on his strategy of "more-bipartisan-than-thou." As the New York Times' Michael Shear wrote in a smart and skeptical piece last week,
Doubling down on bipartisanship did not exactly work in 2010, when the Dems lost 63 House seats, their worst off-year performance in modern times. Because of the Republicans' sheer extremism, it may work to re-elect the president by a narrow margin in 2012 -- but not to rekindle the enthusiasm of the groups that elected him in 2008 as a force for believable change.
Presidential elections are won or lost state by state, and you have to wonder how this strategy will rally economically distressed voters to the Democrats in key swing states like Ohio, Pennsylvania, Michigan, Florida, or even Illinois.
At best, Obama wins narrowly next year, but the Democrats suffer huge losses in the Senate, where the numbers are stacked against them (11 Republicans up, compared to 23 Dems) and gains in the House but not enough to take back control.
There is latent support for a president to lead as the champion of hard-pressed regular people. But Obama keeps passing up the opportunities history deals him.
The Republican assault against public employees in Wisconsin, Ohio, Indiana, and elsewhere produced the largest gain in the approval ratings for unions in decades. By margins of nearly two to one, the public rejects the conclusion that public workers should take pay or benefit cuts to solve fiscal crises.
You wouldn't have expected government employees to be the poster children for broad economic distress, but the effort to blame the recession and the budget crisis on nurses, teachers, cops and firefighters backfired. Regular people saw these workers as their neighbors and fellow members of a beleaguered middle class, not as their oppressors.
You might have expected a Democratic president to seize this teachable moment to point out that the collapse of the economy and of government revenues was caused on Wall Street, not in state capitols or at union bargaining tables. But this president was too busy making amends for the hurt feelings of big business, preparing to unveil the next loophole in enforcement of the Dodd-Frank Act, and sending his fundraising associates to Wall Street with wheelbarrows to collect donations for his campaign.
by Robert Kuttner
As spring dawns, the economy's green shoots have been trampled once again, first by the economic fallout from Japan's tsunami, and again by rising worldwide commodity prices.
The disruption of Japan's production revealed the soft underbelly of globalization -- the reliance on vulnerable global supply chains only as strong as their weakest link. Rising food and energy prices produce a toxic stew of inflation and unemployment.
This depressing news, of course, has political as well as economic consequences. Politically, it means that the incumbent party -- Obama's -- faces even tougher going in 2012.
Economically, rising inflation makes it that much harder for the Federal Reserve to keep resorting to very low interest rates to levitate a sick economy. At some point, the Fed's natural inflation-phobia will kick in, even though higher food and energy prices have nothing to do with overheated demand (with unemployment stuck near double digits, demand is still too low, not too high.) But as in the late 1970s, stagnation could turn into stagflation.
And the Republicans in Congress are compounding the crisis of prolonged recession and joblessness by slashing everything in sight -- throwing more people out of work.
Faced with the prospect of having to defend the administration's performance in an economy of still high unemployment, you might think the White House would be doing everything possible to highlight the Republicans' responsibility for the weak economy -- the perverse budget cuts, the unpopular assault on unions, the direct attack on Social Security.
Instead, the president has doubled down on his strategy of "more-bipartisan-than-thou." As the New York Times' Michael Shear wrote in a smart and skeptical piece last week,
"As they prepare to wage political war against President Obama, the potential 2012 Republican candidates are doing everything they can to draw sharp distinctions with him.This must be occurring in a parallel universe somewhere. Republican collaboration with Obama is certainly not happening on earth. The president and his political advisers are evidently gambling that as the Republican budgeters and GOP presidential contenders grow more reckless and more extreme, he will just look more reasonable and more presidential.
But Mr. Obama isn't cooperating.
Rather than emphasize his differences with potential Oval Office rivals or Republican adversaries on Capitol Hill, the president is taking every opportunity he can to embrace members of the other party as co-conspirators in his efforts to confront the country's challenges.
According to Mr. Obama, the two parties have cooperated -- or are showing signs of being willing to work together -- on education reform, tax cuts, energy security, economic growth and potential changes to an entitlement system that has become a drain on the nation's budget."
Doubling down on bipartisanship did not exactly work in 2010, when the Dems lost 63 House seats, their worst off-year performance in modern times. Because of the Republicans' sheer extremism, it may work to re-elect the president by a narrow margin in 2012 -- but not to rekindle the enthusiasm of the groups that elected him in 2008 as a force for believable change.
Presidential elections are won or lost state by state, and you have to wonder how this strategy will rally economically distressed voters to the Democrats in key swing states like Ohio, Pennsylvania, Michigan, Florida, or even Illinois.
At best, Obama wins narrowly next year, but the Democrats suffer huge losses in the Senate, where the numbers are stacked against them (11 Republicans up, compared to 23 Dems) and gains in the House but not enough to take back control.
There is latent support for a president to lead as the champion of hard-pressed regular people. But Obama keeps passing up the opportunities history deals him.
The Republican assault against public employees in Wisconsin, Ohio, Indiana, and elsewhere produced the largest gain in the approval ratings for unions in decades. By margins of nearly two to one, the public rejects the conclusion that public workers should take pay or benefit cuts to solve fiscal crises.
You wouldn't have expected government employees to be the poster children for broad economic distress, but the effort to blame the recession and the budget crisis on nurses, teachers, cops and firefighters backfired. Regular people saw these workers as their neighbors and fellow members of a beleaguered middle class, not as their oppressors.
You might have expected a Democratic president to seize this teachable moment to point out that the collapse of the economy and of government revenues was caused on Wall Street, not in state capitols or at union bargaining tables. But this president was too busy making amends for the hurt feelings of big business, preparing to unveil the next loophole in enforcement of the Dodd-Frank Act, and sending his fundraising associates to Wall Street with wheelbarrows to collect donations for his campaign.
Monday, January 24, 2011
Food speculation: 'People die from hunger while banks make a killing on food'
It's not just bad harvests and climate change – it's also speculators that are behind record prices. And it's the planet's poorest who pay
John Vidal
The Observer, Sunday 23 January 2011
Just under three years ago, people in the village of Gumbi in western Malawi went unexpectedly hungry. Not like Europeans do if they miss a meal or two, but that deep, gnawing hunger that prevents sleep and dulls the senses when there has been no food for weeks.
Oddly, there had been no drought, the usual cause of malnutrition and hunger in southern Africa, and there was plenty of food in the markets. For no obvious reason the price of staple foods such as maize and rice nearly doubled in a few months. Unusually, too, there was no evidence that the local merchants were hoarding food. It was the same story in 100 other developing countries. There were food riots in more than 20 countries and governments had to ban food exports and subsidise staples heavily.
The explanation offered by the UN and food experts was that a "perfect storm" of natural and human factors had combined to hyper-inflate prices. US farmers, UN agencies said, had taken millions of acres of land out of production to grow biofuels for vehicles, oil and fertiliser prices had risen steeply, the Chinese were shifting to meat-eating from a vegetarian diet, and climate-change linked droughts were affecting major crop-growing areas. The UN said that an extra 75m people became malnourished because of the price rises.
But a new theory is emerging among traders and economists. The same banks, hedge funds and financiers whose speculation on the global money markets caused the sub-prime mortgage crisis are thought to be causing food prices to yo-yo and inflate. The charge against them is that by taking advantage of the deregulation of global commodity markets they are making billions from speculating on food and causing misery around the world.
As food prices soar again to beyond 2008 levels, it becomes clear that everyone is now being affected. Food prices are now rising by up to 10% a year in Britain and Europe. What is more, says the UN, prices can be expected to rise at least 40% in the next decade.
There has always been modest, even welcome, speculation in food prices and it traditionally worked like this. Farmer X protected himself against climatic or other risks by "hedging", or agreeing to sell his crop in advance of the harvest to Trader Y. This guaranteed him a price, and allowed him to plan ahead and invest further, and it allowed Trader Y to profit, too. In a bad year, Farmer X got a good return but in a good year Trader Y did better.
When this process of "hedging" was tightly regulated, it worked well enough. The price of real food on the real world market was still set by the real forces of supply and demand.
But all that changed in the mid-1990s. Then, following heavy lobbying by banks, hedge funds and free market politicians in the US and Britain, the regulations on commodity markets were steadily abolished. Contracts to buy and sell foods were turned into "derivatives" that could be bought and sold among traders who had nothing to do with agriculture. In effect a new, unreal market in "food speculation" was born. Cocoa, fruit juices, sugar, staples, meat and coffee are all now global commodities, along with oil, gold and metals. Then in 2006 came the US sub-prime disaster and banks and traders stampeded to move billions of dollars in pension funds and equities into safe commodities, and especially foods.
"We first became aware of this [food speculation] in 2006. It didn't seem like a big factor then. But in 2007/8 it really spiked up," said Mike Masters, fund manager at Masters Capital Management, who testified to the US Senate in 2008 that speculation was driving up global food prices. "When you looked at the flows there was strong evidence. I know a lot of traders and they confirmed what was happening. Most of the business is now speculation – I would say 70-80%."
Masters says the markets are now heavily distorted by investment banks: "Let's say news comes about bad crops and rain somewhere. Normally the price would rise about $1 [a bushel]. [But] when you have a 70-80% speculative market it goes up $2-3 to account for the extra costs. It adds to the volatility. It will end badly as all Wall Street fads do. It's going to blow up."
The speculative food market is truly vast, agrees Hilda Ochoa-Brillembourg, president of the Strategic Investment Group in New York. She estimates speculative demand for commodity futures has increased since 2008 by 40-80% in agricultural futures.
But the speculation is not just in staple foods. Last year, London hedge fund Armajaro bought 240,000 tonnes, or more than 7%, of the world's stocks of cocoa beans, helping to drive chocolate to its highest price in 33 years. Meanwhile, the price of coffee shot up 20% in just three days as a direct result of hedge funds betting on the price of coffee falling.
Olivier de Schutter, UN rapporteur on the right to food, is in no doubt that speculators are behind the surging prices. "Prices of wheat, maize and rice have increased very significantly but this is not linked to low stock levels or harvests, but rather to traders reacting to information and speculating on the markets," he says.
"People die from hunger while the banks make a killing from betting on food," says Deborah Doane, director of the World Development Movement in London.
The UN Food and Agriculture Organisation remains diplomatically non-committal,saying, in June, that: "Apart from actual changes in supply and demand of some commodities, the upward swing might also have been amplified by speculation in organised future markets."
The UN is backed by Ann Berg, one of the world's most experienced futures traders. She argues that differentiating between commodities futures markets and commodity-related investments in agriculture is impossible.
"There is no way of knowing exactly [what is happening]. We had the housing bubble and the credit default. The commodities market is another lucrative playing field [where] traders take a fee. It's a sensitive issue. [Some] countries buy direct from the markets. As a friend of mine says: 'What for a poor man is a crust, for a rich man is a securitised asset class.'"
John Vidal
The Observer, Sunday 23 January 2011
Just under three years ago, people in the village of Gumbi in western Malawi went unexpectedly hungry. Not like Europeans do if they miss a meal or two, but that deep, gnawing hunger that prevents sleep and dulls the senses when there has been no food for weeks.
Oddly, there had been no drought, the usual cause of malnutrition and hunger in southern Africa, and there was plenty of food in the markets. For no obvious reason the price of staple foods such as maize and rice nearly doubled in a few months. Unusually, too, there was no evidence that the local merchants were hoarding food. It was the same story in 100 other developing countries. There were food riots in more than 20 countries and governments had to ban food exports and subsidise staples heavily.
The explanation offered by the UN and food experts was that a "perfect storm" of natural and human factors had combined to hyper-inflate prices. US farmers, UN agencies said, had taken millions of acres of land out of production to grow biofuels for vehicles, oil and fertiliser prices had risen steeply, the Chinese were shifting to meat-eating from a vegetarian diet, and climate-change linked droughts were affecting major crop-growing areas. The UN said that an extra 75m people became malnourished because of the price rises.
But a new theory is emerging among traders and economists. The same banks, hedge funds and financiers whose speculation on the global money markets caused the sub-prime mortgage crisis are thought to be causing food prices to yo-yo and inflate. The charge against them is that by taking advantage of the deregulation of global commodity markets they are making billions from speculating on food and causing misery around the world.
As food prices soar again to beyond 2008 levels, it becomes clear that everyone is now being affected. Food prices are now rising by up to 10% a year in Britain and Europe. What is more, says the UN, prices can be expected to rise at least 40% in the next decade.
There has always been modest, even welcome, speculation in food prices and it traditionally worked like this. Farmer X protected himself against climatic or other risks by "hedging", or agreeing to sell his crop in advance of the harvest to Trader Y. This guaranteed him a price, and allowed him to plan ahead and invest further, and it allowed Trader Y to profit, too. In a bad year, Farmer X got a good return but in a good year Trader Y did better.
When this process of "hedging" was tightly regulated, it worked well enough. The price of real food on the real world market was still set by the real forces of supply and demand.
But all that changed in the mid-1990s. Then, following heavy lobbying by banks, hedge funds and free market politicians in the US and Britain, the regulations on commodity markets were steadily abolished. Contracts to buy and sell foods were turned into "derivatives" that could be bought and sold among traders who had nothing to do with agriculture. In effect a new, unreal market in "food speculation" was born. Cocoa, fruit juices, sugar, staples, meat and coffee are all now global commodities, along with oil, gold and metals. Then in 2006 came the US sub-prime disaster and banks and traders stampeded to move billions of dollars in pension funds and equities into safe commodities, and especially foods.
"We first became aware of this [food speculation] in 2006. It didn't seem like a big factor then. But in 2007/8 it really spiked up," said Mike Masters, fund manager at Masters Capital Management, who testified to the US Senate in 2008 that speculation was driving up global food prices. "When you looked at the flows there was strong evidence. I know a lot of traders and they confirmed what was happening. Most of the business is now speculation – I would say 70-80%."
Masters says the markets are now heavily distorted by investment banks: "Let's say news comes about bad crops and rain somewhere. Normally the price would rise about $1 [a bushel]. [But] when you have a 70-80% speculative market it goes up $2-3 to account for the extra costs. It adds to the volatility. It will end badly as all Wall Street fads do. It's going to blow up."
The speculative food market is truly vast, agrees Hilda Ochoa-Brillembourg, president of the Strategic Investment Group in New York. She estimates speculative demand for commodity futures has increased since 2008 by 40-80% in agricultural futures.
But the speculation is not just in staple foods. Last year, London hedge fund Armajaro bought 240,000 tonnes, or more than 7%, of the world's stocks of cocoa beans, helping to drive chocolate to its highest price in 33 years. Meanwhile, the price of coffee shot up 20% in just three days as a direct result of hedge funds betting on the price of coffee falling.
Olivier de Schutter, UN rapporteur on the right to food, is in no doubt that speculators are behind the surging prices. "Prices of wheat, maize and rice have increased very significantly but this is not linked to low stock levels or harvests, but rather to traders reacting to information and speculating on the markets," he says.
"People die from hunger while the banks make a killing from betting on food," says Deborah Doane, director of the World Development Movement in London.
The UN Food and Agriculture Organisation remains diplomatically non-committal,saying, in June, that: "Apart from actual changes in supply and demand of some commodities, the upward swing might also have been amplified by speculation in organised future markets."
The UN is backed by Ann Berg, one of the world's most experienced futures traders. She argues that differentiating between commodities futures markets and commodity-related investments in agriculture is impossible.
"There is no way of knowing exactly [what is happening]. We had the housing bubble and the credit default. The commodities market is another lucrative playing field [where] traders take a fee. It's a sensitive issue. [Some] countries buy direct from the markets. As a friend of mine says: 'What for a poor man is a crust, for a rich man is a securitised asset class.'"
Thursday, January 13, 2011
Jobless claims jump, wholesale food costs surge
By Pedro Nicolaci da Costa
WASHINGTON | Thu Jan 13, 2011
WASHINGTON (Reuters) - Jobless claims jumped to their highest level since October last week while food and energy costs lifted producer prices in December, pointing to headwinds for an economy that has shown fresh vigor.
However, a surge in exports to their highest level in two years, which included record sales to China, helped narrow the U.S. trade deficit in November, an encouraging sign for fourth-quarter economic growth.
Federal Reserve Chairman Ben Bernanke said he was hopeful about the recent improvement in the outlook, saying he now expects the economy to expand between 3 percent and 4 percent this year.
"That's not going to reduce unemployment at the pace we'd like it to, but certainly it would be good to see the economy growing," Bernanke said at a conference on small business sponsored by the Federal Deposit Insurance Corp.
Back in November, the Fed's estimates for 2011 were in a range of 3 percent to 3.6 percent.
"I think deflation risk has receded considerably and so we're moving in the right direction," Bernanke added.
Still, the data on Thursday showed just how torturous the economy's path to recovery would be.
The number of Americans filing for first-time unemployment benefits rose unexpectedly to 445,000 from 410,000 in the prior week, a Labor Department report showed. It was the biggest one-week jump in about six months and confounded analyst forecasts for a small drop to 405,000.
The jobs figures weighed on U.S. stocks and boosted government bonds, which were also benefiting from concerns about Europe's debt struggles.
"The jobless number highlights the patchy recovery we've seen in the job market and reinforces that it will be a slow process bringing down the jobless rate," said Omer Esiner, market analyst at Commonwealth Foreign Exchange in Washington.
The rebound in benefit claims came in the wake of the holidays, which may have hindered new applications and created a backlog. Claims, which peaked around 650,000 in April of 2009, had been on a downward trajectory, dipping below 400,000 for the first time in two years during the week of Christmas.
The four-week moving average of new claims, which strips out short-term volatility, rose by 5,500 last week to 416,500.
A separate report from the Philadelphia Federal Reserve Bank showed factory activity in the U.S. Mid-Atlantic region accelerated less in December than originally reported.
WHOLESALE STICKER SHOCK
Though underlying inflation trends remain tame in the United States, food and energy costs were rising briskly at the wholesale level as 2010 drew to a close.
U.S. producer prices climbed 1.1 percent in December after a 0.8 percent rise in November, according to another Labor Department report. Economists had been looking for a repeat of that 0.8 percent advance in December. For the year as a whole, the PPI index was up 4 percent.
Inflation excluding food and energy, however, rose just 0.2 percent, in line with forecasts. That left the year-on-year gain in core producer prices at 1.3 percent, just below analyst estimates, helping tame inflation fears.
The rising prices producers receive ultimately could put upward pressure on retail prices, acting like a tax on consumers that could slow growth. Up to now, companies have not been able to pass increasing costs onto consumers because of weak demand, but that too has consequences.
"Eventually this means corporate profits could be squeezed," said Robert Dye, senior economist at PNC Financial Services in Pittsburgh.
A recent spike in global food costs has raised fears of a crisis in the poorer corners of the developing world.
World food prices hit a record high last month, outstripping the levels that sparked riots in several countries in 2008, and key grains could rise further, the United Nations' food agency said recently.
TOUGH SELL
On a more positive note, the U.S. trade gap narrowed to $38.3 billion in November from $38.4 billion in October, the Commerce Department reported. Analysts had expected it to widen to $40.5 billion.
November's deficit was the slimmest since January 2010. Exports totaled $159.6 billion, the highest since August 2008 -- just weeks before the bankruptcy of Lehman Brothers touched off a trade-crushing global panic.
Exports to China in November totaled a record $9.5 billion. Still, they were swamped by rising imports that pushed the politically touchy U.S. shortfall with China to $25.63 billion.
Chinese President Hu Jintao meets with President Barack Obama in Washington next week, and trade issues -- and what the United States calls China's "substantially undervalued" exchange rate -- will be high on the agenda.
The split between weak underlying inflation and high food and energy prices makes it harder for Federal Reserve officials to argue publicly that inflation is not a threat. A fear of inflation being too low has underpinned the Fed's efforts to support the economy by purchasing government bonds.
Another key factor is the bleak jobs picture, not helped by the Labor Department data.
The number of Americans who continued to claim benefits after an initial week of aid did retreat sharply to 3.88 million from 4.13 million, offering some reason for hope.
Still, the total number of Americans on benefit rolls, including those receiving extended benefits under emergency government programs, jumped to 9.19 million from 8.77 million.
WASHINGTON | Thu Jan 13, 2011
WASHINGTON (Reuters) - Jobless claims jumped to their highest level since October last week while food and energy costs lifted producer prices in December, pointing to headwinds for an economy that has shown fresh vigor.
However, a surge in exports to their highest level in two years, which included record sales to China, helped narrow the U.S. trade deficit in November, an encouraging sign for fourth-quarter economic growth.
Federal Reserve Chairman Ben Bernanke said he was hopeful about the recent improvement in the outlook, saying he now expects the economy to expand between 3 percent and 4 percent this year.
"That's not going to reduce unemployment at the pace we'd like it to, but certainly it would be good to see the economy growing," Bernanke said at a conference on small business sponsored by the Federal Deposit Insurance Corp.
Back in November, the Fed's estimates for 2011 were in a range of 3 percent to 3.6 percent.
"I think deflation risk has receded considerably and so we're moving in the right direction," Bernanke added.
Still, the data on Thursday showed just how torturous the economy's path to recovery would be.
The number of Americans filing for first-time unemployment benefits rose unexpectedly to 445,000 from 410,000 in the prior week, a Labor Department report showed. It was the biggest one-week jump in about six months and confounded analyst forecasts for a small drop to 405,000.
The jobs figures weighed on U.S. stocks and boosted government bonds, which were also benefiting from concerns about Europe's debt struggles.
"The jobless number highlights the patchy recovery we've seen in the job market and reinforces that it will be a slow process bringing down the jobless rate," said Omer Esiner, market analyst at Commonwealth Foreign Exchange in Washington.
The rebound in benefit claims came in the wake of the holidays, which may have hindered new applications and created a backlog. Claims, which peaked around 650,000 in April of 2009, had been on a downward trajectory, dipping below 400,000 for the first time in two years during the week of Christmas.
The four-week moving average of new claims, which strips out short-term volatility, rose by 5,500 last week to 416,500.
A separate report from the Philadelphia Federal Reserve Bank showed factory activity in the U.S. Mid-Atlantic region accelerated less in December than originally reported.
WHOLESALE STICKER SHOCK
Though underlying inflation trends remain tame in the United States, food and energy costs were rising briskly at the wholesale level as 2010 drew to a close.
U.S. producer prices climbed 1.1 percent in December after a 0.8 percent rise in November, according to another Labor Department report. Economists had been looking for a repeat of that 0.8 percent advance in December. For the year as a whole, the PPI index was up 4 percent.
Inflation excluding food and energy, however, rose just 0.2 percent, in line with forecasts. That left the year-on-year gain in core producer prices at 1.3 percent, just below analyst estimates, helping tame inflation fears.
The rising prices producers receive ultimately could put upward pressure on retail prices, acting like a tax on consumers that could slow growth. Up to now, companies have not been able to pass increasing costs onto consumers because of weak demand, but that too has consequences.
"Eventually this means corporate profits could be squeezed," said Robert Dye, senior economist at PNC Financial Services in Pittsburgh.
A recent spike in global food costs has raised fears of a crisis in the poorer corners of the developing world.
World food prices hit a record high last month, outstripping the levels that sparked riots in several countries in 2008, and key grains could rise further, the United Nations' food agency said recently.
TOUGH SELL
On a more positive note, the U.S. trade gap narrowed to $38.3 billion in November from $38.4 billion in October, the Commerce Department reported. Analysts had expected it to widen to $40.5 billion.
November's deficit was the slimmest since January 2010. Exports totaled $159.6 billion, the highest since August 2008 -- just weeks before the bankruptcy of Lehman Brothers touched off a trade-crushing global panic.
Exports to China in November totaled a record $9.5 billion. Still, they were swamped by rising imports that pushed the politically touchy U.S. shortfall with China to $25.63 billion.
Chinese President Hu Jintao meets with President Barack Obama in Washington next week, and trade issues -- and what the United States calls China's "substantially undervalued" exchange rate -- will be high on the agenda.
The split between weak underlying inflation and high food and energy prices makes it harder for Federal Reserve officials to argue publicly that inflation is not a threat. A fear of inflation being too low has underpinned the Fed's efforts to support the economy by purchasing government bonds.
Another key factor is the bleak jobs picture, not helped by the Labor Department data.
The number of Americans who continued to claim benefits after an initial week of aid did retreat sharply to 3.88 million from 4.13 million, offering some reason for hope.
Still, the total number of Americans on benefit rolls, including those receiving extended benefits under emergency government programs, jumped to 9.19 million from 8.77 million.
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