Abstract
The US food regime maintained some degree of stability in terms of prices and production levels for commodities in the world economy. This food regime, resting on supply management policy, began to falter in the early 1970s. In the late-1980s and 1990s, notable changes occurred in the world economy regarding agriculture as the food regime became more market-oriented. The end of the twentieth century saw the breakdown of many institutions, organizations, and international agreements that had tried to stabilize prices and production from 1945 to 1975. This paper examines this period of change (roughly 1960–2010) and explores the effects on five commodities: cocoa, coffee, corn, soybeans, and wheat. These commodities offer important points of comparison. First, while cocoa, coffee, and wheat were regulated by international organizations and agreements, corn and soybeans were not. Second, the US dominated the international corn and soybean markets, but the cocoa, coffee, and wheat markets were much more competitive. And third, corn, soybeans, and wheat were commodities largely produced in the core of the world economy, while cocoa and coffee were produced in the periphery. Thus, comparing the effect of the fall of the US food regime on these commodities reveals the importance of previous regulation, the level of market competition, and geographic origin in the world economy.
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Notes
The full period of the analysis is about 1947–2010, which covers the rise and fall of the US food regime. The shift in the food regime occurred in the early- to mid-1970s, as the regime began to falter (Friedmann 1982). Since we are especially interested in this period of change, we focus on the period 1960–2010. Additionally, our data on world commodity prices comes from the World Bank and extends back to only 1960.
Friedmann (1983) bases the emergence of the first food regime on the formation of a world wheat market, particularly in the coordination of prices. By contrast, Winders (2009b) bases the emergence of the regime on when the national and international policies forming the basis for free trade in agriculture took hold (e.g., the Anglo-French Treaty of 1860). Thus, one view focuses on market structures while the other focuses on economic policies.
Although, Winders (2009a) shows that the gradual retrenchment of supply management policy in the US began in 1954 and continued through the early 2000s.
In this respect, we see food regimes as connected to cycles of hegemony in the world economy. Friedmann (2009, p. 338), for example, points out the fundamental connection between financial crises and crises of hegemony, and she poses the question, “If the international monetary system is not stabilized, can there be any food regime?”
Polanyi’s (1957) discussion of shifts between international regimes of free trade and state regulation helps to shed light on the process through which regimes take shape and change. In particular, the extent and kind of state intervention—whether assuming the form of national regulation or neoliberal policies supporting laissez faire market self-regulation—calls forth forces that push in the opposite direction. On the one hand, Polanyi notes that attempts to achieve the utopian “orthodox” free market eventually wreak havoc on society as well as on nature. As a result, movements opposing free market forces attempt to protect people and land to contain the destruction created by the market. On the other hand, “self-protection against the market limits the maneuver and, therefore, short-term profitability of capital” (Friedmann 1995, p. 15). This likewise creates opposition that seeks a change in the extent of state intervention. Therefore, opposition emerges within food regimes regardless of whether the regimes are oriented toward markets or regulation. This is the essence of Polanyi’s double movement.
In the US, for example, production controls and price supports rested on “base acreage,” which restricted eligibility for subsidies and acreage allotments for particular commodities based on the farm’s historical production patterns. To maintain a steady base acreage for wheat, for example, a farm generally had to continue growing wheat. This helped to ensure fairly stable production levels, notwithstanding variability due to weather, etc.
Finlayson and Zacher (1983, p. 386) note that six international commodity agreements were formulated, “for tin, sugar, coffee, cocoa, natural rubber and wheat.” Fridell (2007) suggests that cotton and wool also had commodity agreements. Certainly, international organizations existed to help coordinate markets for cotton (Quark 2013) and wool.
Real prices (controlling for inflation) for these commodities declined steadily between 1960 and 1970. However, despite the relatively steady decline, trends in real prices for these commodities were devoid of sharp fluctuations.
There have since been several wheat agreements, but they have not entailed the kind of regulations seen before 1970.
Pendergrast (1999, p. 363) argues that the decline of the Cold War also affected the desire of the US to sign a new ICA, as the US became less concerned about the political repercussions of economic instability in Latin America.
For an extensive discussion of the history and politics of US agricultural policy, including the FAIR Act, see Winders (2009a).
Jaffee (2007, p. 48) points out the long-term decline in prices during part of this period: “Between 1980 and 2000, world prices for eighteen major export commodities fell by 25 % in real terms; the most dramatic declines occurred in sugar (for which the price fell by 77 %), cocoa (71 %), rice (61 %), and coffee (64 %).”
We considered using a slightly different time period for coffee, 1971–1988, to correspond with the end of the ICA, which theoretically would have affected coffee prices. For this period (1971–1988), coffee prices showed an average annual variation of 23.3 % for Robusta and 24.4 % for Arabica. And using 1989–2010 for the final period, the average annual price variation for Robusta was 25.1 % and for Arabica was 22.5 %. We chose to use the same periodization for coffee as for the other commodities for the sake of clarity and ease of comparison.
Consider for a moment an observation by Finlayson and Zacher (1983, p. 414): “As far as consuming countries are concerned, the matter which most affects their support for an ICA (international commodity agreement) is their ‘political’ concern to assist the LDC (less developed country) producers. While some do hope ICAs will prevent undesirable market fluctuations, they generally see little gain in these accords for themselves.” It is safe to assume that this was not true of what motivated wheat-consuming countries to participate in the IWA. These differing motives suggest different positions of power.
Finlayson and Zacher (1983, p. 400) describe the voting structure set forth in 1973: “Importing and exporting members each had 1000 votes; the first 100 were divided equally between members of each group, and the remaining 900 were apportioned according to basic quotas in the case of exporters and import levels over 1969–1971 in the case of importers.” Under this system, the US would have had about 230 votes.
By contrast, there were a number of economic and political levers that the US could use with other countries—even countries such as Canada—to compel a country to adhere to the IWA. Such levers were generally not available to Ghana or other cocoa-producing countries in the 1970s to compel the US to succumb to the interests of cocoa producers. It might be worth reminding ourselves that many cocoa-producing countries had only recently gained independence from European colonizers: Cameroon, 1960; Cote d’Ivoire, 1960; Ghana, 1957; and Nigeria, 1960. The relative strength and influence of these states in international relations compared to the US or European countries should be considered.
Stiglitz (2002, p. 12, emphasis in original) notes that “the IMF was based on the recognition that markets often did not work well… and that there was a need for collective action at the global level for economic stability.” Therefore, from 1944 to the early 1970s, the strategies and goals of the IMF mirrored those of international commodity agreements and supply management: stabilize and coordinate the market and ensure adequate demand. Beginning in the mid-1970s, the goals and policies of the IMF changed to reflect the emerging neoliberalism that would dominate the last third of the twentieth century.
Abbreviations
- CAP:
-
Common Agricultural Policy
- FAIR Act:
-
Federal Agriculture Improvement and Reform Act
- GATT:
-
General Agreement on Tariffs and Trade
- ICA:
-
International Coffee Agreement
- ICCA:
-
International Cocoa Agreement
- IMF:
-
International Monetary Fund
- IWA:
-
International Wheat Agreement
- NAFTA:
-
North American Free Trade Agreement
- WTO:
-
World Trade Organization
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We appreciate comments from Rick Rubinson, as well as the careful reading and comments by the anonymous reviewers.
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Winders, B., Heslin, A., Ross, G. et al. Life after the regime: market instability with the fall of the US food regime. Agric Hum Values 33, 73–88 (2016). https://doi.org/10.1007/s10460-015-9596-9
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DOI: https://doi.org/10.1007/s10460-015-9596-9