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Contract farming is everywhere, but how does it affect agrarian relations in the Global South?

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Contemporary debates in agrarian studies have been predominantly focused on land and property issues, at times to the detriment of questions about production and exchange. The large and expanding footprint of contract farming is one example of a relatively neglected – yet significant – dimension of contemporary agricultural systems in the Global South. Farming contracts are one of many forms of coordinating production and exchange that seek to avoid the uncertainty for producers and buyers of finding each other more spontaneously in open markets. Contract farming involves a non-transferable agreement between farmers and buyers that specifies the terms of production and marketing, typically relating to the price, quantity, quality and delivery of the product.

Decades of research and case studies suggest that contract farming is widespread in local, domestic and export-oriented agricultural commodity markets, both linked to large multinational corporate buyers, as well as within the informal networks of small-scale traders. Research on contract farming in the Global South consistently attributes this expansion to two intertwined effects: one is the liberalization of agriculture due to structural adjustments that stripped states from their coordinating roles in production. The other is the active promotion of contract farming by multilateral development agencies, who proposed it as a win-win alternative after the demise of state-led coordination.

International organizations, governments and agribusinesses have promoted contract farming as key tool to integrate smallholders into markets and modernize agricultural sectors. Contract farming is hailed as a source of jobs, income and stable markets for smallholders, and for providing a stable supply base and profits to agribusiness. However, whether contract farming actually does lead to win-win outcomes remains highly contested. Political economy studies reveal that unequal power relationships are inherent to contract farming arrangements, demonstrating that (i) buyers tend to benefit more than smallholders, (ii) not all producers benefit equally (small producers are highly differentiated and many hire labor), and (iii) many smallholders actually lose out from these schemes as they bear the brunt of production risks and enter vicious cycles of indebtedness. As a result, we often see a mosaic of winners and losers.

 

Contract farming, an avenue for rural development?

Since the 1990s, international organizations such as the FAO and the World Bank have been promoting contract farming as a tool for inclusive growth in rural areas. Responding to criticisms that these arrangements tend to disproportionately benefit buyers and may expose small producers to indebtedness and impoverishment, international organizations have put their weight behind the promotion of “fair contracts” and better governance and transparency in contractual arrangements.    However, political economy studies still question this rebranding of contract farming as an inclusive business model by showing how “fair contracts” focus solely on the unequal power relations between small producers and agribusinesses, while missing the range of inequalities that exist among and between farmers, agricultural workers, unpaid household labor and those who provide ancillary services to small-scale producers. Moreover, many contract farming schemes rely on monopsony power, often leaving producers unable to renegotiate or withdraw from contracts, let alone benefit from price spikes. The monopsony position of the contracting firm refers to a situation where it is the only buyer of the crops produced by the contract farmers. This gives the contracting company exclusive access to the crops of the contract farmers.

 

Supermarkets, food multinationals and small traders: the new cast of actors in contract farming

With the ongoing restructuring of the global food system, contract farming and a cast of new actors have come to the fore. On the one hand, corporate buyers are expanding their customer base and sourcing geographies. For these actors, contract farming arrangements are a way to ensure standardized and steady supply of agricultural commodities in globalized markets. Most notably, supermarkets make use of contract farming arrangements to supply high quality and standardized vegetables and fruits to consumers around the world. Even though smallholders who are able to comply with the standards set by supermarkets tend to benefit from supermarket contracts, poorer farming households tend to benefit less and may even be excluded from such arrangements altogether.

On the other hand, specialist traders and local procurers increasingly use contract farming (both formally and informally, i.e. with and without written contracts) to source directly from smallholders or act on commission as intermediaries between smallholders and agribusinesses. In the absence of government support, these intermediaries may take on a seemingly developmental role by offering informal extension services, providing road infrastructure and loading necessary materials and machineries to smallholders.

 

Agency and resistance

Despite the uneven contribution of contract farming to rural development and productive upgrading for small scale producers and agricultural sectors of the Global South, political economy studies highlight that smallholders are not passive victims of corporate buyers and merchants (whether large or small), but often resist and challenge the contract farming relation. This may take the form of overt resistance through protests and strikes, but also of informal and often hidden strategies that take the form of everyday struggles. For example, oil palm contract farmers in the Philippines have reacted to a lopsided contract, unsustainable levels of indebtedness, and the risk of losing their land by side-selling their produce to other agribusinesses, refusing to harvest, or burning oil palm trees. Tobacco contract farmers in Zimbabwe have responded by switching to other crops or diversifying their sources of finance. However, both cases show that contract farmers’ agency and resistance is limited by available resources and alternatives.

 

Towards a new research agenda

Over the past three decades, political economy studies have contributed to a much better understanding of the differentiated impact of contract farming in the Global South. Yet, important questions remain. For example about the interface of contract farming and changes in land tenure; the prevalence of unpaid household labor and the exploitation of hired labor among small-scale producers; contract farming as a form of extractivism (of the resources and labor contained in the commodity); and the ecological burden of the expansion and intensification of agriculture associated with contract farming. To move towards this new contract farming research agenda, we have founded the Contract Farming Initiative, a network that brings together a diverse group of critical contract farming scholars and activists. The initiative is geared to support cross-country analyses of contract farming schemes. As one of our first tasks, we are mapping contract farming arrangements in the Global South to get an overview of where contract farming scholarship is concentrated and where more research is needed. We warmly invite other scholars to contribute to this project.

As part of our activities this year, we will host a panel at the EADI CEsA General Conference 2023 to bring together scholars from different geographies and critical perspectives to discuss contract farming’s potential for rural development by focusing on dynamics of financialization, resistance from smallholders, social differentiation as both a cause and outcome, and labor exploitation dynamics.

This article was first published on EADI’s blog, Debating Development Research.

Opinions expressed in Bliss posts reflect solely the views of the author of the post in question.

About the authors:

Caroline Hambloch (Humboldt-Universität zu Berlin), Mark Vicol (Assistant Professor, Rural Sociology Group, Wageningen University) and Helena Pérez Niño (Assistant Professor, International Institute of Social Studies, The Hague) are co-editors of the recent special issue in the Journal of Agrarian Change The Political Economy of Contract Farming: Emerging Insights and Changing Dynamics (January, 2022), and co-founders of the Contract Farming Initiative research network.

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Food saving: too good not to commodify

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Food saving apps like “Karma” and “Too Good to Go” promise to reduce greenhouse gas emissions while providing affordable take-out meals – but what does the commodification of food saving really entail?

As a university student living in a country with high living costs such as Sweden, where even a conventional cucumber can cost you 2 Euros, you have to figure out how to get your hands on cheap or free food pretty quickly. For me, dumpster diving, as well as taking home the left-overs of the local student pub where I volunteer as a cook, does the trick. Friends unwilling to climb into dumpsters prefer food-saving apps like „Too Good To Go“ (TGTG) or „Karma“.

These apps promise a win-win-win-win situation: restaurants can make money off food they would normally have not been able to sell, customers get good food at a discount price, the apps take a percentage of the revenue, and lastly, food waste and its negative effects on the climate are reduced.

“Radical Slacktivism” marketing campaign by for-profit food saving app Karma. Source: karma.life.

These apps never captured my interest – after all, I already have my bases covered, and really do not need another app to clutter my home screen and divert my attention. Yet that changed when a fellow climate activist drew my attention to Karma’s “radical slacktivist” marketing campaign.

The campaign accuses the climate movement of being judgemental and engaging in “doomsday storytelling”. Instead – they argued – by using Karma you can save the world in a fun way, simply by downloading an app and eating food: how cool is that?

Reducing food waste clearly is an important step in achieving climate goals: the Karma company itself mentions that food waste is responsible for 6% of global greenhouse emissions. But food waste is generated at every stage of the supply chain, from agricultural production to domestic consumption, and it is not entirely clear what share food waste from restaurants makes up. Karma suggesting that combating food waste in restaurants will “save the world” is therefore not only wrong, but also obscures the wider parts of the problem.

“Radical Slacktivism” marketing campaign by for-profit food saving app Karma. Source: karma.life.

It may very well be that “Karma” is simply using this offensive campaign to generate controversy, hoping to achieve more publicity and recognition this way. However, the campaign’s message – just use our app, and don’t bother with the climate movement – reveals a deeper problem: Karma proposes a technological fix to food waste, and ultimately becomes invested in upholding the status quo in order to keep profiting off the overproduction of food. This eco-modernist narrative not only shifts the focus from systemic change (which the “judgmental” climate activists demand) to individual consumption under a “green growth” capitalism – it also appropriates the ideas of pleasure activism, which is an emerging strategy pioneered by black and brown peoples. Pleasure activism seeks to make the struggle for justice and liberation a pleasurable experience, and connecting through food is an important part of it.

The idea to work with businesses to prevent food waste is not new either, however until the emergence of apps like TGTG and Karma, this took place largely outside the capitalist system. Volunteers would pick up food from individuals, retailers and producers, and distribute it for free, or use it themselves. A platform for facilitating this, foodsharing.de, was founded in 2012, and nowadays is also organized through an app. However, by selling food that would otherwise end up in the trash, the for-profit apps have commodified food saving, assigning an exchange value to food that would have otherwise been considered waste.

Interestingly, it is the CEO of Karma, Hjalmar Ståhlberg Nordegren himself who has called into question the business model of its competitors, by criticizing them for incentivising overproduction. TGTG, which sells mystery bags that can be bought days in advance, has admitted to calling businesses informing that any left-overs they have at a specific time, would be very likely to sell via the app. This may very well tempt businesses to produce a surplus to be sold at discounted, but still profitable prices.

Karma meanwhile requires businesses to upload the exact products that they have left over, which they hope will allow them to devise an algorithm that can alert businesses ahead of time when they are likely to overproduce. By preventing surplus food from even being produced, the businesses will not have to sell it at a discount price, thereby improving their bottom line even more – in theory. In practise, businesses still stand to make a profit from selling discounted food, if at a lower profit margin: as long as they sell them for more than production cost and provided this doesn’t reduce the amount of food that is sold at a normal price.

Too good to go bags in a supermarket dumpster. Source: @anurbanharvester on instagram.

This is the issue for supermarkets: buying discounted food from supermarkets will cause consumers to buy less food at a normal price. That is why supermarkets often put a cap on the amount of bags they sell via TGTG. For restaurants meanwhile, selling discounted food is likely to win them new customers, who would not have purchased products from them in the first place. Aside from selling food at full price to regular customers, they now have an additional revenue stream from eco-conscious and price-savvy customers that want to save money and/or help the environment.

Political Ecology teaches us to be wary of “win-win” narratives. While Karma and TGTG may make quality food available for people who would otherwise be unable to afford it, there are “losers” in this situation too: while these apps are commodifying food that would otherwise have been thrown away, they can also end up commodifying food that would have been recovered by non-profit food-saving organisations.

Food saved by the non-profit organization Food Saving Lund. Source: @foodsavinglund on instagram.

A friend of mine, who is active in our local food-saving community, confirmed that businesses are already declining cooperation with non-profit food-saving efforts on the grounds that they have already partnered with Karma or TGTG.

So what’s the bottom line? For-profit food saving apps are unable to fully tackle the problem of food waste of supermarkets, and are likely to merely establish an additional revenue stream for restaurants to broaden their customer base. While they may be able to establish partnerships with businesses that would be unwilling to give away their food to non-profit food saving, the for-profit apps also encroach on the already limited spaces that have been established around decommodified food. At the same time, dumpster diving remains on the verge of illegality. While the spots I frequent don’t engage in actions of deterrence such as locking gates or pouring chemicals on the food, more high-end expensive foods like vegan meat-substitutes sometimes have their packaging intentionally slashed to make them unattractive to dumpster divers.

Legalizing dumpster diving could be a start to make sure more food is diverted from the waste stream, but actually eliminating food waste will require far broader action. There is not only a need to reshape our collective consumption habits –for instance, not expecting all our apples to be without blemishes, and all our bananas without a single black spot?– but we also need to dismantle the economic system that incentivizes food overproduction and that maintains a highly unequal access to food and nutrition.

As long as food is treated as a commodity, it has a market value that is dissociated from its value of feeding people. This makes it more profitable for a supermarket to throw away food rather than give it away for free, and risk “losing” a paying customer; and to keep shelvesf fully stocked until the evening and throw out the excess, rather than risk running out of stock in the evening and having to turn away customers. Decommodifying food however will require a climate movement committed to naming the capitalist system as the culprit behind food waste – “radical slacktivism”, as suggested by Karma, is just not going to cut it.

 

This blog was first published in Undisciplined Environments.

Opinions expressed in Bliss posts reflect solely the views of the author of the post in question.

About the author:

Juliane Miller is interested in imagining better futures. She recently graduated from the Masters programme in Environmental Studies and Sustainability Science at Lund University, Sweden with a thesis on the contributions of German energy cooperatives to energy justice.

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Low-hanging fruits are sometimes the sweetest: how tree-sourced foods can help transform the global food system

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The global food system is dominated by a limited number of actors and mainly focusses on the production of only a handful of relatively innutritious foods. The system in its current shape threatens livelihoods of small-scale farmers, does not meet the nutritional needs of the majority of the global population, and is causing severe environmental impacts such as deforestation and biodiversity loss. A recent study shows that the elevation of small-scale tree-sourced food systems can help contribute to a transformation of the global food system that would lead to improved environmental and human well-being.

The global food system in its current form is dysfunctional and destructive. Not only does the production of a select few agricultural products that dominate the global food market require vast swaths of land, it is also leading to environmentally destructive agricultural production practices and the erosion of traditional ways of rural life and small-scale farmers’ livelihoods. Despite an emphasis having been placed on sustainable food systems within the Sustainable Development Goals (SDGs), with SDG 2 that aims to ensure food security and adequate nutrition through sustainable food systems, hunger and malnutrition compounded by climate change-related challenges are threatening the wellbeing of populations across the world. Especially the most vulnerable are feeling the effects of this intersection of global challenges that to date have been inadequately addressed. 

To reverse these trends, we need to understand what’s wrong with the current global food system and which foods have the potential to simultaneously provide environmental, nutritional and livelihood benefits at local and global levels that can drive a global food system transformation. Trees may hold the key.

What’s wrong with the global food system?

The global food system is unsustainable in so many ways. First of all, food systems occupy enormous amounts of land. This is likely to increase even further in the future: food production is one of the main drivers of deforestation, especially in the tropics. Consequences of these large-scale changes in the use of land include the loss of biodiversity that is happening more and more rapidly, substantial carbon dioxide emissions, and an increasing risk of droughts and wildfires. 

At the same time, the global food system is not producing enough fruits and vegetables to meet human nutritional requirements, partly because the current system is mainly based on just a few energy-dense and nutrient-poor crops such as wheat, rice, sugar and maize. This extraordinarily low diversity within our global food system is causing long-term health problems affecting especially the poorest populations in the Global South who have limited access to micronutrient-rich diets, education about nutrition and basic health services.

In addition, dominant food and agricultural development approaches focus on industrialisation and international trade, leading to the creation of a few global food corporations that dominate the global food market. These transnational food corporations in many cases exercise their power to undermine the rights of food workers and smallholder farmers in order to produce a limited number of crops at the lowest possible price. Food producers get only a fraction of the total amount paid for food products ranging from tea and coffee to other crops produced in the Global South and North alike. 

These developments have led to the massive transformation of small-scale and multispecies tree-based agrarian production systems (often traditional) into large-scale annual crop production. Yet these tree-based systems are vital: a recent perspective article argues that tree-based foods could play a critical role in the transformation of food systems such that it becomes more sustainable, provides more nutritious foods, and provides better livelihood opportunities for smallholder farmers.

Making space for trees…

There are many clear opportunities to incorporate food-producing trees into landscapes. The majority of global cropland does not contain trees, but has a high potential for doing so. Especially in the tropics, where large-scale forest areas are still being cleared for agriculture and then abandoned once soils are exhausted, restoration efforts could include the establishment of sustainable, locally-managed agroforestry systems. Such agroforestry systems have been shown to provide multiple environmental benefits, including carbon sequestration, biodiversity conservation and the provision of several other ecosystem services, especially when they are based on diverse, multi-species systems. 

This could also mean that the hundreds of millions of smallholder farmers across the world could have a more prominent role in improving local diets through the production of tree-sourced foods. With the right incentives, investments and involvement, smallholder farmers could scale up agroforestry systems to produce more and healthier food, while simultaneously diversifying their income sources and consumption. 

Yet doing so would be challenging in several ways. To make increased tree-based food production a more integral part of food systems, several challenges have to be addressed. An increased demand for certain tree-sourced products like cacao and palm oil have led to large-scale deforestation for the establishment of industrial monoculture plantations, which provide very few environmental benefits, harming biodiversity and increasing carbon dioxide emissions in the process. Thus, monoculture plantations are not the way forward – we need to combine different types of trees in one area to ensure multiple ecosystem services.

In addition, severe negative social impacts are associated with such large-scale commodity production, such as people working under abusive labour conditions. Land grabbing has also become a serious problem as the profitability of certain tree species is becoming recognized and the sector commercialised. Furthermore, for smallholders, dependency on a single commodity for their income increases their vulnerability due to risks of crop failure caused by plant diseases and sudden prices crashes. Diversified production systems play therefore an important role in securing income sources, but also in diversifying diets, especially local diets.

…and making space for smallholders

So how can we address these challenges? Strategic actions and interventions for local market development can create a context that incorporates biodiversity in food systems as examples show in Brazil. Besides, focussing on diversifying local consumption provides opportunities for production directly linked to regional skills, preferences and needs and could increase the resilience of local food systems, which has been proved important in the face of the Covid-19 pandemic. However, production for consumption in high-income countries could in some cases provide additional income streams as in many of those countries, the willingness to pay for sustainably-produced food is higher.

Other steps to be taken to facilitate the incorporation of sustainable tree-sourced food systems into the global food system are:

  1. Securing the tenure rights of rural populations. This will allow them to make long-term investments which are particularly important since tree-crops can involve high initial costs and return on investment can take years. 
  2. Developing inclusive supply chains for potentially popular products. This is essential for rural communities to adopt diversified agroforestry systems and access markets in which realistic business opportunities to smallholders should be key.
  3. Creating diversified income opportunities by engaging in different markets through a combination of production of commodities and non-commodities, intercropping multiple tree species with annual crops, payment for ecosystem services, but also by redirecting annual crop subsidies and providing micro-credits. These will create incentives for farmers to adopt tree species in their production systems, can help alleviate high investment costs and long pay-back times, and avoids the risks of price shocks, crop diseases, and other pitfalls associated with monoculture systems. 
  4. Investing in the conservation of genetic resources that underpin diversity so that crop tree systems to flourish. Additionally, reliable seed sources and seedlings need to be available for the establishment of tree crop farms. 
  5. Guaranteeing sustainable production, which will require a combination of interventions by states, markets, and civil society across the supply chain in which consumers can play an important role in demanding and consuming sustainably produced and deforestation-free products. Sustainable food systems require radical social action to alter conventional trading and production systems.

The time is ripe

Although the scale of these mentioned challenges seems to be too complex, in the face of increased shocks from events such as the COVID-19 pandemic, transforming global food systems is not just a desirable outcome, it is urgently required to ensure greater resilience both locally and globally.

Opinions do not necessarily reflect the views of the ISS or members of the Bliss team.

About the authors:

Julia Quaedvlieg is a PhD candidate at the International Institute of Social Studies, where she researches tropical deforestation policies and the impact of interventions on smallholders’ livelihoods. Her research interests lie in natural resource management, rural development policies, and rural communities, with special focus on Latin American countries.

Merel Jansen is a post-doctoral research fellow at the Institute for Environmental Sciences at the University of Koblenz-Landau. Her research focusses on the sustainable use and restoration of tropical forest resources, in particular non-timber forest products. Currently, she is working on a project in which she aims to evaluate the potential of agroforests to mitigate deforestation related drought in southwest Amazonia.

Are you looking for more content about Global Development and Social Justice? Subscribe to Bliss, the official blog of the International Institute of Social Studies, and stay updated about interesting topics our researchers are working on.

Women’s Month 2019 | Seed keepers, memory keepers: native women and food sovereignty by Leila Rezvani

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When North America was colonised, the relationship of indigenous people with food was also colonised. But a group of women acting as seed keepers for their communities are fighting back, practicing decolonisation in their daily work and addressing the legacy of food colonisation through the reclamation of seeds and the traditions, practices, and affective relations that nurture human-plant-environment relationships and keep Native communities thriving, healthy, and connected.

Understanding the colonisation of North America begins with understanding food. Europeans thought that Natives could be ‘civilized’ through their stomachs. Targeting Native diets and methods of food provisioning was a way to control and disempower. Native populations of humans, non-human animals, and plants were decimated due to disease and violence. In what is now called the United States, native groups were forced onto individual allotments, often marginal land away from ancestral homes. Sedentary farming was viewed as the rational form of land use, shaping the native in the white yeoman farmer’s image.

And in residential schools, Native languages, dress and diets were forcefully repressed and replaced with English, European clothing and foods like wheat and dairy, which were largely absent from Native diets previously (Vernon 2015).

The legacy of this physical and cultural violence is clear: today, at least 60 Native reservations struggle with food insecurity, and Native families are four times as likely as other US families to report having not enough to eat (PWNA 2017). This places many Native communities in a relationship of dependence with the US Government: the USDA provides canned goods, powdered milk, processed cheese and white sugar, contributing directly to high rates of diabetes, heart disease, and obesity (Vernon 2015).

Fighting back

Native women are addressing the legacy of food colonisation by asserting their communities’ right to grow food for themselves—food that nourishes human bodies, cultural tradition, and the wider web of non-human species and environments. These women and the groups they work with not only promote food sovereignty but practice it: Winona La Duke of the Anishinnaabe founded the White Earth Land Recovery Project, which bought back 1,200 acres of tribal land that had been appropriated by the US government and began a project to revive the collection of wild rice, an important traditional food.

Rowen White of the Mohawk Nation founded Sierra Seeds, a company selling locally adapted and heritage varieties, and directs the Indigenous Seed Keepers Network (ISKN). In the winter of 2018, the ISKN came to an agreement with Seed Savers Exchange, a public access seedbank of rare and heritage varieties, to identify and rematriate[1] varieties of corn, beans and squash that originated in Native communities (White, n.d.).

Rufina Juarez, a Chicana Indigenous woman, helped organise the 14-acere South Central Farm, maintained by 350 primarily Central American families as a space to grow culturally appropriate, nourishing food in 20-by-30-foot plots. The farm was a haven for immigrants to grow food that connected them to the places they left behind: nopales, corn, squash, tlapanche and papalo greens, lettuces, strawberries, cabbages (Mark 2006). The farm was bulldozed in 2006 even after farm advocates were able to raise money to meet the $16 million asking price. (Juarez 2010, Gordon 2006).

And still, new challenges constantly arise: climate change alters traditional migratory routes of important game animals like caribou, land grabbing for industrial monocropping or extraction removes land from indigenous stewardship, and biopiracy[2] and corporate consolidation of the seed industry deteriorates crop biodiversity (Cultural Survival 2013). Native women continue to organise in the face of these challenges, recognising that colonisation is an ongoing, evolving process, deeply tied to the machinations of globalised capital.

Enduring practices

The work of seed keeping and the maintenance of community tradition it entails is often, but not exclusively, spearheaded by women. Collaboration between many stakeholders, Native or not, young and old, male, female, or otherwise, is key. I chose to highlight these initiatives because women are central and powerful, but are not burdened with speaking for ‘nature’, from an essentialised, gender-based position. Rather, their work builds on traditions of care, affectivity, and community network building that women and others have performed for generations, throughout the trauma of colonisation and the attempted, but unsuccessful, erasure of native foodways.

[1] “Rematriate” means returning the seeds to their place of origin. “Repatriate” is more commonly used, but here I chose to retain the word used in White’s article, which consciously imputes a feminine quality to the seed and the land to which it is returning.

[2] Biopiracy describes the process by which biological or genetic material (commonly from medicinal or crop plant or animal species) is obtained and exploited for commercial use without the knowledge or consent of the original ‘owners’ or stewards of the material. The most common situation is multinational pharmaceutical or agrochemical/seed companies using indigenous plant knowledge to locate commercially valuable species, stela them, and then patent them so they become exclusive property of the corporation. The term was originally coined by Pat Mooney of the ETC Group and popularized by Vandana Shiva of Navdanya.

References
‘Combating Food Insecurity on Native American Reservations'(2017) , pp. 1-4Partnership with Native Americans and Northern Plains Reservation Aid.
‘Maintaining the Ways of our Ancestors: Indigenous Women Address Food Sovereignty’ (Last updated 13 October 2013) (a webpage of Cultural Survival). Accessed 16 February 2019 <https://www.culturalsurvival.org/news/maintaining-ways-our-ancestors-indigenous-women-address-food-sovereignty>.
Alvarez, L. (Last updated 2019) ‘Colonization, Food, and the Practice of Eating’ (a webpage of The Food Empowerment Project). Accessed 13 February 2019 <http://www.foodispower.org/colonization-food-and-the-practice-of-eating/>.
Gordon (14 June 2006) ‘LA’s South Central Farm Shut Down and Bulldozed’ Tree Hugger. Accessed 16 February 2019 <https://www.treehugger.com/corporate-responsibility/las-south-central-farm-shut-down-and-bulldozed.html>.
Mark (9 June 2006) ‘Could the battle for South Central Farm be coming to a close?’ Grist. Accessed 25 February 2019 <https://grist.org/article/mark2/>.
Juarez, R. (2010) ‘Indigenous Women in the Food Justice and Sovereignty Movement: Lessons from the South Central Farm’, NACCS Annual Conference: Chicana/o Environmental Justice Struggles for a Post-Neoliberal Age, 1 April 2010. San Jose State University pp1-10.
Vernon, R.V. (2015) ‘A Native Perspective: Food is More than Consumption’, Journal of Agriculture, Food Systems, and Community Development 5(4): 137-142.
White, R. ‘Indigenous Seed Keepers Network: The Long Way Home; Seed Rematriation at Taos Pueblo’ (a webpage of Native Food Alliance). Accessed 13 February 2019 <https://nativefoodalliance.org/indigenous-seedkeepers-network/>.

This article is part of the series `Women´s Month 2019´, in which members of the ISS gender committee reflect on women´s issues on Bliss.

Image Credit: https://www.stopthewall.org/apartheid-wrong

About the author:

leilaLeila Rezvani is a Master’s student in the AFES major. She comes from Southern Vermont, USA, and is interested in the politics of scientific knowledge production, seed systems, plant breeding and thinking about how the agro-food system could be more just for plants, people and non-human animals. She misses the mountains and hopes to work for a small seed company or farm someday (soon).  

 

Weight gains from trade in foods: evidence from Mexico by Osea Giuntella, Matthias Rieger and Lorenzo Rotunno

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Originally published on VoxEU.org on 02 February 2018

The majority of obese adults are now found in developing countries. This column presents new evidence on the effects of trade on obesity in Mexico. The results indicate that across Mexican states, a one standard deviation increase in the unhealthy share of food imports from the US increases the likelihood of individuals being obese by about 5 percentage points. As developing countries around the world open up their food markets to industrialised countries, they may be accelerating their ongoing nutrition transition and imposing high future costs on their health systems.

Obesity is not the first health challenge that comes to mind when thinking about the global south. Obesity is rather associated with the Global North, particularly the US (think soda drinks, fast food, and lack of exercise). But this conventional wisdom is passé. The majority of obese adults – those with a body mass index of 30 and more – are now found in developing countries (Ng et. al 2014). The Global South is in the midst of a health and nutrition transition (Popkin and Gordon-Larsen, 2004). While communicable diseases and undernutrition are on a (slow) decline, non-communicable diseases and overnutrition are taking hold of populations, and they are doing so rapidly.

Given the known health risks (such as diabetes and cardiovascular diseases) and economic costs of obesity, what can policymakers in the Global South do to prevent obesity in epidemic proportions? Important lessons may come from countries that have already undergone this transition and from examining potential drivers that are amenable to public policy. The much-discussed case of Mexico is ideal for such an exercise.

Obesity and trade: The case of Mexico

Mexico’s obesity rates increased from 10% to 35% over the period 1980-2012 (according to our analysis sample including adult females). And among the already obese OECD countries, Mexico ranked second in 2015, surpassed only by the US (OECD 2017).

Coinciding with these profound changes in population health, Mexico has opened itself to trade in foods mostly with the US. Currently over 80% of Mexican food imports are American. In Figure 1, we show the evolution of Mexican imports of foods and beverages from the US over time. While overall food imports have increased dramatically, food that is typically considered unhealthy has surged quite spectacularly. Notably, exports of ‘food preparations’ are 23 times larger in 2012 compared to 1989.

Figure 1 Mexican imports of food and beverages from the US over time

In Figure 2, we classify Mexican imports from the US as unhealthy or healthy food using the United States Department of Agriculture (USDA) Dietary Guidelines (for instance, ‘dark green vegetables’ are recommended for increased consumption, while ‘refined flour and mixes’ are advised for reduced consumption). US exports to Mexico of both food groups have increased since the late 1980s, but unhealthy food groups at a much faster rate.

Figure 2 Unhealthy and healthy Mexican food and beverage imports from the US

Such trends naturally raise the suspicion of a possible, causal link running from greater consumption of US foods to rising obesity prevalence (e.g. Jacobs and Richtel 2017, Rogoff 2017). However, to date no paper has attempted to estimate a direct causal relationship between obesity and trade.

Estimating weight gains from trade in foods

In a new working paper, we quantify the impact of US food exports on individuals’ likelihood of being obese across Mexican states over the period 1988 to 2012 (Giuntella et al. 2017). To this end, we match several rounds of anthropometric and household expenditure surveys with product-level food trade data. Our main results are based on female adults for which data are available over this long time span.

We calculate the unhealthy share of food imports from the US by differentiating food items using the USDA Dietary Guidelines for Americans. We then allocate these aggregate food imports (healthy, unhealthy) to Mexican states. More specifically, we exploit variation in Mexican states’ historical expenditure by food products prior to trade integration. Our identification strategy assumes that aggregate trade shocks heterogeneously impact sub-national units as a function of time-invariant or ‘baseline’ variables (e.g. Dix-Carneiro and Kovak 2017, Autor et al. 2013). Note that there is substantial heterogeneity across Mexican states in obesity rates and historical food expenditure patterns, which further motivates our modelling approach.

Our empirical models also control for a host of state (such as food prices, GDP, FDI, migration) and individual covariates, as well as state fixed effects and state-specific time trends. In a second empirical strategy, we relate long-run differences in obesity rates at the state level to changes in unhealthy food imports conditional on baseline covariates. We instrument US exports of unhealthy foods to Mexico with corresponding US exports to other countries. And alternatively, we use ‘gravity residuals’ singling out the comparative advantage of the US in unhealthy food production relative to Mexico (akin to Autor et al. 2013).

Quantifying weight gains from trade in foods

We find that a one standard deviation increase in the unhealthy share of imports (equivalent to a 14 percentage point increase) raises the likelihood of obesity by about 5 percentage points. The effect amounts to 18% of the sample average in obesity. Findings using long-run difference models and IV estimates, as well as gravity residuals, are qualitatively similar – pointing to a plausibly causal effect.

Our main finding passes a series of robustness and placebo checks:

  • Plausibly unrelated imports from the US (such as apparel products) do not impact obesity.
  • The effects associated with food imports from the rest of the world are insignificant and small, underlining the specific importance of US foods for obesity.
  • Likewise, unhealthy Mexican food exports to the US are not correlated with obesity.
  • Similar patterns emerge if we employ food imports from the US for final demand.
  • Overall (the sum of healthy and unhealthy) food imports do not correlate with obesity, highlighting the importance of differentiating ‘unhealthy’ and ‘healthy’ US foods.
  • Our main results are robust to dropping Mexican states one by one.
  • Similar patterns are obtained using body mass index (in quantile regressions) or overweight as outcome variables.

Health inequality and trade

Weight gains due to trade vary across socioeconomic groups. As illustrated in Figure 3, women with low levels of education face a greater risk of trade-induced obesity – their obesity risk is 5 percentage points higher than that of more educated women in a Mexican state with average exposure to unhealthy food imports. This differential goes up to 8 percentage points as the state’s trade exposure rises by 14 percentage points (one standard deviation). This interaction effect between education and trade is robust to the inclusion of state-time fixed effects (that is, purging the main local effect of trade exposure). The results are consistent with the well-known hypothesis that more educated individuals are more efficient producers of health investment than less educated ones. This educational gradient may be exacerbated in food environments where individuals are faced with more unhealthy food choices (Mani et al. 2013, Mullanaithan 2011, Dupas 2011).

Figure 3 Inequality between education groups in obesity risk and unhealthy food imports

Income, prices, and tastes

Having established a direct impact of US food exports on obesity prevalence in Mexico, we next turn to exploring possible mechanisms. Trade impacts incomes, prices, and tastes (due, for instance, to exposure to a foreign lifestyle and advertisement), all of which may drive the observed impacts on obesity. First, note that our main effect is robust to controlling for state GDP per capita, the total share of expenditures on unhealthy foods, as well as the relative prices of healthy versus unhealthy goods. Second, estimating demand equations over healthy and unhealthy food groups, we find that exposure to unhealthy foods from the US has redirected overall expenditure towards unhealthy foods. This observed shift is robust to controlling for real income and prices (for a similar empirical strategy, see Atkin 2013). In other words, trade with the US appears to influence tastes for relatively unhealthy foods. Increased variety of unhealthy foods boosts demand. These patterns are in line with a shift to ‘Western’ food consumption and increases in body weight among East Germans following the fall of the Berlin Wall (Dragone and Ziebarth 2017).

Policy implications

Nations have a lot to gain from trade. But weight gains and the associated health losses from trade in foods have been largely omitted from the equation. As developing countries around the world open up their food markets vis-à-vis industrialised countries – which tend to have a comparative advantage in more processed and less healthy foods – they may accelerate their ongoing nutrition transition. Obesity may put high costs on future health systems and the economies of the Global South.

Undoing the nutrition transition is likely harder than moderating it in the first place. Obesity and unhealthy food habits tend to be persistent. The Mexican experience is informative for countries in the Global South. Integrating nutrition and other health concerns into the formulation of food trade policies is paramount,[1] and such concerns should feature high up on the agenda in future trade negotiations.

Our findings suggest that differentiating between healthy and clearly unhealthy imports may help slow down secular trends in obesity around the world.

References

Atkin, D (2013), “Trade, tastes, and nutrition in India”, American Economic Review 103(5): 1629-1663.
Autor, D H, D Dorn and G H Hanson (2013), “The China Syndrome: Local Labor Market Effects of Import Competition in the United States”, American Economic Review 103(6): 2121-68.
Colantone, I, R Crino and L Ogliari (2017), “Import competition and mental distress: The hidden cost of globalization”, mimeo.
Dix-Carneiro, R and B K Kovak (2017), “Trade Liberalization and Regional Dynamics”, American Economic Review 107(10): 2908-46.
Dragone, D and N R Ziebarth (2017), “Economic Development, Novelty Consumption, and Body Weight: Evidence from the East German Transition to Capitalism”, Journal of Health Economics(51): 41-65.
Dupas, P (2011), “Health behavior in developing countries”, Annual Review of Economics 3(1): 425-449.
Giuntella, O, L Rotunno and M Rieger (2017), “Weight Gains from Trade in Foods: Evidence from Mexico”, University of Pittsburgh Working Paper No. 17/010.
Jacobs, A and M Richtel (2017), “A Nasty, Nafta-Related Surprise: Mexico’s Soaring Obesity”, New York Times, 11 December.
Mani, A, S Mullainathan, E Shafir and J Zhao (2013), “Poverty impedes cognitive function”, Science341(6149): 976-980.
McManus, T C and G Schaur (2016), “The effects of import competition on worker health”, Journal of International Economics 102: 160-172.
Mullainathan, S (2011), “The psychology of poverty”, Focus 28(1): 19-22.
Ng, M et al. (2014), “Global, regional, and national prevalence of overweight and obesity in children and adults during 1980-2013: a systematic analysis for the global burden of disease study 2013”,The Lancet 384(9945): 766-781.
Pierce, J R and P K Schott (2016), “Trade Liberalization and Mortality: Evidence from U.S. Counties”, NBER Technical Report No. 22849.
Popkin, B M and P Gordon-Larsen (2004), “The nutrition transition: worldwide obesity dynamics and their determinants”, International Journal of Obesity 28: S2-S9.
Rogoff, K (2017), “The US is Exporting Obesity”, Project Syndicate, 1 December.

Endnotes

[1] Related studies provide evidence for adverse effects of manufacturing imports on the health of workers – see for instance, Colantone et al. (2017) and the associated VoxEU column, McManus and Schaur (2017), and Pierce and Schott (2016).   

Picture credit: Adam Clark

giuntella2Osea Giuntella is Assistant Professor of Economics at the University of Pittsburgh.
riegerMatthias Rieger is Assistant Professor of Development Economics at the  International Institute of Social Studies, Erasmus University Rotterdam.rotunno_4Lorenzo Rotunno is Assistant Professo of Economics at the Aix-Marseille University.