Food issues dampened before election
October 23, 2012
Several weeks ahead of the culmination of this year’s presidential and Congressional election battles, it seems appropriate to note the inconsequential role government policies affecting food have played in the outcome. Even in those states where agricultural programs have had a powerful role in prior years little has been heard about differences that might have determined past national results. Support levels were not even a matter of debate, due mainly to the elevated level of prices. At times in the not too distant past, the government was frequently blamed for either low or high crop prices. Little or none has been heard of that in this campaign and in the face of what the food industry may describe as the toughest four years for dealing with price gyrations.
This lack of attention is especially astounding as the authority of the law that has long ruled ended this year, and neither House nor Senate succeeded in adopting replacement legislation that could win a majority. In the event that this stalemate continues into next year, it means the Department of Agriculture will be required by the Agricultural Act of 1949 (yes, a law enacted 63 years ago) to announce support prices beyond belief. Based on a percentage of the parity price as determined in 1949, this statute would require a national average wheat loan rate on the 2013 crop of $13.88 per bushel, which is more than $4 above the peak of 2011 and is similarly above last week’s market. Even the threat of this ancient law coming into force is beyond belief.
Yet, it is not agricultural supports that are at the center of the debate preventing enactment of new legislation. The fight is mainly over amounts allocated for food stamps, currently known as the Supplemental Nutrition Assistance Program, or SNAP. Annual spending on SNAP, which provides food aid to a record total of nearly 47 million people, is in excess of $75 billion. Opponents of this program have called for budget cuts of $16 billion over a decade, while supporters have urged either no or quite small decreases.
The food industry for the most part has been quiet about SNAP. That changed with the creation of Kraft Foods Group and Tony Vernon, its new chief executive. In an interview with the Financial Times, Mr. Vernon was outspoken in support of SNAP funding, pointing to its role in meeting urgent food needs. He emphasized the importance of SNAP to Kraft’s business in the United States, estimating that food stamps account for at least a sixth of the company’s domestic revenues and for an even larger share of unit sales. “Our biggest challenge,” he said, “is feeding the 50 million Americans who live below the poverty line. I personally think that SNAP is important to feeding families, and I hope it continues.”
In contrast to this focus on domestic hunger and the government’s role, America under President Obama has been cautious in undertaking programs meant to ease food shortages overseas. Not only have foreign aid shipments been much reduced, but America has backed away from foreign efforts, led primarily by France, to expand assistance to hungry people.
Only a month before the election, the administration called off a meeting of G20 food ministers meant to consider emergency food aid. The reason for this action was the belief food markets are “functioning” appropriately, indicating an emergency meeting was “not necessary at this time.” Hardly anything could be more different from the past or more welcome than the U.S. government declaring that markets have the ability to address what many had pointed to as a global catastrophe caused by the high cost of food. Whether the pending election did or did not prompt this action is unknown. How refreshing it is for Washington to take the lead in closing deliberations addressing “abnormal international market conditions,” leaving to markets to produce the best response.