Thursday, August 18, 2011

President Obama: Let's Move! Campaign Is An Economic Boon For American Farmers

Fact check: President says American fruit and vegetable growers, especially family farmers, will earn higher profits thanks to First Lady's childhood obesity initiative...
Speaking on Wednesday at the final town hall meeting of his rural bus tour through America's heartland, President Obama gave his Alpha, Illinois audience a dissertation on Let's Move!, First Lady Obama's childhood obesity campaign. It came after an audience member commended Mrs. Obama's efforts, then asked the President what his Administration will be doing to create "positive incentives to encourage people to eat healthy, and to live healthy." The President, standing in front of a John Deere tractor at Country Corner Farm, described Mrs. Obama's fitness initiatives. But his trip was designed to highlight his Administration's efforts to boost the rural economy, so he gave an analysis of the economic benefits of Let's Move! for American farmers. (Above: The President in Alpha)

The US supply chain for domestically grown fruit and vegetables will be re-shaped by the Let's Move! component that encourages citizens to eat more fruit and vegetables, the President said. This will help American farmers make more profit from their sales, especially family farmers, he explained. Certainly American family farmers could potentially benefit from the campaign, but under its current structure, these benefits are not apparent. And the President was confused about some details of his wife's signature initiative.

"This [Let's Move!] is something that actually can benefit farmers, particularly family farmers," President Obama said. "A lot of times, farmers are not making all the money from their products because it goes through this chain of shipping and processing and distribution, and there are a lot of middlemen between the farmer and the end user."

That's true: According to a February report from USDA's Economic Research Service, farmers and agribusiness receive just 11.6% of the American food dollar, with the rest going to other points on the food supply chain.

"If we can get farmers more directly linked to consumers, they’re selling their products more directly, they’re getting more fresh vegetables, more fresh fruit, then everybody can benefit," President Obama said.

That's also true in theory, but the structure of the private sector partnerships Mrs. Obama has created for her campaign don't now support this. A pillar of Let's Move! is eliminating what USDA identifies as food deserts in the next six years, which the agency defines as "a low-income census tract where either a substantial number or share of residents has low access to a supermarket or large grocery store--areas where supermarkets are not close to consumers."

The First Lady has "been able to get a lot of agreements with [grocery] companies," President Obama told the Alpha crowd, adding that these are voluntary commitments, rather than created by legislation. He pointed to the largest partnership of all, with grocery giant Walmart, as a win for farmers.

"Voluntarily, they [Walmart] and a whole bunch of other big retailers have said, we’re going to start linking up with family farmers; we’re going to start setting up better grocery stores in underserved communities...and linking up -- setting up farmers markets in urban areas where people can sell produce," President Obama said.

In reality, none of the grocers that have partnered with the White House have pledged to "link up" specifically with family farmers to purchase the produce that they will sell. There is no requirement for the companies to use fruit and vegetables grown by any specific class of farmers, whether domestic or foreign, large or small. Rather, the agreement covers what markets will be built: Drugstore chain Walgreens announced that it will transform 1,000 of its stores into "food oasis" stores, selling healthier foods, including produce. SuperValu pledged to build 250 Save-A-Lot stores in food deserts in the next five years. Walmart pledged to build 275 to 300 stores in food deserts by 2016. Two other regional, smaller chains also made building pledges.

Nor did the Let's Move! partnership with grocers involve a pledge from the corporations to open farmers markets. And the report on the rural economy the White House Rural Council released ahead of the President's trip, "Jobs and Economic Security for Rural America," fails to include any strategies for connecting American family farmers with American consumers. Rather, there is a focus on the importance of the export market for agricultural products.

USDA issued a report in early August showing that more than 1,000 new farmers markets have opened across the US in the last year, but these new venues were not, as the President seems to be maintaining, due to the efforts of grocery corporations. Farmers markets account for only a tiny percentage of the food that is purchased in the US--less than 1%, according to USDA.

Foreign farmers get the biggest boost...
The fact is US farmers don't actually grow enough fruit and vegetables to ensure that every man, woman, and child in America meet the produce consumption advice in the 2010 Dietary Guidelines for Americans, the basis for the eating part of Mrs. Obama's campaign (Americans should fill half their plates at every meal with fruit and vegetables, according to the Guidelines). USDA still identifies fruit and vegetables as "specialty crops," and US Agriculture is primarily devoted to other crops: Corn, soybeans, cotton, rice and wheat.

What Mrs. Obama's campaign currently means is that--should every American follow federal dietary guidelines--foreign fruit and vegetable growers will be receiving the biggest benefit. America will be forced to rely on imports for all the fresh produce required to really meet the eating goals of Mrs. Obama's campaign.

Two weeks ago during a conference call with reporters, Deputy Agriculture Secretary Kathleen Merrigan pointed this out, saying that it's going to be hard to make sure Americans meet the 2010 Dietary Guidelines, and noting that a problem is "how we're going to get there if we are not largely resting on imported foods."

America's imports of fresh fruit and vegetables has increased substantially since the 1990s, according to USDA's analysis. "Dominant suppliers are the North American Free Trade Agreement region for fresh vegetables, the Southern Hemisphere countries for off-season fresh fruit, and equatorial countries for bananas," USDA says. And America is increasingly dependent on China for produce imports. In 2010, America imported $1.36 billion in fruit and vegetables from China, up from $197 million in 1999. Mexican imports went from $2.6 billion to $7.1 billion in the same time period.

Ag Secretary thinks food middlemen are important part of economy...
Meantime, on Monday, Agriculture Secretary Tom Vilsack aired a very different view of the food supply chain than President Obama. Vilsack pointed out that the record-breaking use of SNAP benefits, also known as Food Stamps--which now have close to 46 million people enrolled in the program--creates the kind of middleman supply chain scenario that President Obama says Let's Move! will eliminate. Food Stamps currently add more than $6 billion to the economy in purchasing power monthly, and thus create jobs for the food middlemen, Vilsack said, pointing to this as an economic stimulus.

"If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it," Vilsack said. "All of those are jobs. It's the most direct stimulus you can get in the economy during these tough times."

What it all means...
The point of the President's heartland swing was to highlight what his Administration is doing to boost the rural economy. Thus he focused on the economic benefits of battling obesity with healthy eating, pointing out that obesity has a huge impact on healthcare costs. Mrs. Obama has also spoken about the economic benefits of battling childhood obesity, and in July, when she invited grocery executives to the White House to make their announcements about eliminating food deserts, senior White House aides focused as much on the job-creation element of the project as they did on the healthy eating aspects.

If Mrs. Obama does for produce what she's done for the fashion industry, American growers will be in good shape. But right now, eliminating the middleman in the supply chain, and thus boosting farmers' profits with direct sales is still in the starter stage. Fruit and vegetables prices, like all food prices, have remained stubbornly high. And it's hard to imagine how Walmart's proposed commitment to dropping the price of fruit and vegetables means that American farmers will earn higher profits.

*The full transcript of President Obama's remarks is here.

The video of President Obama's town hall:



The President, his Cabinet Secretaries, and the senior officials traveling with him heard plenty about the needs of farmers during the trip, being told, among other things, that land is too expensive, agriculture subsidies need to be eliminated or at least capped, and other regulations--such as those for water runoff, noise, and dust--are something farmers don't want. Estate taxes also came under fire, and there was a plea from the grandson of a farmer with an interest in a corn ethanol plant for the President to preserve the business.

The President's three-day swing through Minnesota, Illinois, and Iowa included four town halls and one Rural Economic forum, and he unveiled both a new small business support initiative to create rural jobs, and a $510 million initiative to boost rural industries for advanced biofuels. Driving through the heartland on his high-tech black bus, the President made stops five kinds of pie, for ice cream, and for popcorn, and visted a County Fair in Illinois. The President had lunch with veterans and breakfast with small business owners. He was gifted with pie, and brought home gifts for Mrs. Obama.

The President returned to Washington on Wednesday night, and departs for Martha's Vineyard this afternoon, for a ten-day vacation.

*Top photo by Pete Souza/White House