Saturday, January 11, 2014

The Subversion of Puerto Rican Self Sufficiency

It has now been more than a year since the historic referendum in which the Puerto Rican people rejected the current political status they have been subjected to for 115 years.  Yet despite their vote to reject colonialism, Puerto Rico is no closer to obtaining sovereignty.

The vote to change the island's political status, which received a decisive 54% majority, barely registered as a blip on the radar in the mainland U.S. news cycle.  There were a few articles reporting the results, but the issue did not manage to register in the larger national political conversation. For many Americans, the problems in Puerto Rico aren't considered America's problems.  But there are 3.6 million Puerto Ricans on the island who are second-class American citizens. 

Puerto Ricans are dealing everyday with policies from Washington that impact their lives, policies they have no vote in deciding. Since the election a year ago, here are two significant issues that illustrate the detrimental effects of Puerto Rico's status on its economy.

The inability to Import Rice Seeds Suited for Puerto Rico's Climate

A sad irony about Puerto Rico is that on an island with a tropical climate rich with fertile soil, perfect for growing many fruits and vegetables, roughly 85% of food sources are imported. It's common at the supermarket to see the shelves full of plantains from the Dominican Republic, avocados from Mexico, papaya from Costa Rica, and mangoes from Nicaragua. And that is a fraction of the corn, poultry, cereals and root vegetables from the United States. Earlier this year, it was reported that the sandwich franchise Subway, expanding on the island, wanted to buy peppers for its sandwiches from local farmers. They were informed that there was no production capacity to sell them even a fraction of what they would need. Obviously, efforts to increase agricultural self sustainability are direly needed.  

To this end, several months ago a delegation from the Puerto Rican government took a trip to the Dominican Republic to speak with government officials there about a pilot project to grow a grain of rice that is specially suited for a tropical climate. As its neighbor, a Puerto Rican in Mayagüez with a strong arm could practically throw a baseball to the eastern coast of the D.R.  

"The Dominican seeds were recommended by agronomists from that country, which is self-sufficient in rice production, because they are acclimated to the inclemency of the weather and the conditions of the terrain in the Carribean," said ex-secretary of Agriculture Luis Rivero Cubano, now head of a group dedicated to fostering innovation and development in agriculture.  

With good reason, the Puerto Rican government would be interested in copying the success of this Dominican program. It could help bring a food that you will find on every dinner plate in Puerto Rico to the island itself, rather than having to import it from abroad. The article goes on to explain how such efforts are part of a worldwide trend of countries looking to create sovereignty in food production.  

"In recent times, the political plan at a worldwide level has been changing. Countries now don't only defend their territorial or political sovereignty, but also look to assure their supply of energy and food." 

But when the Puerto Rican delegation brought home the Dominican seeds they were not able to get past the paternal frisk of Uncle Sam. The U.S. customs agents did not allow the seeds to be brought into Puerto Rico because of USDA prohibitions that prohibit the import of seeds from the Dominican Republic.

Unable to move forward with the anticipated project, which might have gone a long way towards promoting Puerto Rican self-sufficiency in a staple food, the government was forced to import seeds from the state of Texas from the company Rice Tech. Of course, the climate and soil in Texas is far different than that of Puerto Rico.  It remains to be seen how the Texas rice seeds will fare grown on the island. The U.S. will benefit from one of its corporations having an exclusive deal to export to Puerto Rico, but it is hard to see how Puerto Rico comes out a winner.

A Boston Court Strikes a Blow to Fresh Milk Production  

If Puerto Rico fails to produce most basic foodstuffs for its population's consumption, there is one area where they have managed to succeed: milk.  By all accounts, the dairy industry has thrived in Puerto Rico and led to a surplus in milk production. 

"Puerto Rico is the country with the most cattle per capita in the world.  The production of milk is the only area of the food industry where we are self-sufficient.  In fact, we produce more milk than we need, so that with the leftovers we can make cheese, butter, yogurt and other derivatives of milk," writes Héctor Pesquera Sevillano.  

The production of milk comes from local farmers, who collectively belong to the Puerto Rico Association of Stockbreeders.  The farmers sell their milk to private companies who process and distribute it to supermarkets and grocery stores. Being a territory of the United States, Puerto Rico must allow private companies to control this part of the industry. There are primarily two foreign corporations involved in processing of milk: Suiza Dairy and Tres Monjitas.  

The government agency overseeing the industry, Oficina de Reglamentación para la Industria Lechera (ORIL), determines how much the processors must pay the producers. Additionally, to maintain a steady supply and ensure that what is not being consumed does not go to waste, the excess milk not sold to producers is directed to the company INDULAC to produce UHT milk, cheese and other milk-based products.  

But the private, for-profit processors have always been eager to get a bigger slice of the pie, and are not pleased at what they see as the advantage of INDULAC in producing milk and dairy alternatives. They can bring UHT milk from the mainland, and earn a bigger profit than they would from fresh milk.  With tougher regulations on UHT milk from the states, the distributors see their advantages further reduced by dramatic cost increases.

Producers of UHT milk complained that this violated their protection under the Insterstate Commerce Clause. That's right: Puerto Rico cannot protect its own industries; they have to compete equally with the rest of the states. U.S. corporations are allowed equal access to Puerto Rican markets, regardless of whether Puerto Ricans wants to prioritize local business.

A federal judge in Puerto Rico agreed with the processors and blocked Puerto Rico from enforcing the regulations. This lowered the cost of UHT milk, making it harder for cash-strapped grocery shoppers to pay more for fresh local milk instead of succumbing to the savings of imported box milk.

The court also struck down ORIL's formula for determining how to up divvy up proceeds from milk sales. An appeals court in Boston upheld the decision, striking what could eventually turn out to be a death blow against Puerto Rican self sufficiency. The government has reached an agreement that would award about $80 million to processors to make up for this, while giving only $8 million to farmers to pay for feed.

"In my opinion, fresh milk being a product of leading necessity in the hands of a virtual foreign monopoly, the processing and distribution of milk should be nationalized," Pesquera writes. "Our economy being kidnapped by the federal government, with the perverse intention of defending the interests of the owners of capital, this idea of nationalizing wouldn't reach first base."    

The U.S. itself developed its economy in the early post-revolutionary years by protecting its own industries such as cotton. Noam Chomsky explains how in the early 19th century, the United States and Egypt had similar economies that were poised to develop rapidly.

"There was one fundamental difference between Egypt and the United States, namely the United States gained independence and it was therefore free to ignore the prescriptions of economic theory - pretty much the same as today," Chomsky writes.  "They were free to follow England's own course of independent state-guided development with high tariffs to protect industry from superior British exports, the first textiles and later steel and others, and a wide variety of other modes of state intervention in order to accelerate economic development."

Puerto Rico today finds itself in a similar position as Egypt 200 years ago. Without the ability to control its own economy, it's hard to imagine a way for Puerto Rico to develop on its own terms.