deflation greece potato commodity

If You Got Land, You Can Do These Things
movement cooperatives

Greece's 'Potato Movement' Grows in Power

Hard times usually spur some people to cooperate but the groups they form often don’t survive good times -- so basic reform is always needed, which is land justice. This 2012 article is from Al Jazeera, Jun 11.

by John Psaropoulos

When an economy shrinks, prices are meant to go down in response to falling demand. This has not happened in Greece -- at least not yet. While the Greek economy shrank by an average of five per cent a year between 2009 and 2011, consumer prices rose by an average 3.7 per cent a year. The combination of falling revenues and rising prices has led to an explosive political mix.

It is not politicians but grassroots activism that has come to address this issue. In April, the Hellenic Statistical Authority (ELSTAT) reported a 24.6 per cent drop in potato prices from March 2011 -- the largest ever one-year drop in any commodity. The reason for this historic deflation was what has come to be known as the potato movement -- and it is having an empowering effect on Greeks, not only as consumers, but also as citizens and voters.

The first to invite the farmers of Nevrokopi to sell their potatoes at wholesale prices was the Pieria Prefecture Voluntary Action Group, based in the northern Greek town of Katerini, on the foothills of Mount Olympus. On February 19, it organised a sale of potatoes to the Katerini public at 25 cents a kilo -- one-third of market price.

Days later, the movement spread to Thessaloniki's Aristotelian University. Christos Kamenidis, a professor of agricultural marketing, organised a potato sale on campus with student volunteers. "I was worried that we would [only] sell three or four tonnes. We sold 50 tons on the first day," Kamenidis said.

The entire greater Thessaloniki area now holds regular sales of cheap produce, and the movement has spread south to the capital, Athens, and beyond.

The potato movement is changing the food market. "Competition has increased," Kamenidis told Al Jazeera. "The stores that once sold for 75 cents are selling for 45 cents, and I heard prices as low as 19 cents." And the effect has not been limited to potatoes. Other basic durable goods such as olive oil, flour, rice, and honey have also gone on sale directly from producers, undercutting market prices by half.

The potato movement is giving renewed impetus to two institutions that could have been expected to channel market economics in hard times but didn't. The first, farmers' cooperatives, were set up in the 1980s to give producers the clout to compete with wholesalers. "Cooperatives have the ability to sweep wholesalers aside, but they don't sell any cheaper," Kamenidis said. "They mark up produce even more."

Farmers' markets, set up throughout Greece to help producers compete with retailers, also reportedly fall prey to the same greed. "Producers have succumbed to the logic of the market. They are trying to gouge consumers in the same way as middlemen," Ilias Tsolakidis, who created the Pieria group in Katerini, told Al Jazeera.

The potato movement has not gone unchallenged. "Now there is a war breaking out," Tsolakidis said. "The potato sorting and packaging centres are raising their prices to producers." Controlled by wholesalers, the centres are using their leverage to inflate producers' overheads.

There are other problems. Many villagers did not believe in the movement. They thought the price was too low and some made fun of organizers.

Foteini Arnaoutoglou, a potato farmer and local organiser in the village of Vrontou, near Nevrokopi, was vindicated. She and the growers she coordinates sold their potatoes at the cost price of 25 cents a kilo, and have cash in hand to sow next year's crop. Those who held out for a higher price are stuck with potatoes they may have to sell over the border to Bulgarian middlemen for 10 cents a kilo, or with cheques and IOUs from Greek middlemen that haven't been honoured in two years. She now plans to sell abroad via a website.

Tsolakidis said, "We receive about 5,500 orders for each sale of produce, representing about 45,000 people, or 55 per cent of the population of our town … Political gatherings are lucky if they get 50 people."

Both in Katerini and in Keratsini-Drapetsona, the potato movement is championed by those who have understood the sea change in Greek values: independence from party and special interests, and a dedication to public service.

These "new values" may today be limited to grassroots activism and local government, but judging by the ferocity with which Greek party hierarchies are being shaken, it may only be a matter of time before they reach the top.

To read more

JJS: While many consumers welcome lower prices, many economists disapprove of a falling cost of living and try to influence people to fear deflation. Well, that would not be the first time that the thinking of mainstream economists were skewed. Another hugely fundamental blind spot of conventional economists is their failure to distinguish between the two kinds of spending.

People spend hard-earned money that rewards another’s efforts -- as when we buy corn, computers, and condos -- and spend money that does not reward anyone’s effort -- as when we buy or lease land or other natural resources. These two spendings have totally opposite reactions. You buy a car, somebody else will make another car. You buy a parcel, nobody else will produce another lot of land.

From these two spendings flow two different economies, one fair and efficient, the other not. By the way, that spending for nature is technically called “rent”. And bankers know all about it.

The Greek crisis, of course, is tied to bad bankers and they in turn to a business cycle driven by speculators in debt, all debts, from mortgages to insurance liabilities. To learn about these links, you could check out Phil Anderson, author of The Secret Life of Real Estate. He writes about EU stability, Greece and Spain seemingly falling apart, markets declining again, and the prospect of yet more printing of money. He suggests keeping an historical perspective as to current events; bankers are very much repeating the behavior we have always seen out of each past real estate low point and entry into the new cycle. His insights on how to position yourself for the coming upswing in the cycle are derived from his understanding of “rents”. To meet Phil

Former World Banker Joe Stiglitz in his latest book, The Price of Inequality, also talks about “rents” -- undue income as the source of inequality. He uses the more modern meaning -- “monopoly profits” -- for "rent", but elsewhere he talks about classical rents, rent from land and resources. He also cites classical economist Henry George in a footnote, and extensively. His book is abridged at Vanity Fair. To remind him of all rents .


Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

Should Goldman Give Back $2.9 Billion to Taxpayers?

Hong Kong approaches land-value tax ideal

Palm oil giants target African land

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