Betting on Hunger

September 24, 2010 12:02 PM

From the Guardian PovertyMatters Blog : Will the meeting in Rome result in action against food speculation?.
At an emergency meeting in Rome The UN has warned of major new food crisis; environmental disasters and speculative investors are to blame for volatile food commodities markets.
The EU is to wage war against speculation in these markets.
Early in 2008 Eric Touissant, (President of CADTM) explained How the Food and Financial Crises Are Interconnected.
This July Harpers published The food bubble: How Wall Street starved millions and got away with it by Frederick Kaufman. (previously).
posted by adamvasco (12 comments total)

Looking at the chart near the end of the Guardian article, it looks a lot like the price levels spiked but have now fallen back to a level that is consistent with a long-term trend of increasing prices that has been going on since 2000. In other words, if you take out the late-07/08 spike, you yet a pretty straight line between the early 2000s and today's prices.

That makes me wonder whether there are more serious problems than simply speculative activity. Like the possible long-run correlation between petroleum and grain prices (PDF; Google HTML here).
posted by Kadin2048 at 12:27 PM on September 24, 2010 [1 favorite]

Some people blamed biofuels, others blamed Goldman, now it seems we are looking at the structure of the markets and trying to figure out who gets to participate?
Bill Clinton explained the roots of this crisis really well earlier this year.. Western nations pushed trading policies that allowed their highly subsidized and industrial scale agriculture to overwhelm local growers and small farmers (even in their own countries). The result is the demise of much of the local agricultural economy and knowlege that went with it. Poor nations have been left holding the bag and are now very dependent upon imports for their staples. We forced them off the land into sweatshops and factories. Now when we can't buy the products of their industry, yet have no cash left to buy our food.

While the poor nations will suffer what really worries me are places like Iran, Russia and other middle income nations which enjoy decent caloric intakes and have had rising standards of living. When people have rising expectations and suddenly go hungry that's when the radicals take over.
posted by humanfont at 1:47 PM on September 24, 2010 [1 favorite]

The history of every major galactic civilization tends to pass through three distinct and recognizable phases, those of Survival, Inquiry and Sophistication, otherwise known as the How, Why and Where phases. For instance, the first phase is characterized by the question How can we eat? the second by the question Why do we eat? and the third by the question Where shall we have lunch?

- Douglas Adams, The Hitchhiker's Guide to the Galaxy
posted by anigbrowl at 2:19 PM on September 24, 2010 [2 favorites]

Oh dear, I can just hear the Alex Jones freaks acting up about UN CONTROL OF THE FOOD SUPPLY!!!!!
posted by symbioid at 3:04 PM on September 24, 2010

Also worth noting, recently passed financial reform should limit this behavior in the States. Another unsung acomplishment of the Democratic party.
posted by humanfont at 3:49 PM on September 24, 2010 [1 favorite]

From the 'Food Bubble' link: “North America, the Saudi Arabia of cereal”

The Wheat Whopper! The Sultan of Starch! The Master of Millet! The Count of Monte Breakfesto! LLLLLet's get ready to tumbrel!

Wheat has always been used as a political tool. Which perhaps makes it easier to exploit for profit.
posted by Smedleyman at 4:30 PM on September 24, 2010

Bill Clinton explained the roots of this crisis really well earlier this year.. Western nations pushed trading policies that allowed their highly subsidized and industrial scale agriculture to overwhelm local growers and small farmers (even in their own countries).

Bill Clinton helped make that possible by helping the Farm Bill along. I think he's trying hard to reverse some of the mistakes he made - good for him. All said, speculating on any commodity necessary for life should be illegal, period. Why should a wealthy investor have the ability to buy up underground water rights, as Warren Buffet has done in Texas. That's just wrong.
posted by Vibrissae at 11:33 PM on September 24, 2010

and the third by the question Where shall we have lunch?

What about the fourth phase? Characterized by the question: "Ooooh, so you're starving to death and dying of malnutrition, huuuuh? Well, looks like demand just shot up, heh heh heh. That'll be $8,000 for this box of Rice Crispies. What you don't have $8,000? Hey, too bad that's capitalism, you don't like it, go starve in a ditch."

not really a question, is it.
posted by peppito at 11:35 PM on September 24, 2010

Can you provide more details in the Warren Buffet water rights story? I was unable to find anything about it even in a cursory Google search.
posted by humanfont at 4:57 AM on September 25, 2010

Thanks for the Clinton story humanfont however misguided aid is only part of the problem.
From the interconnected link

Only a small part of the rice, wheat or corn produced in the world is exported, while by far the greater amount is consumed in the country of production. However, the price on the export market determines the price on the local market. The export market price is fixed in the United States, mainly in three stock exchanges (Chicago, Minneapolis and Kansas City). Consequently, the price of rice, wheat or corn in Timbuctu, Mexico, Nairobi, and Islamabad is directly affected by the evolution of the prices of these cereals on the United States stock markets.

.
posted by adamvasco at 7:16 AM on September 25, 2010

http://larryjamesurbandaily.blogspot.com/2010/08/food-markets-hunger-and-profit.html

The July Harper's had an interesting article about Goldman-Sachs and agricultural market speculation. This looks like a reblogging with associated bickering about leftists.
posted by sneebler at 12:06 PM on September 25, 2010

On the other hand agriculture is capital intensive and subject to volatility from weather, disease and other unpredictable factors. The result is without external capital inputs into the derivatives markets it is unlikely that the growth in output necessary for feeding our growing population and appetites can be sustained. Those high corn prices a few years back bought a lot of new tractors and harvesters. You have to borrow a ton of money to plant your fields, then get enough of a crop and sell it at the right price to make money. That money has to come from somewhere and not just potential buyers either.
posted by humanfont at 4:51 PM on September 25, 2010