Tuesday, September 06, 2016

The Food Market

Treating food as a financial commodity that needs to be maximized ignores costs that are harder to measure in dollars, especially the environmental impact of food production. The Trans-Pacific Partnership (TPP), a trade agreement that must still be ratified, would favor profits and industrial agriculture, and could harm small-scale and subsistence farmers.

Food was originally turned into a commodity that could be bought and sold on the stock market in order to solve the problems of heavy up-front costs and uncertainty inherent in agriculture, by allowing farmers to essentially sell their products before they were harvested. However, things started to change in the 1980s when a sequence of policy decisions made room for “speculation on agricultural futures by banks, hedge funds, pension managers and university endowments.”

Prices soared in 2008 when the housing market dropped, stock brokers looked to food commodities. A number of factors contributed to the price increase, but the Food and Agriculture Organizations of the United Nations determined that speculation drove 60 percent of the pricing changes in wheat at that time. The problem with fluctuating prices on Wall Street is that they lead to price fluctuations worldwide, leaving little for those who already pay a large portion of their income for food when prices rise. In low-income families, staples make up a large portion of diet and income, and price changes have a huge impact on people’s lives.

In a socialist world, food would flow easily from the regions with the conditions most suited to produce it.

“Some countries, for example, have access to abundant water and fertile soils, and these countries should focus on producing crops that rely heavily on those resources, and export their surplus to other countries that are less able to produce those crops, but which hold comparative advantage in producing other crops,” wrote Jennifer Clapp, former chairwoman of the Canadian think tank Centre for International Governance Innovation and the author of the book “Food.”

However, this ideal is far from our reality, where food staples are controlled by a handful of firms. Though the TPP seeks to lift trade restrictions in 12 countries, it could actually help concentrate power even more in the hands of industrial food giants by extending seed copyrights and allowing corporations to sue governments that pass regulations perceived to threaten profits. A Canadian group from the University of British Columbia noted that this allows for “continued marginalization of small-scale producers and processors.”

Though growing cash crops might help struggling farmers while the market is hot, disruptions in the market can seriously threaten food security, especially if the crops they grow are inedible. Although intuitively large-scale agriculture may seem like a solution to the insecurity of subsistence farming, according to Frances Moore Lappé, who has been writing about hunger since the 1960s, “despite the vast output of U.S. industrial agriculture, one in six Americans is ‘food insecure.’”

The problem with an industrial and economic model of food production is that it values quantity above all else and neglects other factors such as water use, sustainability and biodiversity. Economic incentives can encourage farmers to grow cash crops that just aren’t environmentally sustainable for a region, like asparagus in the Peruvian desert or rice paddies in an arid part of Ghana.

Rebecca Roseman, a recent master’s degree graduate of New York University’s Food Systems program visited Ghanaian farmers and reported in an interview with Humanosphere that “in Ghana rice was not a good choice because it’s really, really dry there – only government intervention or subsidization could make it grow. Rice might be an attractive market right now, but it’s an untenable long-term choice because of the water needed.”

 Roseman summed it up like this: “Increasing monetization of food markets has done a lot of disservice to the people who are the poorest in the world. This turns staple foods into commodities, instead of something people can rely on to feed themselves every day.”

http://www.humanosphere.org/basics/2016/09/guess-who-loses-when-speculators-bet-on-food/

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