Filed under: Commodities trading, hunger, the wheat market | Tags: algeria, biofuels, climate change, commodities, commodities trading, egypt, food prices, food riots, fuel prices, jordan, peak oil, political instability, population growth, speculation, staple crops, trading, tunisia, unrest, wheat prices
Over the past weeks / months, this blogspace has been largely populated by emails and a few letters from people that have done all these good deeds with the flour they’ve received from this project – bringing people together to enjoy a good meal, feeding others that are tired from work / studying, need of some inspiration, or just plain hungry. As great as these stories are, one could look at this blog and forget the impetus behind the Industrial Harvest project, and that’s not my intent at all.
If you need a reminder as to what this project is all about, all you need to do is look at the news. Food prices have continued to go up – right now, the price of food is higher than it’s ever been, even higher than the food price crisis in 2008. All that unrest in Tunisia and Egypt? It may be good for democracy, but it was largely fueled by anger at skyrocketing food prices, which in developing nations are more closely linked to commodities. In the Middle East and North Africa, wheat is the commodity of choice – Egypt is the world’s largest wheat importer. Algeria (the #4 global wheat importer) also saw food riots recently, along with Jordan. As a friend explained to me, wheat is a relatively small market (dwarfed by corn and soy) and therefore more vulnerable to price swings, and these places are highly reliant on that particular staple crop as a source of nourishment. Big problem – regardless of the regime that’s in place.
There’s no shortage of debate as to what’s making food prices go up. Some argue that it’s basic supply and demand: Global population is increasing and urbanizing – and as people in developing nations gain wealth, they consume more meat and more food and more land previously used for farming (as we in the “developed” world consume boatloads of everything, like we always have). So it is now more difficult to carry over a surplus of staples from year to year, and any uncertain weather or political event event that lowers expected yields will cause prices to spike.
Oh yeah, and those uncertain weather events? Things like floods, cyclones, droughts, wildfires, late freezes? There are more and more of those these days, thanks to global climate change, and they certainly impact the global food supply. Paul Krugman and Joseph Romm at Climate Progress have articulated this argument nicely. I can’t imagine it yields a lot of satisfaction for the climate scientists, who have been predicting these sorts of things for years, to be vindicated now.
And then there’s the price of fuel, which tracks closely with the price of food – industrially grown commodities require a large amount of energy to grow and transport. The Peak Oil crowd points out that as oil supplies decline, the prices of both food and fuel will go up even further. To make things worse, in our desperation for an oil substitute, we are dedicating a significant amount of food crops to producing biofuel.
Other folks point to the devaluation of the US dollar and Bernanke’s policy of “quantitative easing” as the root of the problem. Ironically, a cheaper US dollar in relation to other currencies drives up the demand for (and subsequently the price of) commodities.
Lastly, there’s the argument that the growth in commodity speculation has played a role – the financialization and deregulation of the commodities markets (along with the bust in the tech and mortgage derivative markets) have led to an explosion of commodity hedge funds, pension funds, index funds, derivatives, swaps, and on and on. All that nasty stuff that got us into trouble with the credit and housing crisis is now impacting the food system.
So are Wall Streeters disrupting the food supply in their desire to make a buck? Well, yes – I think they probably are, and yes, it’s part of the point of this whole Industrial Harvest thing. Frederick Kaufman’s excellent article for Harpers’ in July was what personally convinced me once and for all, but Kaufman is not the only one sounding the alarm. Some EU countries – primarily France – have recently spoken up in favor of stronger regulation of commodity markets. France, as the leader of the G20 this year, is poised to push this issue. The UN Food & Agricultural Organization (FAO) is right there with them. And all of a sudden, in the midst of all the hubbub around Egypt, a few mainstream news outlets seem to be starting to pick up the story as well. Better late than never, guys (see here, here and here).
Of course, it’s unrealistic to pretend that what’s going on with food prices is based on any single factor. Nor can I be 100% sure what’s going on. But, if someone asked me, I would sum up my view of the situation as increased demand and a host of other factors (climate events, biofuels, monetary policy, etc.) magnified by a pretty large and unstable speculative system, which is in turn driven by a few huge, powerful, vertically integrated corporations. This is all exacerbated by the fact that with markets it doesn’t matter what’s actually happening – it just matters what people think is happening – and what people think people think is happening (and so on). The fact that this house of cards could be brought down by any of, oh, 5 or 10 or 100 different and / or random events (or all of them, or some of them) is not only discomfiting. It also makes it easy for any single party to point the finger at the others, effectively diffusing responsibility, perpetuating ignorance and causing those who should care to throw up their hands in inaction and confusion.
Filed under: hunger, project updates, the wheat market, where the flour went | Tags: caribbean, flour, food insecurity, food prices, industrial harvest, jamaica
Back in August, I met N.,who came to the reception at Roots & Culture hoping to take some flour back to Jamaica to give away on an upcoming trip. She thought it would be a provocative commentary in that island nation, as the recent increases in food prices had had severe impacts on the people there. N. told me that the government just passes along price increases to the consumers, even though it has the power to do otherwise. Like many Caribbean nations, Jamaica could easily be self-sufficient in terms of food, as it’s blessed with a year-round growing season and many native sources of nutrients. But instead, it’s been sold down the river by corporations/governments focused on growing commodities (such as sugar cane) for export, undermining its food security – particularly in tough economic times like these.
So, together with the patient and flexible Mike Wolf, we arranged for N. to pick up a 50-lb bag from the Roots & Culture show and take it with her on the plane. I hadn’t heard from her much since, but I caught up with her when she came to the commodities trading session at Mess Hall. She broke the bad news to me: “It didn’t make it. I’ve got the day off on Thursday. I’ll come by and tell you the whole story.” Read what happened to her, in her own words, here – it’s a great lesson in creative adaptability under pressure.
Speaking of adaptability, check out the newly updated list of upcoming Industrial Harvest events. Both Mess Hall sessions have now been rescheduled for Oct. 10 (this coming Sunday, 11 am – 1 pm) and Oct. 24 (another Sunday, 3 – 5 pm). Join us!
Hey, wow, the last post was dated August 9. Has it really been that long? I do apologize…in the mania of leaving Chicago, going back to Seattle, alley weddings, other art installations, trying to catch some of the last summer weather, returning to Chicago, trying to set up a ton of events, and then leaving yet again to visit my folks back in Ohio (from whence this post is dispatched) – well heck, I just got sidetracked.
The food riots in Mozambique last week are a little bit of an old story by now, but the increase in wheat prices caused a 30 percent increase in the price of bread there. Speculation on the Board of Trade is implicated in the price runup – the article above suggests that investors may have turned to commodities due to low interest rates and a volatile stock market. The quote in the final sentence of the article is worth a reprint: “We are going to have much bigger fluctuations in weather and therefore the food supply than we had in the past, so we are going to have to learn how to cope with fluctuating food prices.”
The government of Mozambique coped by reducing bread prices (which are set by their government, so it’s too bad people had to riot before this happened). The reductions in the price of bread were paid for by (among other measures) reducing compensation for the chairmen of the boards of public companies (that sentence is a grammatical nightmare, sorry).
In other news closer to home, check out the updated Industrial Harvest events listings for fall. There’s a lot of great stuff on deck, including two weeks of programming at Mess Hall starting this Wednesday, the 14th. There’s more that’s being added to the calendar for the weekend of the 18th too, so take another look in a couple of days – we’re working out some last scheduling details. Hope to see you there!