Tag Archives: Food

Speculating in Hunger – Are Investors Contributing to the Global Food Crisis?

Investment newsletters are now featuring headlines like “How You Can Profit from the Global Food Crisis.” The recommended investments include agribusiness stocks and exchange-traded funds (ETFs) that speculate in agricultural commodities. These investments will no doubt do very well in the global food crisis; but before you put your money down, you may want to explore whether you will be helping to alleviate the problem or actually contributing to it. Do you really want to “invest” in starvation? In an April 23 article in the German news source Spiegel Online called “Deadly Greed: The Role of Speculators in the Global Food Crisis,” Balzli and Horning note, “Many investors . . . are simply oblivious to the fact that by investing in the global casino, they could be gambling away the daily food supply of the world’s poorest people.”

Jean Ziegler, UN Special Rapporteur on the Right to Food, has called the exploding food crisis “a silent mass murder.” In an interview in the French daily Liberation on April 14, he said, “We are heading for a very long period of rioting, conflicts [and] waves of uncontrollable regional instability marked by the despair of the most vulnerable populations.” He blamed globalization and multinationals for “monopolizing the riches of the earth,” and said that a mass uprising of starving people against their persecutors is “just as possible as the French Revolution was.”

In some places, in fact, this is already happening. In Haiti, where the cost of rice has nearly doubled since December, the prime minister was fired this month by opposition senators after more than a week of riots over the cost of staple foods. Violent protests over food prices have been set off in Bangladesh, where rice has also doubled; in the Ivory Coast, where food prices have soared by 30 to 60 percent from one week to the next; and in Egypt, Uzbekistan, Yemen, the Philippines, Thailand, Indonesia and Italy. In an April 21 Wall Street Journal article titled “Load Up the Pantry,” Brett Arends observed that the food riots now seen in the developing world could soon be affecting Americans as well. Rocketing food prices are not a passing phase but are actually accelerating. He recommends hoarding food – not because he is actually expecting a shortage, but as an investment, because “food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund.” Arends goes on:

“The main reason for rising prices, of course, is the surge in demand from China and India. Hundreds of millions of people are joining the middle class each year, and that means they want to eat more and better food. A secondary reason has been the growing demand for ethanol as a fuel additive. That’s soaking up some of the corn supply.”

That’s the rationale published in the Journal of Wall Street, the financial community that brought us the housing bubble, the derivatives bubble, and now the commodities bubble, producing the subprime crisis, the credit crisis, and the oil crisis. The main reason for the food crisis, says this author, is that the Chinese and Indian middle classes are eating better. Really? Rice has been the staple food of half the world for centuries, and it is hardly rich man’s fare. Moreover, according to an April 2008 analysis from the United Nations’ Food and Agriculture Organization, food consumption of grains has gone up by only one percent since 2006.

That hardly explains the fact that the price of rice has spiked by 75 percent in just two months. The price of Thai 100 per cent B grade white rice, considered the world’s benchmark, has tripled since early 2007; and it jumped 10 percent in just one week. The fact that corn is being diverted to fuel, while no doubt a contributing factor, is also insufficient to explain these sudden jumps in price. World population growth rates have dropped dramatically since the 1980s, and according to the U.N.’s Food and Agriculture Organization, grain availability has continued to outpace population. Biofuels have drained off some of this grain, but biofuels did not suddenly happen, and neither did the rise of the Asian middle class. If those were the chief factors, the rise in food prices would have been gradual and predictable to match.

Another explanation for the sudden jump in grain prices, not mentioned by this Wall Street Journal writer, is suggested by William Pfaff in the April 16 International Herald Tribune:

“More fundamental is the effect of speculation in food as a commodity – like oil and precious metals. It has become a haven for financial investors fleeing from paper assets tainted by subprime mortgages and other toxic credit products. The influx of buyers drives prices and makes food unaffordable for the world’s poor. ‘Fund money flowing into agriculture has boosted prices,’ Standard Chartered Bank food commodities analyst Abah Ofon told the media. ‘It’s fashionable. This is the year of agricultural commodities.'”

The “hot money” that has fled the collapsed real estate bubble is now moving into the commodities bubble, and that includes food. “Hot money” is an influx of speculative capital in search of high rates of return, quickly moving from one market to another. It moves, however, not because the products are better (the traditional justification for price-setting according to “free market forces”) but because the speculative “spread” is better. Money is invested not in making real goods and services but simply in making more money. Food prices are being driven by speculators, and today that includes ordinary investors like you and me, who can now gamble in agricultural futures through ETFs that have opened up a lucrative market formerly available only to big investment players.

Conventional economic theory says that prices are driven up when “demand” exceeds “supply.” But in this case “demand” does not mean the number of hands reaching out for food. It means the amount of money competing for existing supplies. The global food crisis has resulted from an increase, not in the number of mouths to be fed, but simply in the price. It is the money supply that has gone up, and it is investment money in search of quick profits that is largely driving food prices up. Much of this seems to be happening in the futures market, where fund managers seek to maximize their profits by using futures contracts. Balzli and Horning explain:

“The futures market is a traditional tool for farmers to sell their harvests ahead of time. In a futures contract, quantities, prices and delivery dates are fixed, sometimes even before crops have been planted. Futures contracts allow farmers and grain wholesalers a measure of protection against adverse weather conditions and excessive price fluctuations. . . . But now speculators are taking advantage of this mechanism. They can buy futures contracts for wheat, for example, at a low price, betting that the price will go up. If the price of the grain rises by the agreed delivery date, they profit. Some experts now believe these investors have taken over the market, buying futures at unprecedented levels and driving up short-term prices. Since last August, this mechanism has led to a doubling in the price of rice.”

The authors quote grain wholesaler Greg Warner, who says what is happening now in the grain futures market is unprecedented. “What we normally have is a predictable group of sellers and buyers — mainly farmers and silo operators.” But the landscape has changed since the influx of large index funds into the futures market. “Prices keep climbing up and up.” Warner calculates that financial investors now hold the rights to two complete annual harvests of a type of grain traded in Chicago called “soft red winter wheat.” He calls these developments “stunning” and points to them as “evidence that capitalism is literally consuming itself.”

What about investing in agribusinesses such as Monsanto, which have promoted the “Green Revolution” through the bioengineering of foods and the production of GMO (genetically modified) seeds, synthetic fertilizers, and herbicide and pesticide sprays? Won’t these corporations, at least, help to alleviate the global food crisis? To the contrary, critics say these businesses too are just driving food prices up. Monsanto’s patented GMO seeds have been genetically engineered so that they cannot reproduce but must be purchased every year from the company. Small farmers who have fallen for the hype of greater productivity and subjected their land to these seeds and chemicals have found that not only have their yields been reduced but that the land will no longer bear anything except GMO seeds. Farmers who can no longer afford the seeds are priced out of the market, handing monopoly control over to the agribusiness giants that can then raise prices to whatever the market will bear; and in the case of food, it will bear a lot, right up to the point of slavery. As Henry Kissinger once famously said, “Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.”

What can you invest in, then, that actually would help relieve the global food crisis? One possibility is local organic farming. “Community-supported agriculture” (CSA) is a model of food production, sales, and distribution aimed at increasing the quality of food and the care given to land, plants and animals, while reducing losses and risks for producers. A variety of CSA systems are now in use worldwide, allowing small-scale commercial farmers and gardeners to have a successful, small-scale closed market while providing their customer-members with a regular delivery or pick-up of healthy local produce. The USDA provides a list of CSA addresses and websites.

That still leaves the problem of speculation in food futures. How can parasitic profits to non-producing middlemen be eliminated while still protecting farmers? The futures market was first created for farmers, who needed to be able to lock in a price today that would cover their costs and return a reasonable profit later. One interesting proposal is to return to the policy of “farm parity pricing” enacted during the 1930s. It ensured that the prices received by farmers covered the prices they paid for input plus a reasonable profit. If the farmers could not get the parity price, the government would buy their output, put it into storage, and sell it later. The government actually made a small profit on these transactions; food prices were kept stable; and the family farm system was preserved as the safeguard of the national food supply. With the push for “globalization” in later decades, farm parity was replaced with farm “subsidies” that favored foods for export over local markets. They also favored large corporate farms engaged in chemical farming over sustainable farming, forcing thousands of family farmers out of business. Farm parity pricing could help, but a complete solution to the problem of global inflation would require an overhaul of the private central banking system that has created one bubble after another for the last century. (See E. Brown, “Market Meltdown: The End of a 300 Year Ponzi Scheme,” webofdebt.com/articles, September 3, 2007.)

If you want to invest in the commodities boom without driving up the global prices of food or fuel, buy gold.

Does Eating Raw Foods Make Sense in the North?

Have you bought the idea that a completely raw food diet is the ultimate, most logical, best diet for all humankind, no matter where they live in the world? (Like eskimos eating watermelon…)

It seems to me that it’s the implied idea transmitted by many raw-foodists, raw food website, books and seminars.

The idea is:

Raw Food is Good, Cooked Food is Evil, and the World Would Be a Better Place If Everyone Ate Only Raw Foods

OK, I may be exaggerating, but often that’s the general tone of many of the raw food gurus’ message.

Is it actually true?

Would it be possible that the resources required to transport those foods would actually make the raw food diet fairly unecological, considering the fact that eating a diet of bananas and mangoes in Northern Canada isn’t the most natural choice?

How much food do you need as a 100% raw food eater?

It’s fairly well-known that anyone deciding to eat only raw foods in a sustainable way (for health) needs to eat a tremendous quantity of fresh fruits and vegetables.

In order to get enough calories from fruits and vegetables, without using too much raw fat (which would be detrimental for health), here’s the average amount of food that’s necessary:

For a 2000 calorie diet: 10 pounds a day (with peels and all)
For a 3000 calorie diet: 15 pounds a day (with peels and all)

I based those numbers on average consumption most 100% raw foodists go through in a typical day (those who are not on a detox program!).

So basically, 70 to over 100 pounds of food per week!

That’s a lot.

Where does your food come from?

If we would want to get a more accurate picture on the ecological impact that eating a large quantity of imported fruits would have versus a smaller quantity of local cooked, animal or grain foods, we would need to analyze a lot of variables. I haven’t been able to get an accurate estimate from the data that’s available.

But just knowing that most imported fruits come from fairly far away, and that large quantities are necessary on a completely raw food diet, I can draw the obvious conclusion that eating this way is not necessarily the most logical, natural and ecological choice.

Consider that:

– Grapes from Chile travel a minimum of 4000 miles to get to you

– Bananas from Costa Rica travel about 2000 miles or more to get to you

– Mangoes from Mexico at least 1000 miles to get to you

– And so on…

All of the fossil fuels used to transport all of these foods leave an impact, which may offset or even counter-balance the possible environmental benefits of choosing a raw vegan diet (which requires less resources when produced locally), versus a local diet that would contain both raw, cooked, plant and possibly even animal foods.

It’s always been obvious to me that a diet of all raw foods in Canada makes less sense on many levels that one that includes some cooked foods, more local foods and fewer imported fruits.

There’s also the fact that these fruits are picked unripe in many cases, the acidity level is too high and the nutrient level too low.

So is the solution for all raw-food enthusiasts to move to the tropics? Certainly not!

My point is:

– There’s no need to demonize cooked food – A diet that includes both raw and cooked food makes a lot of sense on many levels. You don’t have to eat 100% raw. This is really an individual choice based on your health, your location, and your preference.

– A raw food diet can be unnatural – Eating 100% raw foods in the north can be unnatural and unsustainable. And for many more reasons that I can expand on in future articles, it’s certainly not a solution that can be proposed to the entire world!

– If you live in the north, follow the seasons – Many people, as summer approaches, have the desire to include more raw food in their diet. But in the winter, instead of freezing to death, they choose to incorporate more raw, cooked foods. That is perfectly fine, natural and even desirable for most people.

Here’s a list of some additional tips to enable you to eat more ecologically and sustainably, while incorporating more raw fruits and vegetables in your diet, no matter where you live:

1- Freeze Berries and other Fruits in Season – Berries are some of the most nutritious and antioxidant-packed foods you can eat. To avoid the consumption of too much imported foods in the winter, I encourage you to freeze a huge quantity of ripe, local, organically grown (or wild) fresh berries when they are in season. I personally freeze a lot of wild blueberries, which are local. Then, use them throughout the winter in your recipes. You can thaw them in advance to avoid the negative effect of consuming cold foods.

2- Grow Sprouts – Grow some fresh, toxin-free sprouts such as clover and sunflower greens, to get a supply of cheap, fresh, local vegetables in the winter!

3- Avoid out of Season Fruits – Some fruits may be available in your store, but may actually be out of season in your hemisphere of the world. If you live in North America, the season for grapes usually ends in September or October. Grapes during the winter are imported from countries situated in the opposite hemisphere, such as Chile, where the seasons are reversed. Avoid that! Learn the seasons of different fruits and vegetables and choose to avoid foods imported from such far-away places.

4- Make Different Salads and Vegetable Dishes in the Winter – In one of my recipe books, I give different kinds of salads and dressings depending on the season. In the winter, I recommend salads made with cabbage, carrots and other root vegetables. In the summer, I incorporate more lettuce, tomatoes and fresh vegetables. You should do the same.

5- Shun Exotic Fruits – Exotic fruits such as durian, Thai coconuts and litchis can be great to try, but they inevitably come from faraway countries such as Thailand. In addition to leaving a huge ecological impact for being imported from so far, they are also heavily sprayed with toxic chemicals. Durians are particularly notorious for that. Try them for fun, but stick to fruits and vegetables as local as possible – at least from somewhere you could drive to.

Finally, I would like to encourage you to continue making the best choices for your health. Sometimes, that may sometimes mean:

– Eating fresher, locally grown commercial foods instead of less fresh, imported organic foods

– Eating ripe, local commercial food instead of unripe, imported organic foods

– And eating some cooked, warm “local” food instead of just cold imported fruits

Lookt at true consequences of your own choices, and realize that there’s not one size that fits all.