Thursday, January 19, 2012

Corporate Food Sells Local

It's a funny ol' world. This ad comes from Hellman's--a company owned by Unilever, one of the larger corporate behemoths straddling our globe. The ad is practically a PSA for Canadian farmers and Canadian food with the seeming contradiction of being put out with one of the global food giants it decries.  Yet, owning local as well as international producers, it's clear that Unilever won't suffer no matter what we as consumers do. Unless wegrow our own food and purchase from local farmers at a local market or through a CSA, the multinationals are still going to make out like bandits. But all that being said, still a good commercial.

Tuesday, January 17, 2012

Debt and Food: A Common Cause

Eric Reguly, in the weekend Globe and Mail, tries to compare and contrast two different crisis which originated in 2008: the European debt crisis, and the international food crisis. The two crisis were linked, mostly by nervous money fleeing the world's debt markets for commodities (and both were precipitated by the criminal activity engaged in by various investment banks like Goldman Sachs and Bear Stearns prior to the housing bubble popping). The role of speculative money in causing the worldwide food price inflation of 2008 through 2011 is pretty common knowledge. Starbucks president Howard Shultz, as reported in the The Telegraph, has said:
... the current spike in the cost of commodities such as coffee and other foodstuffs is "not based on supply and demand" but based on market speculation. He said that the farmers who actually produce the commodities are receiving a "de minimus" proportion of the price rises. "Right now we are experiencing a very strange and almost inexplicable phenomenon in the commodities market. Without any real supply or demand issues we are witness to the fact that most agricultural food commodities are at record highs at once, and coffee is at a 34-year high." 
Frederick Kaufmann, in The Guardian, follows up with a brief interview with Professor Yaneer Bar-Yam, of the New England Complex Systems Institute (Necsi):
"Prices have been way out of equilibrium in 2011," Bar-Yam told me. "The bubble has not burst yet." According to Bar-Yam, the international thirst for biofuels has put a strain on arable land previously reserved for food production. At the same time as the rise of the biofuel mandate, the rise of investable commodity indexes and other electronically traded funds has offered investors of all stripes a chance to sink their cash in a sparkling new casino of derivative products. As a result, an ever-flowing spring of speculative capital sustains the status quo. But just as food is no ordinary widget, speculation in commodity markets is not simply a matter of financial predation. "The high prices of food have resulted in accumulations of inventories at the same time as people can't afford food," said Bar-Yam, who noted that the Arab spring was triggered by the food-price bubble. In fact, Necsi's quantitative model of speculation predicted the uprisings in Tunisia, Libya and Egypt, and warned that if food prices remain inflated, riots and revolutions will go global sometime between July 2012 and August 2013. "We are at a critical point," said Bar-Yam. "We don't have a stay-the-course option right now." 
Notice that quote: "The high prices of food have resulted in accumulations of inventories at the same time as people can't afford food." That makes it very clear that this is about speculation, not supply and demand.