Blog Action Day: Food (and the betting game)!

Today is World Food Day, and appropriately, Blog Action Day is focusing on Food. I am thrilled, as one of my passions in life is finding ways to fight hunger.

For me, food has always been on the mind. From making sandwiches for our soup kitchen with my mom as a kid to witnessing poverty in different places around the world,  I have always seen hunger as a major concern.  My business degree thesis in college was on various technologies to eradicate hunger: from ways to raise awareness to new developments in nutrition. Upon graduating, I joined a faith based service group and worked in a food pantry.

When I started my current job three years ago, I struggled with not helping out the hungry on the front lines. I did and do feel good about my work, knowing that I help countless people across the globe by advocating to large companies on social, environmental, and governance concerns. But still, I missed being more directly linked to combating hunger.

Last year, my job presented me with the opportunity to connect back to my passion with erradicating hunger. More and more our investing groups were being pushed to enter in the agricultural futures commodities markets. Since the stock market was still feeling the after shocks of the 2008 financial crisis, this looked like a steady investment. The more I started to research this, the more skeptical I became.

For me, the easy way to look at this complex issue was to simple say, “is this an APPROPRIATE investment”, especially for faith based and socially responsible investors? Originally, the agricultural futures market was created for farmers. Producers of food could use this market to receive assurance that no matter what happened to the price of their crop, they could sell it at a certain price in the future. This helped determine what the real price of the food product should be, as well as provided the farmers with insurance, that even if prices soared, or drastically dropped when it was time to sell their crop, they could sell their goods for this predetermined price.

In 2000, many of the protections that had been around since the Great Depression for farmers were removed. Through the Commodities Futures Modernization Act deregulation allowed anyone to enter this agricultural futures market.  What does this mean? That any outside speculator could trade unlimited amounts in these commodities with virtually no regulations.

Ten years have passed and what have we seen? Billions of dollars flooding into this market and real food prices becoming incredibly unstable.

Nearly 1 billion people on our planet are hungry. That is 1 in every 6 people. Even is the USA, the statistic is the same, of 1 in 6 people facing hunger. This is astounding for a world so technologically advance and with enough food to feed all of its inhabitants. It is a tragedy.

There are 80 reports pointing to excessive speculation as linked to food price volatility worldwide.  More than 400 organizations are concerned about this issue. And last week, 450 economists asked the G20 to regulate speculation on food prices.

My philosophy is even if you aren’t sure if you fully understand these complexities, ask you self if you think betting on the price of food is appropriate. Are you hedging against the loss of your own crop, or the trying to find what price you should sell your crops for? Do you understand this market? Is this an appropriate place for you to make money?

If not, then go with the benefit of the doubt- don’t invest in these derivatives. Rather, invest in the MEANS of production and support farmers. Don’t bet on their crops and the world’s food.

Your Call to Action:

I do not like to write about a concerning issue and not empower people to take a stand. Here are plenty of ways to get involved!

  1. Support protections! On Tuesday, the Commodities Futures Trading Commission may enact position limits on commodities. This vote is so important. If strong enough, prices could be more stable and other governments would be more willing to follow suit. Ask the CFTC to make these regulations strong, so people don’t have to go hungry because they can’t afford food.
  2. Ask your financial manager if you are invested in agricultural derivatives and switch to direct investment in the production of food.
  3. Think about hosting a Justice Cafe, as October’s topic is Food Justice
  4. Host an Oxfam dinner, and discuss these topics at length!
  5. Write your own blog post about Food!

7 responses

  1. Pingback: Veg-Out: Guest Post | Say Yes! Change Things.

  2. It has ruined prices of the “Real” thing. People are buying and selling “paper” products. Farmers can’t afford to sow, grow, harvest and trade the real stuff anymore. Our in-put costs have risen beyond reason. Example diesel cost around R3.88 per liter, now it is almost R12.00 per liter! Maize was R2000.00 per tonne, it is R2000.00 today, falling R500.00 in the past week or so, as we get closer to harvest time in July. Fertilizer cost R2000 per hectare then, now it is R8000.000 per hectare. How can this be fair and make economic sense?

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