Provoking quotes from text:
“Commodities contracts aren’t about trading the tastiest corn, but about enabling the buying and selling of exact amounts of corn that meet these specific standards.” (11).
“For example, it is possible for coffee futures to surge 30 percent in a two-week span, but when we pick up a bag of coffee beans at the store, we don’t find that the price tag shows an equivalent 30 percent spike; it is likely the same price as the last bag we purchased.” (12).
Relevant quotes from article:
“Nearly 75 percent of surveyed bankers reported farm income was less than a year ago, although the percent of bankers that reported weaker farm income declined slightly from the first quarter (Chart 1). Respondents also noted that agricultural producers continued to reduce capital and household spending as profit margins generally remained weak.”
“Persistent declines in farm income in the District have continued to affect agricultural credit conditions. Demand for non-real estate farm loans and loan renewals continued to climb in the second quarter with additional increases expected in the third quarter (Chart 5). As noted in the Kansas City Fed’s most recent Agricultural Finance Databook, the rising demand for farm loans has been driven primarily by the need to finance short-term operating expenses as profit margins have remained weak.”
Commodity trading, while making it easier to exchange large amounts of goods, has made much of our food system, the farmer-to-consumer relationship, disconnected. Market prices for the average consumer remain the same day after day, regardless of if the farms that produced the ingredients in it made any money growing it. This bizarre, unengaged system doesn’t allow consumers to support the farmers. We don’t absorb any of the risk in farming and are able to lay back and relax if they take a fall, knowing there won’t be any change in the prices of what we buy. Farming is risky by nature, and farmers risk crop failure due to uncontrollable circumstances yearly. Additionally it’s no secret that farmers aren’t the wealthiest people on the planet. So few members of our society are responsible for providing nutrition for everyone in our society, and given how challenging it is I believe we should allow the market to surge up and down, so that we may celebrate when the year is going well and take on some of their hardship when the season is a fluke. Recent articles from the past year, like the one I found from a commodity news site called ZeroHedge, show that farmers are struggling to keep up with the standards, and aren’t doing well with the current prices they’re able to sell their crops for.
Part of the issue is that as a general whole, we value food that is as cheap as it can be, rather than food that is as nutritious or delicious as it can be. As Newman discusses, big time traders don’t care about looking at or trying the corn they buy, they just want to know that it fits the industry standards and that it isn’t more expensive than the market norms for the time. Farms need to enter these contracts, though, or else they face not being able to sell their crops at all. It would be so nice for farmers and consumers both if consumers were aware of this pressure they feel, and could be motivated enough to relieve some of it from them by letting them know that there is a community that wants to buy corn that tastes good, even if it does cost a little bit more.
When people buy their processed food filled with corn at the store today, it will be the same price as always, and they won’t wonder if the corn farmer is well off on the profits they are making from it. To be honest, if the grocery stores hiked up the price of each canned corn by just one cent during a hard season, which they gave to the farms in order to reboost their economic health, no one would blink an eye at that either. So would it be so bad if we assumed some of the responsibility of growing the food we eat, letting the prices of our daily bulk goods like corn, soybeans, and wheat, in exchange for giving the farmers a sense of financial security and a chance to focus on making their product higher quality? I don’t think it would be too terrible at all.
Durden, Tyler. “Farmland Bubble Bursts As Ag Credit Conditions Crumble.” Zero Hedge. ZeroHedge, 12 Aug. 2016. Web. 13 Jan. 2017.
Newman, Kara. The Secret Financial Life of Food: From Commodities Markets to Supermarkets. New York: Columbia UP, 2013. Print.