Intro to The Secret Financial Life of Food and Chapter One – WC: 235
“…others buy futures contracts as part of an investment strategy…because food prices may move in a different direction than stock prices, some investors see the purchase of futures contracts as a way to diversify their portfolios.” pg 10
“It only took a decade but it’s officially OK to fall for U.S. banks again. Consumers feel good. Business leaders feel good. And interest rates are finally not zero — in fact, they may get an extra lift from President-elect Donald Trump, should his policies boost economic growth as everyone seems to be expecting.”
Lachapelle, T. (2017, January 13). It’s OK to Love Banks Again. Retrieved January 13, 2017, from https://www.bloomberg.com/gadfly/articles/2017-01-13/banks-deliver-goods-to-justify-trump-bump
The quote from page 10 directly addresses the reality of the commodification of food. The similarities between the classification of motive in trading food commodities “hedging and passive investment” and “speculation” brought the 2007-2008 financial crisis to mind. During this banking debacle, banks that were “too large to fail” decided to advantageously grant loans to individuals who, on paper, had no chance of repaying them because they could shift the responsibility to an individual investor willing to take the risk. Newman wrote on page 10, “just as many owners of mutual funds don’t know which companies they hold in their stock portfolios, many investors don’t know which commodities contracts are included in their index funds.” The “speculation” entrepreneur wants to fix a favorable price for himself to either profit from, or trade to an entrepreneur looking to diversify his portfolio for his own guaranteed profit, or even to try and dump a riskier contract on an investor that is even more removed from the product than the writer of the futures contract. On page 11 Newman quoted Michael Pollan, [commodities are] “without qualities; quantity is the only thing that matters”. In the digitized trading grounds of the futures market, movers and shakers are only seeing digital numbers to represent an idea with so much more meaning. The uncertain vernacular of the writer accurately conveys the hopelessness of restoring hope in the U.S. bank system.
Hey Sean, Shani here
First off, I didn’t do the seminar assignment.
Moving on, I think you’ve found one of the main flaws in agriculture: we treat food as a commodity. Which it is, of course it is, we trade things for it. We exchange time in the form of services so that we can have food provided by someone who spent their time producing the food. It’s a commodity. But like you quoted commodities are only seen for their quantities, not their qualities. So instead of forcing a inaccurate metric on food, maybe we should design a new metric to accurately price the value of food? Or maybe we should remove food from the commodities market all together and make an alternative scheme to distribute food for free? As we go on into the future, taking into account alternative currency such as BitCoin, I wonder how long the dollar will remain useful? And at such a crux in time where we aren’t trading goods and services for dollars, will there be an opening for a Star-Trek-esque food provider? Ask for the vegetables and they will be there? Maybe a tax supported CSA for everybody?
Many things. Thanks for sharing Sean~
Shani A