Hunger Pays: Banks Profiting on Food Prices

By: Dylan Rodgers

Much of the economic market is purely theoretical.  Professional financial advisers look at the history of market trends to make hypotheses about future market conditions.  Any economist could easily explain this process through mathematical equations of values, statistics, and probabilities, but theoretical future economics is by no means a truth statement like 2+2=4 (the way it is always presented).  The real truth pushing the prices up is that market value dictates profit.

Market speculation is a guess as to the future values of products.  Originally it was created to help farmers have the security of a guaranteed price in the future.  The one major problem is that the market speculators (banks and other marketing firms) are less interested in the market and more interested in making a profit.  They pump billions of dollars into the market and bet it on rising food prices.  Regardless of what is actually happening in the real world, the fact that banks speculate food prices to go up means that present market prices go up to accommodate the 'inevitable future'.

Now the market may be purely theoretical but it has legitimate effects on the real world.  As food prices go up, people are forced to spend more and more of their income on sustenance.  People living in lesser developed countries on average already spend around 70 percent of their total household budget on food alone.  People are forced to choose between their bills or their nutrition, their mortgage or their children.

The starvation of people across the globe is reality, no matter how speculators try to put it.  Over a billion people (that's 1 in 7) are severely malnourished.  In Africa it is 1 in 3.  Ethiopian food prices increased 41 percent in May 2011 alone, and why?  Why are people forced into this position?

Let's be real:  in business, making a profit is top priority, no matter how many people starve.  That's why speculators now outnumber the amount of food traders (people dealing with actual food, scarcity, and demand) worldwide.

So what can be done about this? Often the battle sides on sustaining ultimate freedom in capitalism.  Even when people suffer for the profit of a few, it is seen as the nature of the market.  Campaigns in both the US and throughout Europe are pushing for legislation to cap the number of "food futures contracts" that can be held by financial speculators.  By limiting their power, the food market would stabilize itself based off of the actual conditions, not some made-up figures.

Once this horrible charade is over, we can put it in our bag of forgotten lessons like the mortgage crisis and the stock market scandal.  Hopefully we'll take this one more seriously.

Photo: Mars Hill Church Seattle