Food prices and global hunger are predicted to drop in the next 10 years. But treating food as a financial commodity that needs to be maximized ignores costs that are harder to measure in dollars, especially the environmental impact of food production. Although economics could be leveraged to move food where it’s needed, the Trans-Pacific Partnership (TPP), a free trade agreement that must still be ratified, would favor profits and industrial agriculture, and could harm small-scale and subsistence farmers.
Food was originally turned into a commodity that could be bought and sold on the stock market in order to solve the problems of heavy up-front costs and uncertainty inherent in agriculture, by allowing farmers to essentially sell their products before they were harvested.
However, things started to change in the 1980s, according to the Huffington Post, when a sequence of policy decisions made room for “speculation on agricultural futures by banks, hedge funds, pension managers and university endowments.”
Prices soared in 2008 when the housing market dropped, stock brokers looked to food commodities. A number of factors contributed to the price increase, but the Food and Agriculture Organizations of the United Nations determined that speculation drove 60 percent of the pricing changes in wheat at that time, according to Huffington Post reports.
The problem with fluctuating prices on Wall Street is that they lead to price fluctuations worldwide, leaving little for those who already pay a large portion of their income for food when prices rise.
The United States Department of Agriculture (USDA) illustrates what happens to high-income and low-income countries when the price for staples like rice, corn, wheat and vegetable oil go up:
In low-income families, staples make up a large portion of diet and income, and price changes have a huge impact on people’s lives. Apart from increases in speculation, fluctuations in supply and demand factors, like extreme weather events and demand for biofuels, can also affect the food commodities prices.
Though there hasn’t been a price increaes as steep as the one in 2008, it stands to question whether our current trade systems are based on flawed economic theories.
In an ideal world, food would flow easily from the countries with the conditions most suited to produce it.
“Some countries, for example, have access to abundant water and fertile soils, and these countries should focus on producing crops that rely heavily on those resources, and export their surplus to other countries that are less able to produce those crops, but which hold comparative advantage in producing other crops,” wrote Jennifer Clapp, former chairwoman of the Canadian think tank Centre for International Governance Innovation and the author of the book “Food.”
However, this free trade ideal is far from our reality, where food staples are controlled by a handful of firms. Though the TPP seeks to lift trade restrictions in 12 countries, it could actually help concentrate power even more in the hands of industrial food giants by extending seed copyrights and allowing corporations to sue governments that pass regulations perceived to threaten trade. Proponents say this allows for efficiencies that would lower food prices, but another Canadian group from the University of British Columbia noted that this allows for “continued marginalization of small-scale producers and processors.”
The problem with an industrial and economic model of food production is that it values quantity above all else and neglects other factors such as water use, sustainability and biodiversity. Economic incentives can encourage farmers to grow cash crops that just aren’t environmentally sustainable for a region, like asparagus in the Peruvian desert or rice paddies in an arid part of Ghana.
Rebecca Roseman, a recent master’s degree graduate of New York University’s Food Systems program visited Ghanaian farmers and reported in an interview with Humanosphere that “in Ghana rice was not a good choice because it’s really, really dry there – only government intervention or subsidization could make it grow. Rice might be an attractive market right now, but it’s an untenable long-term choice because of the water needed.”
Though growing cash crops might help struggling farmers while the market is hot, disruptions in the market can seriously threaten food security, especially if the crops they grow are inedible.
Although intuitively large-scale agriculture may seem like a solution to the insecurity of subsistence farming, according to Frances Moore Lappé, who has been writing about hunger since the 1960s, “despite the vast output of U.S. industrial agriculture, one in six Americans is ‘food insecure.’”
Lappé and many other activists favor small-scale agriculture and tend to focus on grassroots movements, but Clapp advocates for changing the broader policies through agencies like the World Trade Organization as well.
“Building sustainable food systems at the local level will continued (sic) to face challenges if the structures of the global economy are pushing in the other direction,” Clapp wrote. And wide-scale moves like the TPP continue to push against small farmers.
Roseman summed it up like this: “Increasing monetization of food markets has done a lot of disservice to the people who are the poorest in the world. This turns staple foods into commodities, instead of something people can rely on to feed themselves every day.”
Although revamping global trade may sound next to impossible, Clapp pointed out that the current system “has really only been dominant in the past 20 to 30 years.”