Friday, October 03, 2014

The Food Supply Chain - Is It About Food Or Profit?


The capitalist system of profit over everything else affects the very basics of our lives, and more often than not affects them negatively. Air, the first imperative for life, is known to be polluted and in many areas dangerous to health - but little is done about it. Water, the second imperative, is also polluted with all manner of poisons and most water supply is now privatised and has to be paid for (one example currently newsworthy is the situation in Detroit). The third imperative, food, is an enormous arena worldwide for profit-making on a grand scale. And, generally, the poorer one is the more one is affected by these factors.
One of the basic principles of a socialist system is free access for all to the common wealth which, in essence, means water and food comes free. With the profit motive removed from all transactions communities would also be free to organise their water supply, food production, etc etc for the benefit of all rather than the financial gain of a few.

How financialisation influences the dynamics in the food supply chain by Myriam Vander Stichele

 This paper provides a brief analysis of the financialisation of the food supply chain and its impact on the agricultural sector. The growing interlinkages between the financial sector and the agri-food sector have shaped to a large extent the prevailing dynamics of the latter, from land ownership to food retail. The different parts of this paper describe the different ways and means, and ever further levels of financialisation.
 First, financialisation has led companies in the agro-food sector to prioritise financial profits and the interests of financial stakeholders over those of other stakeholders. 
Second, the financial sector increasingly influences how the food supply chain is structured and how decisions are made at various points along the chain.
 Third, the financial sector itself has increasingly used the agri-food sector as a basis to expand its financial business by developing and offering, often speculative, financial instruments and services that cause and further deepen financialisation. The agricultural derivatives markets are a typical example. Fourth, some agribusiness themselves offer financial services or act as the financial industry.

 The agricultural sector and the food industry are attractive to the financial industry for a number of reasons. Expectations of long-term growth in food demand and increasing food scarcity make food-related companies attractive investments. Moreover, the inherent uncertainty and risks involved in agricultural production are appealing to financial players, as the greater the risk and volatility, the higher the potential returns. A wide variety of financial players are involved in the agri-food sector, such as individual investors, institutional investors including pension funds, commercial and investment banks, insurance companies, hedge funds, private equity funds, stock exchanges, agricultural exchanges and other trading venues for agricultural commodity derivatives, fund managers, financial advisors, etc. 

The dynamics resulting from this financialisation of the food supply chain is distorting the main function of the agri-food sector, which is to provide nutritious food to as many people as possible in an environmentally and socially sustainable way. To restore this function, an important step to be taken is to expose the ways in which the financial sector's growing influence is having a negative impact on the agri-food sector. The following step is to hold financial players accountable for the distortions they cause. In addition, other ways must be found outside the financial sector to support and finance a more equitable distribution of income along the food supply chain, the provision of food for all members of society, and healthy food consumption.




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