The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Speculation and the Threat of Famine

Aug 20, 2012

Global food prices, as listed on the Chicago commodities exchange, have soared. It’s the drought, says the business press. Yes, there is drought, but that has been made much worse by what experts call “intense financial speculation.”

The severe drought in the U.S.–following the one that hit Russia, Ukraine and Kazakhstan (and, before that, threatened Argentina)–resulted in a decrease in production of grains in those countries–mainly wheat, corn and soybeans.

Yet, there has been no “real threat of shortages,” according to the U.N. Agency for Food and Agriculture. Stock reserves are large enough to meet needs. In fact, what’s really revolting is that overall global grain production has never been so high. This year it reached 2.4 billion tons, 500 million more than 10 years ago, an increase twice as fast as the growth in world population. But this latest drought represents an opportunity for banks and large financial funds to speculate on grains, causing their prices to shoot up throughout the world.

Over the last three months, corn prices jumped 17% and wheat soared 41%, and 70% in one year! The speculators are rubbing their hands with joy, as is agribusiness.

A dozen super-rich companies control 85% of world trade in food goods: for example, Monsanto controls corn and livestock feed, Cargill controls 25% of wheat, and Louis Dreyfus has 31% of the market for rice. Drought is great for business.

Grain prices are based on factors that have nothing to do with people’s needs. They are based on financial goals, first of all to enable the large producers, capitalist agriculture, to make a profit. In this economic system, grains like all food products are treated as commodities to be bought and sold.

A drought or a natural disaster unleashes speculation on these food staples, driving up the prices in the commodities markets, which then dramatically affects the poorest populations of the world. The poor are faced with basic foods that cost too much for them to buy.

Two centuries ago, Charles Fourier denounced capitalist society which was coming into being, where “poverty is born in a civilization of abundance.” Unfortunately, this remains true, and on a still greater scale. Fourier deduced from this the necessity to radically change society. This is still more urgent today.