what's behind the rise, really?
How can this happen? In the food system, it’s both profit-taking by vertically integrated companies that control the entire supply chain, and speculation. (Note: vertical integration means a company owning all the steps between primary production and retail: from farm to trucking to processing plant to next processing plant to retail distribution. When a company is vertically integrated like that, it can take profit from every step of the chain, as well as exerting total control over all steps. It's a reliable way to maximise overall profits.) As with housing, food is part of the commodities markets that are publicly traded on the world’s stock exchanges. Futures trading in pork bellies, grain, oilseeds and other food drives a huge part of the global pricing on food. Futures trading means guessing at the future price and availability of any commodity, and it’s the sort of fabricated reality that allows for rapid price changes and ballooning differentials between price paid to the farmer (which is at least somewhat based on real costs, though usually below the actual cost of production) and price charged to the consumer (which is entirely dependent on how much profit the middle companies choose to take).
While farmers continue to receive low prices at the farm gate, traders take more and more profit. Those who are not involved in primary production take no risk, but have all the power in the food system.When food is turned into a commodity, publicly traded as though it were not critical to life, we all lose. The more hands are in the process, the more opportunity there is for prices to rise without relationship to the actual production of food or the needs of the consumer. What we see now is that highly processed “foods” are made with more derivatives and less actual food – more high-fructose corn syrup, lecithin, etc. - and put on the shelves at what seems to be a cheaper price than actual food like potatoes, corn and flour. (This is of course somewhat imaginary, but a discussion of how expensive it is to be poor is another topic.)
Apart from food, though, profit is driving price increases beyond the cost of production all over the economy. Whether it’s gasoline, cleaning products, pharmaceuticals or shipping, everything is on the rise – but it’s driven by corporate profits all over the system. Meanwhile, economists are pretending that the reason is cost increases at the production end, shortages or “instability” (aka. speculation, but they’ll never use that word because it’s a dead giveaway).
Remember that the responsibility of corporations is to increase shareholder return – only that, not to take care of workers or consumers. This means that maximizing profits is not only the goal but the golden rule, and is considered the most ethical possible action by these corporations.
How is it that profit-taking at the expense of everything else is considered ethical? What does this say about our priorities?
And how can we hit reset on those priorities for our government and our economy?