Multinationals make billions in profit out of growing global food crisis

[OneBlueSky]

Speculators blamed for driving up price of basic foods as 100 million face severe hunger

http://www.independent.co.uk/environment/green-living/multinationals-make-billions-in-profit-out-of-growing-global-food-crisis-820855.html

Giant agribusinesses are enjoying soaring earnings and profits out of the world food crisis which is driving millions of people towards starvation, The Independent on Sunday can reveal. And speculation is helping to drive the prices of basic foodstuffs out of the reach of the hungry.

The prices of wheat, corn and rice have soared over the past year driving the world's poor – who already spend about 80 per cent of their income on food – into hunger and destitution.

The World Bank says that 100 million more people are facing severe hunger. Yet some of the world's richest food companies are making record profits. Monsanto last month reported that its net income for the three months up to the end of February this year had more than doubled over the same period in 2007, from $543m (£275m) to $1.12bn. Its profits increased from $1.44bn to $2.22bn.

Cargill's net earnings soared by 86 per cent from $553m to $1.030bn over the same three months. And Archer Daniels Midland, one of the world's largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 per cent in the first three months of this year from $363m to $517m. The operating profit of its grains merchandising and handling operations jumped 16-fold from $21m to $341m.

- more . . .

http://www.independent.co.uk/environment/green-living/multinationals-make-billions-in-profit-out-of-growing-global-food-crisis-820855.html

[rurallib]

1. One could almost think that they helped create the crisis ...

no, no one could be that greedy, could they?

[izquierdista]

2. Speculative bubbles

One of the big flaws of capitalism is that it makes too much money, money that has no where to go. And those that have it are not content to just let it sit in a passbook account, so they have to go out and invest it, seeking the highest return. So in the '90s, the extra money pumped up the NASDAQ (and then took a dump), when the spigot was opened on mortgage loans, it flowed into mortgage backed securities (until they also took a dump), and now it is flowing into commodities.

Readers here should take note of the way that FDR built controls into an unregulated economy in the New Deal. He opened new areas for the money to flow, like rural electrification, that were NOT the highest return on the money, but did provide immense value to the people. The banking regulation of the New Deal changed the flow and ebb of capital to much more manageable flows, ones that led to the building up of the nation, not a succession of speculative bubbles.

If you should get into discussions with people who swoon at the idea of "free markets" ask them if they think that unconstrained water is a good thing. Which is better when a storm approaches, to anchor a ship out in the ocean, or behind the safety of a breakwater? Should there be dams on the Colorado River to provide water and power to 7 states, or is the "free market" of water flooding in the springtime (high supply) and dwindling to a trickle in the summer (high demand) a better way?

With food, the foolishness of speculative bubbles can be seen right away. While burst bubbles in stocks and real estate just cause pain to the balance sheet, this type of speculation causes pain in the stomach, pain that can be relieved by shooting the speculator hoarding the goods. For the sake of peace and 'domestic tranquility', this type of speculation needs to be squelched:
1) raise margins on commodities
2) make hoarding more expensive
3) get farmers to plant local crops for local consumption
4) add to the cost of long distance shipping of commodities (more than what the price of oil is already doing to it).

Unless we want to live in a world where food riots occur every time there is a shift in the market, agriculture needs to be planned and regulated. First to provide sufficient food for local consumption, and then, only then, should there be markets to trade the surpluses.

[lifesbeautifulmagic]

3. Our nbc local news station did a story this morning blaming the food

crisis on alternative fuels, not a word about the speculators or the market. Not only will they use this crisis to line their own pockets, but the oil interests, repubs, and club for growth types will use it to continue our oil addiction.