The old laws of the marketplace are no longer working. Food prices have been rising for six years because of surging demand, and increased production is not restoring the balance as it used to in the past. In fact, prices have been going up even faster over the last year. The so-called "financialisation" of commodities markets, that is, the influx of investment funds seeking safer and more lucrative assets, has intensified the trend and "at the moment impinges more than the law of supply and demand," said analyst Fernando Muraro of AgRural, a consultancy firm in Brazil.
RIO DE JANEIRO, Apr 25 (IPS) - The old laws of the marketplace are no longer working. Food prices have been rising for six years because of surging demand, and increased production is not restoring the balance as it used to in the past. In fact, prices have been going up even faster over the last year.
The so-called "financialisation" of commodities markets, that is, the influx of investment funds seeking safer and more lucrative assets, has intensified the trend and "at the moment impinges more than the law of supply and demand," said analyst Fernando Muraro of AgRural, a consultancy firm in Brazil.
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There is no way to measure the influence of speculative forces on "agflation," the new term coined to describe inflation provoked by the agricultural sector, he said.
But the role of speculation is undeniable, as commodities funds are involved in 40 percent of the futures and option contracts at the Chicago Stock Exchange, the highest proportion ever. Ten million tons of soybeans were bought in March 2007, compared to 21 million tons last month, Muraro pointed out to IPS.
There is a global excess of dollars, and holders are transferring them
to markets and products wherever sustained price increases indicate
good prospects for making profits, he said.
Full Story: http://ipsnews.net/news.asp?idnews=42134
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Farmers, Consumers Squeezed by Middlemen Matt Homer
NEW YORK - With global grain stocks at record lows and soaring prices
for agricultural products, new attention is being paid to which farming
methods are best poised to meet global food needs.
The United States and Europe have long utilised large-scale industrial farming -- which has generated enormous increases in output -- but this method is coming under increasing scrutiny over concerns about monopolistic behaviour and sustainability. In order to increase output in a sustainable way, agricultural experts are increasingly looking to alternative models, or at least significant alterations to the existing industrial one.
A conglomeration of over 110 countries -- including the United States -- and key global institutions recently concluded a three-year study of world agriculture and found that North America is increasingly dominated by a vertical agricultural structure.
According to the report, "The International Assessment of
Agricultural Knowledge, Science and Technology for Development"
(IAASTD), this has created a situation where "the largest actors...have
predominant influence over the production, processing and marketing of
food." It further argues that this has disconnected farmers from
consumers and ensured that most profits are "captured by industries
after the farmgate, not by farmers".
Full Story: http://www.ipsnews.net/news.asp?idnews=42112
