Commodities Trader: Soaring Food Prices “Good for Business”

1x1.trans Commodities Trader: Soaring Food Prices Good for BusinessThe United Nations, food aid agencies and the British Government accused the world’s largest commodities trading company, Glencore International, headquartered in Baar, Switzerland, of characterizing soaring world food prices as “good” business.

The rise in global food prices are partly due to the worst U.S. drought in a half century, which has spawned record feed prices that in turn are causing farmers to shrink cattle herds to the smallest in two generations, driving beef prices higher.

According to USDA estimates, beef output will slump to a nine-year low in 2013 after drought damaged pastures from Missouri to Montana.

Russia suffers from a similar food crisis that could force their government to ban grain exports.

The senior economist of the UN’s Food and Agriculture Organisation, Concepcion Calpe, told The Independent: “Private companies like Glencore are playing a game that will make them enormous profits.”

According to The Independent, Glencore’s director of agriculture trading, Chris Mahoney, triggered the controversy when he said:

“The environment is a good one. High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities.

“We will be able to provide the world with solutions… and that should also be good for Glencore.”

Oxfam, an international relief and development organization dealing with poverty and hunger was outraged by Glencore’s exploitation of volatile world food prices.

Jodie Thorpe, from the aid agency’s Grow Campaign, said: “Glencore’s comment that ‘high prices and lots of volatility and dislocation’ was ‘good’ gives us a rare glimpse into the little-known world of companies that dominate the global food system.”

Oxfam said companies like Glencore were “profiting from the misery and suffering of poor people who are worst hit by high and volatile food prices”, adding: “If we are going to fix the ailing food system then traders must be part of the cure.”

A Glencore spokesperson said: “Regardless of the business environment, Glencore is helping fulfil global demand by getting the commodities that are needed to the places that need them most.”

Calpe said leading international politicians and banks expecting Glencore to back away from trading in potential starvation and hunger in developing nations for “ethical reasons” would be disappointed.

1x1.trans Commodities Trader: Soaring Food Prices Good for Business“This won’t happen,” she said. “So now is the time to change the rules and regulations about how Glencore and other multinationals such as ADM and Monsanto operate. They know this and have been lobbying heavily around the world to water down and halt any reform.”

Glencore’s collective corporate mindset is so very reminiscent of what took place in the year 2000, when Enron traders caused rolling blackouts in California by trading California’s electricity like a commodity in the spot and forward markets.

Enron’s actions left more than 100,000 businesses and residential customers in the dark for two days, trapping people in elevators and shutting down high-tech companies such as Cisco Systems and Apple Computer.

“The traders said that Enron’s former president, Jeff Skilling, pushed them to ‘trade aggressively’ in California and to do whatever was necessary to take advantage of the state’s wholesale market to boost the price of Enron’s stock.”

“Skilling would say, ‘if you can’t do that then you need to find a job at another company,’” said one former senior Enron trader. “He said we should go trade pork bellies if we can’t be aggressive.”

Spence Cooper
Inquisitive foodie with a professional investigative background and strong belief in the organic farm to table movement. Author of Bad Seeds: A FriendsEAT Guide to GMO's. Buy Now!
Spence Cooper