May 27, 2009

What the financial collapse can teach us about the food system

Tom Philpott relates the economic meltdown to the situation with industrialized agriculture: "the global food system, the juggernaut that feeds billions every day. It’s not hard to make analogies with the financial sector whose rubble now lays scattered about, ready to be cleaned up on the public’s dime."

..."Like the financial sector, the food system has dramatically globalized over the past generation, even as it has become increasingly concentrated (PDF). Just as traders in New York, Tokyo, and London—often employed by the same mega-banks—can make, say, the Argentine peso plunge or soar with a few keystrokes, global food commodity markets have become tightly intertwined.

"Just last year, the U.S. policy of diverting massive amounts of corn to biofuel—in concert with similar European Union policy on soybeans—sparked steep increases in food prices worldwide, pushing hundreds of millions of people into hunger. In essence, decisions made in Washington and Brussels reduced Haiti’s urban poor to eating mud cakes.

"The analogy between food and finance also extends to the concept of leverage. During the boom, a typical Wall Street firm held a dollar in liquid assets for every 25 it used to make speculative bets in stuff like derivatives and credit default swaps. Execs were so confident that real-estate prices go only one way—up!—that 25-to-one leverage seemed like a sound business model. Paumgarten shows that many of them had doubts; but that only makes the situation more stunning...

But: ..."Just as signs industrial food’s fragility abound, there’s also evidence of robust alternatives nationwide. For 20 years, farmers markets and CSAs have grown dramatically, providing links between consumers and farmer unmediated by transnational food corporations."..

Read article here, posted 25 May 2009 on http://www.grist.org/