Risks of Financialization and Price Increases in the Food System - Hunger

 

Fonte: Comciencia  (The long night of hunger)   

We are realizing that hunger and the abusive food price increases are the results of the financialization of large corporations, especially in the food system. With the expansion of agricultural commodity futures markets, agricultural products such as coffee, corn, soybeans, live cattle, and several others are traded on the Stock Exchanges, intensifying financialization in the food system with large investment funds, such as pension funds, hedge, and shares of private companies, in addition to other speculators.

There are several definitions of financialization, but one of them refers to the growth and importance of financial markets in global capitalism in recent years. Thus, financial actors express their motives to institutions operating in domestic and international market economies. With this, the power of corporations in large supply chains increases and the risks of financialization turn food and land into objects of speculation. Another definition is that of the sociologist Greta Krippner, who deals with the tendency to make profits in the economy through financial channels and not through productive activities.

These definitions opened the perspective for several areas of knowledge to start studying the phenomenon, such as political economy, geography, sociology, and anthropology, among others. In short, the risks of financialization studies are challenging the neutrality of money and critically analyzing the financial system.

While neoliberal trends in recent years have intensified the financialization of the food system, favoring large companies, micro, and small entrepreneurs have suffered from reduced aid almost all over the world. Even in developed countries (Canada, the United States, and Europe), which previously encouraged alternative agri-food models in response to the entrenched dominant model, aid to small local producers was reduced in the face of the neoliberal wave of globalization.

Even in these countries, small entrepreneurs who defend a sustainable model of food production still suffer today from the lending practices of traditional banking institutions, which favor large food industries, increasing the unsustainability of the food system. Small agricultural activities have been seen as a risky investment, as they are vulnerable to nature's unforeseen circumstances.

Therefore, the difficulties in accessing credit for small farmers have been harmful, as they cannot contribute in a more regenerative way to an alternative food system. Many social entrepreneurs struggle for access to the capital they need to start and grow their businesses. Therefore, we can argue that the lack of access to capital by such innovative entrepreneurs weakens the transition to a more sustainable food system.

In this case, the income or profit of family farmers (if they are profitable at all) derives from the sweat they shed. They are the ones who bring food from the field to the fork. The risks of Financialization, in turn, has contributed to a profound reconfiguration of the food industry order, from production to consumption, increasing inequalities, making food systems vulnerable, and disregarding the defense of sustainable food systems. Therefore, the results of the increasing control of the food system by large corporations jeopardize the survival of micro and small producers, environmental quality, food safety, and consumer sovereignty.

Now, Covid-19 is being used as a scapegoat for corporations that dominate the food market to set abusive price increases as they wish. As the President of the US Federal Reserve said in a US Senate committee: they raise prices because they can. Well, if they can, they do what they want.

For the White House, corporations are showing the highest profit margins in 60 years. For the 100 largest companies in the country, the profit margin is 50% higher compared to 2019. In turn, the net profit margins of the main meat producers such as JBS, Tyson Foods, Marfrig, and Seaboard, are above 300%. The Biden Administration and other politicians, including Senator Elizabeth Warren, are calling this a crime.

It is such a crime that the US Department of Justice has already put several executives behind bars for setting abusive price increases and indicted several others. According to Time Magazine, several corporations, including JBS, are paying millions to solve other cases. If the power of these corporations can make inflation worse than it is, what should be done?

In Brazil, in the current government, it seems that nothing, but the United States Congress has just passed the so-called “PRO Act”, which tries to regulate the actions of these corporations, not only demanding that the well-being of their workers be above their abusive profits but strengthening the unions and the workers' voice in the decisions of these companies.

Countries like Mexico, Egypt, and Bangladesh are already demonstrating against the abusive food price increases, showing that the great food crisis, leading to hunger, is the result of large investments benefiting large corporations. The battle against hunger in Brazil has always benefited large companies. In the current militarized and Centrão-dominated government, we are on the way to hunger, waiting for some presidential candidate to present a plan for a food system, different from today's poverty plan.