“The food system is pretty well bust in the world,” Barbara Stocking, chief executive, Oxfam, June 2011
Jo Smit writes:
The world’s biggest commodities trader Glencore took its place in the FTSE100 index of top companies this month, becoming an investment of choice for pension fund managers.
Is it a good investment? In spite of recent jitters in the global commodities markets the answer must be, in the longer term, yes. Glencore is one of the ranks of major conglomerates that are increasingly coming to dominate the control of the raw materials we need to sustain our existence. Global demand for finite natural resources is increasing over the long term and greater levels of unpredictability of supply and shortage are inevitable in the future. Economic, political, social and environmental uncertainties are making sourcing and supply lines less certain. Droughts in northern Europe, China and southern US states are already threatening this year’s grain harvests. All of these factors are pushing up commodities prices and creating a volatile market that can yield substantial profits. This is why Glencore’s share offer on $10 billion of stock was significantly over-subscribed.
But before you feel too self-satisfied about the growth prospects for your pension fund, spare a thought for the broader consequences of all this. This profit is based on the food and material needs of all of us, whether wealthy or abjectly poor. When global food prices rose by 29% over the past year it was an inconvenience to many of us in developed nations, but the World Bank reported that it plunged 44 million people into a state of extreme poverty. They have joined the 900 million people around the world already going hungry each day. Oxfam has just reported that it expects food prices to double within the next two decades. Every price rise makes the rich richer but will continue to push basic foodstuffs further beyond the financial reach of the poor.
Whatever our moral unease at this, we are locked into a global commercial trading system that has made the stuff of life into the ultimate investment. As we rapidly use up our finite resources, and they constantly increase in price, we will continue to strive for growth and profit because we have no choice. The ‘balance of trade’ is of necessity an imbalance; in order for one to make a profit, someone else has to make a loss.