Profiting from hunger?

file0001556043806The End Hunger Fast campaign has three principle concerns. We are calling on the government to ensure it provides a robust last line of defense for those who find themselves without resources, to ensure that work actually pays enough for people to live on, and to prevent companies from profiting from hunger.

The question, how would companies profit from hunger, and why?

The second part of that question is the easiest, to make profits and thereby enrich shareholders.

But as for how – that is slightly more complicated.

The easiest way to demonstrate how this works is by looking at Glencore – one of the worlds largest commodities trader. Glencore makes its massive profits by speculating, gambling, on the prices of commodities. Commodities in this sense are raw materials or agricultural products which can be sold or traded on international markets. So they could be Gold, lead, rice, wood, etc.

What gives Glencore an unusual advantage in this speculation is that it is a ‘vertically integrated’ company – in other words it doesn’t just sell the commodities, it also produces them, in enormous quantities. It controls for instance 50% of the world’s copper market, which means it has a particular ability to control the supply of that important commodity.

But Glencore doesnt just operate in mining – it also owns hundreds of thousands of hectares of farm land – which means that it has an ability to directly impact the price of cereal crops.

“A disturbing amount of price increases, I fear, is being driven by speculative activity,” Marcus Miller, a professor of international economics at the University of Warwick, told Al Jazeera. “Bets [on future price rises or declines] can become self-fulfilling if you are big enough to affect the market.”

Glencore is a perfect example of a company which can directly profit from hunger – as food prices go up due to the scarcity of wheat or corn or rice, a scarcity which they can to some extent manipulate through their agricultural activities – so their stocks soar. To put it crudely, starvation is good for business.

For forty days through Lent I will be fasting from food to draw attention to issues like this – my personal fast is alongside that of others, and is supported locally by friends from the Christian, Muslim, and Buddhist communities among others.

 

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2 thoughts on “Profiting from hunger?

  1. Not sure what your suggestion is here. In a sense all producers of food are profiting from hunger. Are you saying that there should be no speculation in markets for essentials (a small amount of speculation is probably good for price stability, and the hungry, although I’d certainly accept that the appropriate level of speculation is a tiny fraction of what we generally have)? Or perhaps that there should be a clear separation between companies that speculate and those that produce?

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