The Political Economy of Food and Finance

Schmidt, Ted P.

doi:10.4324/9781315734569

Cited by 10 publications

(12 citation statements)

References 23 publications

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“…The Dodd–Frank Act of 2010 empowered the CFTC to impose position limits for traders other than commercial hedgers. However, since index positions are synchronized, the total market weight of index traders and trend‐following speculators needs to be monitored and curbed, but not necessarily the positions by individual traders—an argument that has already been made by Schmidt (, pp. 134–139).…”

Section: Resultsmentioning

confidence: 99%

How financial investment distorts food prices: evidence from U.S. grain markets

Huellen

2018

Agricultural Economics

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Convergence between commodity futures prices and the underlying physical assets at each contract's expiration date is a pivotal condition for the market's functioning. Between 2005 and 2010, convergence failed for several U.S. grain markets. This article presents a price pressure-augmented commodity storage model that links the scale of nonconvergence to financial investment channeled through indices, which are traded in commodity futures markets. The model is empirically tested, using Markov regime-switching regression analysis. Regression results strongly support the model's predicted link between index investment and the extent of nonconvergence for three grains traded at the Chicago Board of Trade: wheat, corn, and soybeans.JEL classifications: G13, G14, Q14, Q18

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Section: Resultsmentioning

confidence: 99%

How financial investment distorts food prices: evidence from U.S. grain markets

Huellen

2018

Agricultural Economics

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“…Derivatives and its effects in food chains raise the need to establish barriers to limit the negative effects in the value chain but especially in relation to the reduction of the purchasing capacity for consumption (Dixit, ; Lubello, ; VanderHoff Boersma, ). The data show that between 2005 and 2008, the value of financial funds in derivative instruments reached 400 billion dollars; this generated distortions and contributed to the 83% increase in the price of food (Clapp, ) of real markets due to the high degree of financialization; this led to an increase in price volatility due to speculation (Clapp, ; Schmidt, ). Food security certainly depends on subsistence agriculture.…”

Section: General Problems In La Food Securitymentioning

confidence: 99%

Emerging, and old, dilemmas for food security in Latin America

Espinosa-Cristia

Isla

2019

Journal of Public Affairs

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The present text offers a summary of some of the crucial food security problems in Latin American (LA) countries. This region, like many others in the globe, confronts such as food safety difficulties. The summary offers also an analysis of some technologically based solutions for LA food security issues. As a general call, the present review article calls for a collaborative and transdisciplinary approach to think deeper about how to solve food security problems, putting the focus on enabling technologies within a context of social, market, and global trends to achieve food and nutritional security. The review is positioned far from techno‐optimisms and, at the same time, away from purely economic‐based solutions. Conversely, this review embraces the whole complexity that brings economy‐nature‐technology triad. Embracing such complex relationships between technology, nature and the socio‐economy aspects of food security LA issues. Such complexity also triggers a need for a solution that considers a renewed approach to sustainability in the whole food value chain from production to consumption. Sustainability in the value chain opens up a much‐needed approach to LA food security that broadens, and refresh, our understanding of this fundamental socio‐economic and technical phenomena.

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“…Since the 1980s the large bankers and investment houses – along with international groups like the Swaps and Derivatives Association – have strongly lobbied the US government to free up commodity futures markets and to lift constraints on ‘position limits’, that is, the amount of speculation allowed in a market (Schmidt, 2016). Until 2000 there had been legal safeguards in place to give protection to agricultural derivatives, preventing their price from being unduly influenced by speculators (Gertel and Sippel, 2016).…”

Section: The Main Drivers Of Change In Global Food Systemsmentioning

confidence: 99%

“…Until 2000 there had been legal safeguards in place to give protection to agricultural derivatives, preventing their price from being unduly influenced by speculators (Gertel and Sippel, 2016). But in 2000, as part of the deregulatory drive accompanying neoliberal globalisation, the Commodity Futures Modernization Act (CFMA) was passed by the US Congress, allowing financial speculators to dominate trade in many markets (Schmidt, 2016). This encouraged speculators with no previous interest in food markets to purchase derivatives that were directly linked to agricultural commodities – including commodity index funds (CIFs) which ‘bundle’ an array of commodities (such as wheat, corn, pigs, oil and gold) into a single financial entity that can be traded.…”

Section: The Main Drivers Of Change In Global Food Systemsmentioning

confidence: 99%

“…One of the issues relating to agricultural derivatives is that they are being traded independently of real-world food markets, that is, they have become highly ‘financialised’ (Oxfam, 2011: 1). Another is that increased speculation is creating food-price volatility, leading to higher food prices (Clapp, 2012; Schmidt, 2016). Yet another is that the main mechanism to attempt to control speculation on agricultural derivatives and other derivative trading in the US (the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010) is expected to be either rolled back or repealed during the Trump presidency (Rushe, 2017; Wall Street Journal , 2016).…”

Section: The Main Drivers Of Change In Global Food Systemsmentioning

confidence: 99%

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Re-evaluating food systems and food security: A global perspective

Lawrence

2017

Journal of Sociology

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Three major systems of producing and distributing food coexist in today's world-traditional, modernising and industrialised. While the movement from traditional to modernising to industrialised is neither inevitable nor uncontested, there are various social, economic and political forces that are acting to speed up such a transition. Neoliberal globalisation and financialisation are two of the macro-processes that are implicated in profound changes in food systems. From the perspective of critical agri-food scholarship, this article will outline the characteristics of the three food systems, before examining the role played by neoliberal globalisation and financialisation in reshaping their trajectories. The issue of food security will then be addressed, along with current opposition to the current global food trajectory.

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The Political Economy of Food and Finance

Cited by 10 publications

References 23 publications

How financial investment distorts food prices: evidence from U.S. grain markets

How financial investment distorts food prices: evidence from U.S. grain markets

Emerging, and old, dilemmas for food security in Latin America

Re-evaluating food systems and food security: A global perspective

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