Buying farms killing poors for Mammon
April 29, 2008 by Francis Chan, Switzerland
Poor harvest, growing population…..probably are not enough to explain the skyrocketing food prices. Besides Biofuel, ’gambling’ in the futures market of food is certainly another human-induced reason of surging food prices.
Not long ago, investment banks, hedge funds, private equity were rushing to invest in CDOs and other subprime assets. Huge losses? Not at all. Anyway, Central banks will help out when those ‘assets’ turns out to become a source of disaster.
Now, some of them have fallen in love with another kind of investment - ”sell banks, buy farms”, a new motto for many fund managers. There are plenty of reasons for this. But one of them is simple, when you want to bet on the future (prices of food), it’s always good if you can take part in controlling it.
The ’silent tsunami’ of surging food prices has been striking all over the world. At the same time, wealthy Investors are riding on the ‘tsunami’, risking hungry poors’ lives to fish their handsome profits. (Possibly you and I will soon buy a part of the farms, as our investments like pension funds may have followed suit)
What would the fund managers do are basically grasping two opportunities. Either buying cheap land in poor countries and boost its yields, or acquiring existing farms to profit from rising food prices or even land price appreciation.
Though many US farmers and food producers themselves have complained the futures market of food is a broken market, the US regulator said there was no problem. Fine, might be true. The situation may not be bad enough to allow a government intervention NOW. But how about in the FUTURE?
If investment banks really fall in love in buying farms, we should be alert then. When professional fund managers grow crops, are they just aim for and satisfied with making a reasonable profit by providing steady supply to consumers?
When their influence on the global food prices become significant, what would they do? Will they let the food prices coming down and subsequently prove their previous investment decision of buying farms seems stupid? Of course not, they will love to see the food prices going even higher in the long term so that their investment pay its way.
Given the investment funds have a larger and larger stakes in the food market, it would be easier for a camel to go through the eye of a needle than for the food prices to coming down.
He thought to himself, ‘What shall I do? I have no place to store my crops.’ (Luke 12: 17)
No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon. (Mat 6:24)
