How Big Finance is Eating the World’s Agricultural Wealth

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from Naked Capitalism:


Saturday, June 1, 2013
Sasha Breger: How Big Finance is Eating the World’s Agricultural Wealth

By Sasha Breger, a lecturer at the Josef Korbel School of International Studies at the University of Denver and author of the recent book Derivatives and Development. Her research includes global finance, derivatives, social policy, food, and farming. Cross posted from Triple Crisis

If you hear a kind of whooshing, rushing noise, don’t worry—it’s not US jobs moving to China. Today’s great sucking sound is the sound of agricultural wealth being siphoned off into the global financial system. Dragging poverty and insecurity in its wake, this broad movement of wealth from agriculture into finance is enriching and empowering finance capital at the expense of farmers, traders, consumers, rural communities and the earth. In fact, that sucking sound is really the sound of injustice.

Finance capital globally deploys a huge variety of methods and techniques that generally serve to redistribute wealth from agriculture to finance. These include debt, farmland acquisition, commodity hoarding, and derivative and insurance markets. In the following posts, I outline the wealth transfer mechanism in each of these contexts, focusing largely on new data and evidence from the past several years.

Debt

Debt markets are one of the oldest meeting places for agriculturalists and financiers. Under the right conditions and in the correct amounts, debt can finance long-term, productive agricultural investments that improve the well-being of farmers, boost rural communities, and grow and diversify national economies. Unfortunately, lots of agricultural debt around the world is more odious in nature. At the national level, the governments of commodity dependent states frequently borrow too much and for the wrong purposes (for a whole host of interesting reasons). Agricultural wealth in the form of commodity export earnings and government revenues is then utilized to service sovereign debts to financial institutions (usually foreign), a practice which in turn reinforces commodity dependence and undermines public investment, among other harms that have long been noted by debt scholars like Susan George.

At the farm level, debts have been rising for several decades as governments closed up their rural development banks (which used to offer subsidized credit), crops failed, input prices soared and crop prices at the farm gate fell in real terms. In some of these cases, debt repayment works as a mechanism to siphon agricultural wealth off into the informal financial system; in others, debts result in a redistribution of wealth toward the formal financial system. .................(more)

Read more at http://www.nakedcapitalism.com/2013/06/sasha-breger-how-big-finance-is-eating-the-worlds-lunch-agricultural-wealth.html#QpwYVhDSD9SMeQzu.99