The ABCD of food

 

We consume food. Food is the basic necessity that never goes out of demand. Food is essentially the most powerful commodity.

So naturally someone who controls food, controls the world. But is it possible that food can be controlled? Something so basic as food which can be grown in your back yard cannot decide who is the leader.

But there are some companies that have precedence over the entire food industry. The four dominant agricultural trading firms are the ABCD. They command the entire food industry directly and indirectly. The grain trade is capital intensive. They invest heavily in storage facilities and port and transport infrastructure.

The commodity market kings - ABCD - are four diverse companies named:

A- ADM (Archer Daniels Midland)

B- Bunge

C- Cargill

D- Louis Dreyfus

You eat their products everyday. The corn in your flakes, the wheat in your bread, the orange in your juice, the chocolate in your cup; all are the hand downs of these companies. If you've eaten chicken or beef, consumed anything containing salt, gums , starch, gluten, sweeteners or fats, or bought a ready meal or a takeaway, they will have shaped your consumption even further.

First established as private, family owned grain merchant companies with specific geographical specialties, these companies have evolved to be quite complex. They are engaged in activities including buying and selling of agricultural and non agricultural commodities. They also undertake a range of activities from finance to production to processing and distribution.

 

These companies play a very big role in derivates market. They trade on a large scale and influence the foodgrain prices all over the world. How do they do it? Well, let's take the example of wheat.

Wheat is a commodity and hence can be traded in the derivatives market. Derivatives market has a simple concept of buying or selling a stock, holding it and waiting for the results to pop up.

So the ABCD usually short wheat. This means they sell wheat in huge quantities in stock market. They don't have to physically hoard the huge quantity of wheat. Think of it as a virtual stock. So, shorting of wheat means that they sell this stock in the market. 

When the production of wheat increases, it will create excess supply. Eventually price of wheat decreases because there is easy availability of wheat. Basic economics.

ABCD companies bet in the favour of this situation. If wheat prices fall, they will book massive profits as they will be able to buy at low prices in the derivatives market.

But what if the wheat production was less that year. No worries. These corporate giants control the entire foodchain. ABCD controls 90% of the wheat production all over the world. If they do fail in the financial markets, they simply increase price of wheat. The loss incurred in the markets will be easily met by selling wheat at exorbitant prices.

By this way, these companies never default on their earnings. First, they earn profits if they win in the derivatives market and second if this doesn't happen, they increase wheat prices and earn profits margins on the commodity. Its a win-win for them both ways. This gives them an unfair advantage over the small wheat traders.

This manipulation causes a ruckus. Wheat prices increase drastically. More disposable income is employed to fulfill needs. Inflation rises. The poor can't afford food.

This leads to hunger and poverty.

One such situation led to a major uprising in the Sub- Saharan countries. It started with a man named Mohamed Bouazizi's self immolation in protest of police corruption and ill treatment. This led to the infamous Arab Spring.

Arab Spring was a series of anti-government protests, uprisings, and armed rebellions that spread across much of the Arab world in the early 2010s. It began in response to corruption and economic stagnation with respect to food availability.

 The manipulation by the ABCD companies created major disturbance in the food prices that led to arab spring uprising. This resulted in the shift of power dynamics. It threw off many dictators from various regions and established democracy.

Hence, the food prices are carefully guided by the government. A simple basic commodity such as wheat can either overthrow or help in administrating an empire.

 AND the ABCDs control the food dynamics. It is plausible to say that they are the unnamed, unpopular leaders who work to make or break governments. They can easily destroy a nation. They themselves hold massive power bigger than the combined GDP of various nations.

Beware of these power plays. Get to know the world leaders and make better decisions.

Hallelujah!