You certainly cannot achieve such ambitious goals by doing something as pedestrian as growing kale or cultivating an organic farm. You can’t do it by selling fresh foods to a local market: too small, too little room for growth, too much darned hard work. Conquering the world shouldn’t be so hard! Throw me a frickin’ bone here, people. How about manufacturing processed foods on a large scale using low-cost inputs, such as high-fructose corn syrup, cornflour, wheat flour, sucrose and the odd food colouring or two, and then creating the illusion of value-added convenience, health, weight management and sexiness? Well, now we’re talking, Mr Bigglesworth!
But food can be hard work and dirty business. Moreover, most foods, such as eggs, pork, and fruit and vegetables, have finite shelf lives measured in just days – a shipping delay of just a few days could mean that your entire inventory becomes a worthless pile of rot. Lots of foods require refrigeration, adding another layer of cost and risk. Then you have to meet all sorts of regulatory requirements issued by agencies such as – in the US – the FDA, USDA, and federal, state, county and local health departments. What if you are the sort of businessman who doesn’t care to get his hands dirty? You don’t want to actually handle the food; you just want to make large transactions on paper or electronically. Buy low, sell high, bank your profit. No dirty hands, no messy, rotten food.
You therefore want to transact millions or billions of dollars worth of food, but you don’t want to touch the stuff, deal with logistics, worry about risks or contend with endless regulatory hassles. In other words, you want to arbitrage your way to profits, i.e., take advantage of the different prices paid for a product in wide demand from every level of society and that sells as easily in Spokane as it does in London or Brisbane. And you want to do it with something that passes for food and enjoys extended, perhaps limitless, shelf life and can be transported over long distances to take maximum advantage of worldwide price differentials.
What we’re talking about buying and selling is called a commodity. This is a good or collection of goods – whether iron ore, crude oil, gold, tin or aluminium – that is relatively indistinguishable from source to source and by different consumers. Commodities leave little or no room for variety, for boutique versions, for uniqueness. It’s all the same everywhere, for everyone.
Grains are on the short list of foods consumed by humans that conform perfectly to a commodity market. (Coffee beans, tea, sugar and soyabeans are among the handful of others.) You won’t find heirloom tomatoes, radishes, garlic or grass-fed beef on any commodity exchange. Karl Marx observed that, ‘From the taste of wheat it is not possible to tell who produced it: a Russian serf, a French peasant, or an English capitalist.’ When a loaf of multigrain bread is purchased, how many people are concerned with whether the wheat flour, oats, millet or rye came from Iowa, East Anglia or the Ukraine? There is little difference between corn from Brazil and corn from Kansas, and the consumer can’t tell the difference. Of course, you can pretend that there is some enticing appeal to your San Francisco sourdough bread or ‘authentic’ Mexican tortillas. But it’s all created from the same commodity: grains.
Food: The Ultimate Commodity Exchange
Beginning in the late 19th century and for many years afterward, high-volume grains – wheat, corn and rice – were handled as commodities, all under the control of relatively few individuals and private companies. In the United States, the Kansas City Board of Trade and the Chicago Board of Trade were founded to facilitate the trading of futures contracts for wheat, corn and oats in the 1870s. These were the very first products to trade on a commodities market, preceding even crude oil and iron ore.
This was not about grain farmers labouring to grow their crops, then carting them to the mill and hoping to sell for a favourable price. This was about a financial system with rules written by a select few who were intent on trading and profiting from large transactions that are only possible with foods that can be traded as commodities on a worldwide scale. More recently, large companies that trade in grain contracts have found it even more profitable to extend their businesses outside of just paper transactions and have worked towards vertical integration, getting their hands dirty in the messy business of the grains themselves. Today, companies that trade grains are also likely to own grain storage facilities, milling operations, trucking and railroad companies, and myriad other operations involved in the production, distribution, shipping, milling and sale of grains.
Large-scale demand, long shelf life, long-distance transportability and worldwide price differences: these are the criteria that must be met to allow a grain trader to purchase a million tonnes of hard winter wheat from a grain cooperative in Kansas and ship it by train, and then ocean tanker, to a port in Vladivostok. That wheat will serve a population that desires the product due to a poorer-than-usual yield – a situation that increased the price per bushel to a level the trader finds desirable. That single transaction can net many millions of dollars.
Commodity traders also prefer to deal in markets that are growing, not stagnant or shrinking. Although people enlightened by books like Wheat Belly, as well as those who are jumping on the gluten-free bandwagon, have caused a drop in grain sales for food production, the net effect will likely be increased grain sales, since grains are also used to feed the livestock that will provide calories increasingly obtained from beef, pork, poultry, eggs and farmed seafood. For every tonne of grain consumed by humans in the United States, 7 tonnes are consumed by livestock.2 From the perspective of the grain trade, this is called a win-win situation.
Welcome to the world of Cargill, Archer Daniels Midland Company (ADM), Louis Dreyfus, Bunge and Continental Grain Company: multibillion-pound companies that make the grain world go round, trading, arbitraging and cashing in on the millions of tonnes of grains the world’s consumers now demand. In the world of large grain trades, not a lot has changed in the 35 years since journalist Dan Morgan, a 30-year veteran of the Washington Post, wrote his detailed exposé of the grain-trading industry, Merchants of Grain: ‘[T]here they are, in the late 1970s, one of the most remarkable phenomenons in the whole business world: the Hirsches, Borns, Louis-Dreyfuses, Andrés, Fribourgs, Cargills and MacMillans, all survivors and all still in control . . . [I]n no other major industry in the world are all the leading companies private, family-owned, family-operated concerns right down to the last few issues of voting stock.’3
Despite the enormity of their economic sway over world markets, most of these companies were, until recently, private corporations that did not have an obligation to publicly disclose their financial dealings to the US Securities and Exchange Commission. (ADM is an exception, having been publicly traded since the mid-20th century; Bunge became a publicly traded company as recently as 2001, after 183 years of operating privately.) As a result, the billions of dollars of grain trading that occurred during much of the 20th century operated largely in the shadows of business – elusive, mysterious and often represented by large paper trades made before any actual grain was shipped or changed hands.
Although the dealings of these companies are generally outside the radar of public scrutiny, federal agencies are indeed aware. In the United States, the federal government relied on the Central Intelligence Agency (CIA) to track the dealings of grain traders, as well as grain production and agricultural policy in places such as the former Soviet Union – issues they viewed as important to the health of US agribusiness and food security. (Due to the recent push for transparency from the federal government in the United States, such redacted reports are available for anyone to read online from the CIA’s files at http://www.foia.cia.gov/collection/princeton-collection.)
While this near monopoly on food commodities prevailed throughout the 20th century, it continues to a substantial degree in our era. The worldwide grain market is still dominated by a handful of commodity traders, all intent on gaining a larger and larger stake in the diet of the world, human or otherwise. Of course, their intent is not to cultivate locally grown vegetables or humanely raised, pasture-fed beef grazing on clover and grass, nor is it to follow sustainable practices that generate the smallest