Corn, soybeans, wheat, oats, rice, cattle, coffee, sugar, milk, cotton, orange juice - these are just a few of the food items currently being traded on the agricultural market meaning big businesses must invest in the large scale production of these products in order to continue to feed their demand.

In an era where most foodstuffs are fully commodified, we wanted to delve deeper into the meaning behind the practice and take a look at its modern-day realities. After all, bankers, miners, investors, speculators and consumers all buy and sell commodities for financial gain and security in their daily lives and the practise of trading food for both these benefits is no different. Farmers in the American Midwest, for example, may pre-sell their corn into something known as the ‘futures market’ to ensure they won’t be bankrupted if corn prices decline between the time they plant seed and when the product is ready to go to market. This brings us to our first question...

What is a commodity exchange and how does it work?

Let’s stick with the corn example here. Imagine you own a cornbread company and you need thousands of bushels of corn to secure production for the next year. It just wouldn’t make sense for you to go and knock on every farmer’s door for the next couple of months to secure the produce. Instead, the likelihood is you’re going to ask a commodities broker to bid for the corn you need on an exchange. The New York Mercantile Exchange is one example of a place that standardizes the commodity contract in this way. Here, each contract must constitute 5,000 bushels of corn (127 metric tons) and the price stated on the final contract is quoted in cents per bushel.

“In 2016, for example, a serious oversupply of many food commodities shook up the stock market and ultimately led to financial bailouts for farmers who saw their earnings drop as price wars waged on.”

A market exchange such as this naturally drives prices down as everyone trades against each other and the trickle-down effect of low food prices is catastrophic to the food industry as a whole. In 2016, for example, a serious oversupply of many food commodities shook up the stock market and ultimately led to financial bailouts for farmers who saw their earnings drop as price wars waged on.

Whilst fluctuations in commodity prices is normal across all industries, when prices continue to either increase or decrease for an extended period of time it could have a profound effect specifically on the food industry — impacting food service, grocery costs and the manufacturers who provide the food as well as consumers who all rely on it as one of the most basic means to stay alive.

(A few) of the problems associated with food commodification

Alongside the very real issues associated with prices and exchanges, the commodification of food has also led to an industry beset with problematic global practises as industrialisation tries to maximise production through forced labour, low wages and exploitation, amongst other things.

“The supply of cheap labourers to the tea gardens is maintained by making sure they don’t see any other opportunities available.”

In chocolate production during 2013–2014, for example, 1.4 million children aged 5-11 years old were estimated to be working within the agriculture industry in cocoa-growing areas. Many of the tasks associated with cocoa production are hazardous and include working with sharp tools, potent chemicals and carrying heavy loads.

Similarly, it has been broadly documented that in order to keep tea cheap, low labour costs are enforced on vulnerable workers. The Telegraph India ran this article this year which stated: “One of the problems that our tea gardens face is that of labour. But it is not a simple demand-supply situation. It would have been that simple had it not been corrupted by the Plantations Labour Act, 1951...at present, the demand from the workers is that the wage rate should be raised since it is very low and they are unhappy. Yet they have not moved away from the sector.”

The supply of cheap labourers to the tea gardens is maintained by making sure they don’t see any other opportunities available. Their exposure to the outside world is kept at a minimum as well as their education or skill development and they are aware, that if they don’t like the conditions, they are easily replaced.

Another issue facing workers in less economically developed countries which comes as a direct result of food commodification is that the food prices are often far above many people’s meagre means, producing a lack of adequate nutrition despite an apparently plentiful supply. The United Nations estimates that there are close to one billion people worldwide who suffer from malnutrition leading to severe health problems and death.

“Fraud has been rampant since the Colonial era when wines such as Sherry and Port were diluted to stretch out their product or faked completely.”

There’s also the issue of food and wine fraud which comes as a direct response to the mass industrialisation of a product. Fraud has been rampant since the Colonial era when wines such as Sherry and Port were diluted to stretch out their product or faked completely by flavoring water with anything from berry juice to lead. In these more modern times, it’s been widely reported that as much as 80% of olive oil available on the market is fake - often neither Italian nor virgin and there have been a vast amount of well documented food frauds in the agri-food industry in recent years including China’s 2008 milk and infant formula scandal in which products adulterated with melamine resulted in more than 50.000 sick babies.

Join the discussion

The challenge we face when we contract the products we like to eat and drink to a financial machine is that we create a dependency on large scale monoculture production. As we have seen, this results in the trade of ‘future production’ which keeps producers handcuffed to a model that is globally driven, full of fragile global trade agreements and financial systems. This then creates an industry which is purely finance-based with no concern for environmental or social impacts leading to corruption, fraud and the mistreatment of workers which can sometimes include slavery.

There are companies that are trying to step outside this market and offer traditional commodity products based on ethical models of production though, focusing on environmental sustainability and social responsibility. As our Autumn Berlin Terroir Talks pick back up, we’ll be kicking off our events with a discussion about exactly this, uniting a panel of experts including the Rare Tea Company’s Henrietta Lovell and Candide Chocolates’ Christopher O'Connor to discuss the importance of preserving internationally traded products such a wine, coffee, chocolate and tea and whilst building a better model for our future. If this article has piqued your interest, we look forward to seeing you in October!

Daniel Budde and chef Christopher O’Connor, Candide. Photo: iHeartBerlin