Published CommPRO.biz 2013.08.01

Gaming The Farmer

Farming is no place for rubes. Most who produce our food are sophisticated way beyond anything their forefathers could have imagined. Farmers always had to have a wide range of skills to survive. Sadly that’s about all many did; it took just about everything they had just to survive. Today they are mostly well educated, hard-working folks; and like their forebearers, mixing common sense and a wide range of skills.

We recently read of a resourceful farmer who built a drone and equipped it to fly over his land mapping out the soil and crop conditions and feeding the data into his computer. He put it all together for less than the fee he had been paying for a single trip by a fixed-wing plane to scope out his farm. Better yet, he got instant info instead of waiting days for data from the aerial surveillance service.

It seems a shame that all this ingenuity and skill is being trumped when it comes to what farmers get for their crops. Commodity futures have long been how the producers and users of everything from rare metals to foodstuffs have protected themselves against flux in the market. It’s where the term “hedge” came from. In recent times the commodity markets have been invaded by the monster bankers and algorithmic traders. The combination that made a joke of the stock markets.

The monster banks take the interest-free money we give them to invest in the economy and speculate in commodities, derivatives and anything else where they can turn a quick buck. The algorithmic traders are doing the greatest harm to our farmers and jacking up the price of food we put on our tables. They have turned commodity markets into the same gambling halls stock markets have become.

In every gambling hall there are sure winners and sure losers. In commodities it’s the high-speed algorithmic traders and the monster banks who collect every time. It’s the farmers, the end users and the consumers who lose. A role of government is to act as a referee in situations like this. In a similar situation at the turn of the last century, 1905, a minor commodity scandal triggered a quick response. Teddy Roosevelt ordered a full investigation. The Congress passed laws to jail those who gamed the market. The Secretary of Agriculture declared, “We have no favorites.”

Hardly the case today. The monster banks have bought and paid for the Congress. Anything they want they get. The farmers and other commodity producers get the shaft, as do the end users and the consumers. There is an easy fix for this chaotic nightmare. There is no reason for anyone to be in these markets other than the producers and end users. Return the market structure to fit the needs of those for whom they were created. Boot the speculators. Do what government is there for. Do what’s fair, it’s the right thing to do, it’s “Ethics 101.”