Food and finance: the financial transformation of agro-food supply chains
The contemporary food crisis, which rose to prominence with the dramatic increase in food prices in 2007-2008, continues to ravage the world’s poor. Nearly one billion people are chronically malnourished while another billion suffer from the constant uncertainty of whether there will be a next meal and from where it will come. Many analysts point to the ‘ﬁnancialization of food’ as a key culprit for the ongoing crisis. When doing so, they often focus upon the increasing participation of ﬁnancial actors in agricultural derivatives markets and the resulting impact upon food prices. Yet the rise of ﬁnance capital is not novel. Many political economists maintain that it is a recurring feature of capitalist development (Lenin 1974, Arrighi 1994, Hobson 2010). Moreover, the current phase of ﬁnancialization, which has been unfolding since the late 1970s (Palley 2007, Krippner 2011), has
permeated nearly every aspect of food provisioning. Financial actors are playing an increasingly active role in food retailing (Burch and Lawrence 2009, 2013), food processing (Rossman 2010), commodity trading (Murphy et al. 2012), the determination of food prices and the distribution of agricultural risk (Breger Bush 2012, Ghosh et al. 2012, Spratt 2013, Clapp 2014), the provisioning of agricultural inputs (Ross 2008, The Economist 2009), and the ownership and control of farmland (HighQuest 2010, Cotula 2012, Fairbairn 2014). At the same time, enterprises that operate in each of these activities are increasingly active in ﬁnancial markets and earning a growing share of their revenues from ﬁnancial activities. How, if at all, has this ﬁnancialization of food and agriculture contributed to the contemporary food crisis? How is it reshaping social relations and the distribution of wealth and power within and along the generalized agro-food supply chain? Reviewing the existing literature, this paper documents the ﬁnanancialization of the major nodes of the value chain and explores these questions. In doing so, I take a political economy approach that questions both how and why ﬁnancialization is redistributing costs and beneﬁts along the agro-food value chain and gives particular attention to the impacts of ﬁnancialization upon small-scale agricultural producers and laborers within the agro-food sector. Reviewing the literature through a political economy lens reveals four key insights: (1) the line between ﬁnance and food provisioning has become increasingly blurred in recent decades, with ﬁnancial actors taking a growing interest in food and agriculture and agro-food enterprises becoming increasingly involved in ﬁnancial activities; (2) ﬁnancialization has reinforced the position of food retailers as the dominant actors within the agro-food system, though they are largely subject to the dictates of ﬁnance capital and face renewed competition from grain traders who are well-positioned to capitalize upon the ﬁnancial transformation of food; (3) ﬁnancialization has intensiﬁed the exploitation of food workers and heightened the precariousness of their employment, and (4) smallscale farmers have been especially hard hit by ﬁnancialization, as their livelihoods have become even more uncertain and their market power vis-à-vis other actors in the agrofood supply chain has eroded.