This article is partisan garbage, as usual lately for The Economist. Sure, the war had an impact but most of the problems were months BEFORE the war.
Search for "AgInflation" articles from 2021. I know farmers who skipped this season due to razor thin profits, suppressed prices by governments and major supermarkets, and risk of water controls. Would you put $50k of your money for a 10% return with a very, very high risk of failure?
The farmers that did plant, say wheat, are not benefiting from the price surge because to minimize risk they sold their harvest in advance or sold futures. SPECULATORS that are making a killing. Usually hedge funds like Citadel, ETFs by BlackRock, and others.
And in several countries farmers are being blamed for higher prices. Governments should've given the sector a bit of help and control risks. Help with water management. Help with shrinking labor base and increasing costs. But nothing is being done.
There is a perverse system right now and action needs to be taken to heal the sector. But I bet they'll just keep blaming farmers and impose price controls or suppression of some kind. Fixing farming would take years and populist politicians want magic immediate results and shift-blame. So buckle up.
I am not sure how to do it, but some futures-plus arrangement might improve incentives - say sell your crop as a future, but with a (gov supported) price cap - so if the price goes through the roof the farmer gets a share of the overage.
Not sure how much difference it will make but agriculture is kind of important
Search for "AgInflation" articles from 2021. I know farmers who skipped this season due to razor thin profits, suppressed prices by governments and major supermarkets, and risk of water controls. Would you put $50k of your money for a 10% return with a very, very high risk of failure?
The farmers that did plant, say wheat, are not benefiting from the price surge because to minimize risk they sold their harvest in advance or sold futures. SPECULATORS that are making a killing. Usually hedge funds like Citadel, ETFs by BlackRock, and others.
And in several countries farmers are being blamed for higher prices. Governments should've given the sector a bit of help and control risks. Help with water management. Help with shrinking labor base and increasing costs. But nothing is being done.
There is a perverse system right now and action needs to be taken to heal the sector. But I bet they'll just keep blaming farmers and impose price controls or suppression of some kind. Fixing farming would take years and populist politicians want magic immediate results and shift-blame. So buckle up.