From GENE LOGSDON
The Contrary Farmer
The drought that is affecting much of the Midwest is scary enough but what makes me even more nervous is the way speculators in the grain futures market are sending grain prices gyrating all over the place as they bet on what will happen next. Betting on the future supply of food is risky business. There’s too much chance for mischievous manipulation. It is risky enough to gamble with banknotes of one kind or another but they aren’t edible no matter how much good steak gravy you sop on them. Food, however, is everyone’s essential necessity and I wonder greatly about the wisdom of gambling with it especially when many of the gamblers can barely tell a stalk of corn from a hoe handle.
Like most everyone else, I’ve had orthodox economics drummed into my head. I know how economists argue that the speculators, by pooling the information upon which they place their bets, arrive at what is called “price discovery” that helps establish some kind of market equilibrium overall, and helps farmers and processors and society in general adjust to the situation. The gamblers also benefit all of us, I’ve been taught, by “risk shifting” or hedging which provides producers and others with a way to shift the risk involved in ownership of a commodity to others