Private investment firms are betting on hunger, and their reasoning, unfortunately, is sound. Residential real estate may be slumping, but agricultural land is booming. The boom is driven in part by agribusiness expansion, but also by a new player in the agriculture game: private investment firms. Both are bidding up land values for the same reason: the price of food. They’re betting on hunger, and their reasoning, unfortunately, is sound. This is bad news for would-be small farmers who can’t afford land, and much worse news for the world’s hungriest people, who already spend 80 percent of their income on food. Thanks to the world’s growing population of eaters and the fixed amount of land suitable for growing food to feed them, supply and demand tilts the long term forecast toward higher prices. More immediate concerns — like increasing demand for grain-intensive meat and the rise of the corn-hungry ethanol industry — have fanned the flames of a speculative run-up in agricultural commodities like corn, wheat, and soy. Add cheap money to the mix in the form of low interest rates, along with an army of traders chasing the next bubble, and you’ve got a bidding war waiting to happen.
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