Financial speculation or “pump and dump” is creating a global food bubble like the sub-prime mortgages market

Source: The Real News

What “financialisation” means for food workers
Peter Rossman

Over the last couple of decades there has been a huge swelling in the importance of the financial sector in the world economy. Investors now demand the same elevated returns in all economic sectors – including food and agriculture. As a result, even manufacturing and service corporations have been “financialised”. The dominant financial logic places little value on real production, productivity or jobs. This is extremely harmful to the vast majority of the
world’s population, and it has enormous implications for the billions of people involved in food production.

In the European Union, food processing is the largest employer in the manufacturing sector, and it adds more value to its raw materials than any other industry. In the growth years 2000–2005 (the last for which I have figures, but the trend has intensified), over 15 per cent of jobs were eliminated in this industry – ahead of textiles, and behind only agriculture. These jobs were not lost to foreign imports: they were lost to pressure to pay out more to shareholders.

Increased profits and sales were not achieved through productivity-enhancing technological change, which in recent years has barely affected the production process as such, as corporations focus on delivering instant cash to shareholders rather than investing in productive capacity. The companies simply squeezed more out of less. Mergers, acquisitions, and financially mandated reductions in “head count” meant that medium-sized facilities were closed and production centralised in fewer units transporting products over longer distances, deepening and widening the industry’s already substantial carbon footprint.

Those companies now employ fewer and fewer workers to produce their branded products. Outsourcing and casualisation have become key tools for enhancing exploitation in the quest for super-profits. Precarious work [3] not only allows employers to achieve massive reductions in the wages bill, but also has a chilling effect on the bargaining power of the workers who remain directly employed. The organising task for unions now goes beyond winning global recognition, organising and gaining bargaining rights from transnational employers. It also involves uniting into a single bargaining power those directly employed by the company and the growing numbers of precarious workers producing within the same TNC systems.

Source: Seedling