Another WW and Spelt Loaf as I consider Wheat Futures

 

YAWWASL:

Yet Another WW and Spelt Loaf

Nothing to say about this loaf except that it staled quickly.  I gave one away, and worked my way through the other, but it staled before I could finish it.  It had to be the spelt that caused this effect.

One of the loaves flopped when I flipped it out of the banneton into the dutch oven, and I ham-handedly moved it to a nicer position -- hence the funny looking loaf with the notch in it.  It still had some nice oven spring despite the roughness with which it hit the oven.

Since I haven't much else to say about the rather ordinary speltish loaf, let's use this blog space to discuss something that's been happening in the Canadian Grain landscape.

Glencore Headquarters

Canadian Grain Handling
Canadian grain handling has hit the news again recently with Glecore's acquisition bid of Viterra in a 6.2 billion dollar deal that will once again change the way Canada produces and sells wheat. 

As of this blog posting, this deal has to find approval with the Canadian government: Glencore is a Swiss Company, and Viterra is Canadian/prairies-based, and Canada's government has to at least pretend that they are not just selling the farm, to keep credulity with their constituents.  But since it comes fast on the heals of the government's own plans to scrap the Canadian Wheat Board (which I wrote about in this blog), there is likely going to be no government opposition.  Particularly since Glencore has been careful in their bid, including selling off bits and pieces of Viterra to make it appear more acceptable to the Canadian regulators.  Glencore will keep the parts of the business -- the assets that move the grain.  And especially there will likely be no problems found with the deal because a U.S. firm has been hired by our government to determine whether the deal is beneficial for Canada.  Huh.  Well, we all know that the U.S. grain producers have long been complaining that our Canadian Wheat Board was violating free trade by 'dumping' durum wheat on U.S. markets.  It very nearly started a food fight across the border, according to the 2001 report, The Grain Industry in Canada.

Could it be that our Canadian government, with its conservative ideals and backroom dealings, has agreed in principle with the U.S. position?  Is there something else besides the best interests of Canada behind the demolition of the Canadian Wheat Board and its takeover by Glencore?

Glencore spokespersons have frankly said it is using the deal to shoehorn its way into the North American grain market.  It is a strategic move that will see them make further acquisitions in the U.S. in the not-too-distant future.  So don't get too smug yet, you U.S. grain producers.  Be prepared to soon be owned by Glencore.

These players in the Viterra/Glencore deal are Commodity Traders and corporations and governments, but the effects of all of this trickle down to the way farmers produce grain and how we each buy bread.  And despite the namelessness of the corporations, I want to put a face to it: who is making these decisions for us?

This deal is rather small potatoes for Glencore, which wikipedia states is currently the largest commodities trader on the planet (moving significant amounts of zinc, copper, grain and oil).  More recently, a larger mining deal in the EU with the attempted acquisition of mining giant Xstrata at 90 billion dollars drew media attention for similar reasons: Glencore is consolidating its monopoly position on all sorts of commodities.

Glencore wants to appear to be an open book, but who knows?  The organization seems to advance men who have competed at the top of their field in various athletic sports: men with distinct competitive edge are favoured.  They are a high-risk, high-return company, unafraid to enter into areas that are political hot-potatoes.

Glencore can trace its origin to Marc Rich, who was implicated in illegal oil dealings with Iran during the hostage crisis (he bought oil from Iran and sold it to U.S. companies despite the embargo, and even sold oil to Iran's enemy Israel).  Rich fled the U.S. to avoid a charge of tax evasion, but was pardoned by departing president Bill Clinton, after Rich's wife made sizable donations to the president's library fund and to the Democratic party.

Chris Mahoney is the current director of agricultural products at Glencore and has directed this strategic buy, and answers the questions that the media has put to Glencore.  But the real money is above him: Simon Murray is the "non-executive chairman of the board".  He sits on a lot of boards, has his fingers in many pies, but the real strategist for Glencore's growth appears to be the current CEO Ivan Glasenberg, a billionaire many times over who has invested a lot of his own money in Glencore shares.

Why do I care about the high rollers buying and selling grain commodities?  Because it affects me.  I never really had any say in the Canadian Wheat Board before: but its position statement on genetically modified grains was pretty clear. 

Grain producers liked the promise of genetically modified grains, but they were cautious: they wanted the market to decide, they wanted to go ahead only when there was widespread consumer acceptance of the GMO produce.  And there hasn't been widespread consumer acceptance.

How unscrupulous are the leaders of Glencore?  What position will Glencore take to genetically modified grain entering our Canadian food supply?  Will the bottom line be the only guide?  Will they side with the producers who were cautious, or with the seed-suppliers who want to go ahead with GMO grain at top speed?  With a global marketplace at their disposal, they can pretty much afford to dictate terms to the highest bidder.

The CWB and its members were watching what was happening with GMO cotton, and soybeans, and canola.  No one seems to care about cotton since we don't eat it.  So far, soybeans seem to have slid under the radar of most consumers; canola has lost a few European markets, but not too many other markets seem to have taken notice.  But the wheat producers are correct to be cautious.  There is a growing movement to reject Genetically Modified Objects (GMO) in our food, here in North America, even as biotechnologists want to get to it, and climate conditions are worsening.

Exponential profit
Most of us who read it in our youth will certainly remember the wonderful story told by George Gamow in his book "1-2-3-Infinity" about the vizier who supposedly invented the game of chess.  This made his king so happy, the ruler agreed to grant the vizier a reward.  The vizier asked for a single grain to be put on the first square of the chessboard, two grains on the second, four grains on the the third, and thereafter double the amount of grain on each square.  The king thought he was getting off lightly when he agreed to the request.  But he didn't accurately compute what it would cost him: by the time you get to 64 squares, the total number of grains is more than the entire world's wheat production for two thousand years.

Now let's put that story in non-mythic, modern day economic terms.  Let's say you are Glasenberg and own a lot of Glencore shares, and Glencore gets a cut of a few partial cents for every grain on the planet, from now until the sun burns the earth to cinders -- when seed is purchased, when seed is grown, when seed is harvested and transported, and when seed is sold.  How long before you have enough money to own pretty much everything? 

My own feeling is that those at the top are interested only in profit, and this will translate, in the trickle-down effect, to poorer quality, and less control for those of us at the bottom of the food chain. 
I can almost hear the commodity traders talking with the seed producers:

"Health?  We will give that only a token nod, since we don't necessarily want to kill off our customers right away.  But hey: the cigarette companies have been getting away with that for years, why not us grain suppliers?"

We are all stakeholders.  Unfortunately, we aren't all shareholders. 

And those who represent our small, quiet independent voices -- our elected officials -- have decided we do not have anything worthwhile to say.

Wheat futures will be decided without us.

Notes to Myself

• Although it was written in 2008, have a look at what peak oil writer Chris Nelder wrote about the volatility and profit of wheat futures.  You might get an idea of how the world could be held hostage to the supply of grain.