Speculating on food is big business

Article contributed by Gambling Times

There is big money made by business houses that speculate their money on trading and speculating on food grains. Major crops like maize , wheat and rice form a chunk of their trading businesses. These business houses buy a large amount of the produce when they are selling in the market at a lower price. They store these produce and later sell it when the demand is more and the supply is less thereby making a big margin. Sometimes these practices leads to a rise in the market price of these produce. The prices go up in the market due to an artificial shortage situation. These traders and market houses hoard these products to make huge margins at a later date. When the demand is high, the prices are jacked up. As vast amounts of these produce are purchased when the food is plentiful, they get it at a very low price.

Leads to expensive food
Having this system means that the food is always going to be more expensive for those who are poor than what it needs to be. A better way of gambling and speculation for entertainment would be to visit an online casino. If you are looking for a fun way to spend your time visit GamblingTimes and onlinecasino-India website, here you also have a chance to win something on a lucky day.

For a good cause?
Back to food speculating – The investors that do this say they do a good thing. They claim that they even out the supply and store the food at high costs so that it can be used later when it is needed. Well, that is true but there is a problem. The price that they charge is not just covering the expenses for the storage but they also make a huge profit / margin on it.

Hedge funds and big banks
This is not just limited to rich business people and privately owned businesses. In fact most of those who speculate in food business is hedge funds companies, pension funds companies and some of the biggest banks in the world. This means that all of us that have savings might be a part of this without being aware of it. If this is important to you, you can contact your bank and ask if the funds that you have invested in are a part of this.

Soothes out fluctuations
At the same time this means that the prices are higher than they need to be. This also means that the steady supply leads to even prices. Even if there is a drought, there will always be a huge amount of food in stock. As long as there are a number of sellers, the competition will help keep the supply go on.

Difficult question
There is no clear way of subjecting it to right or wrong in this. If these companies didn’t speculate in foods, there would only be a “from farmer to consumer” market. That would mean that when a drought or other catastrophe would strike there would be a major shortage and people would starve.
The UN for example through their World food program hands out food and water to millions of people with their programs. The WFP buys tonnes of food each year for these activities. It procures and distributes food to poor and developing nations struck by poverty. All these purchases are made via donations from countries, governments and big corporate houses.