Windfall Profits for Big Food, Where's The Outrage?
As Food Prices Spiral, Farmers, Others ProfitWILLMAR, Minn. (AP) — The steepest run-ups in food prices since 1990 are hurting grocery shoppers, restaurants and school cafeterias but they're making others rich.
The winners in the new food economy include crop farmers selling corn and wheat for near-record highs after years of crushingly low prices. Ingredient makers like Cargill and ADM are rife with profits. Fertilizer and tractor companies are cashing in.
Profits at seed and pesticide maker Monsanto Inc. reached nearly $1 billion last year — a 14-fold increase since 2003. They've tripled to $1.1 billion at agrichemical maker Syngenta and agriculture divisions of DuPont Co. and Dow Chemical Co. have also seen their earnings balloon. Cargill, which makes ingredients, boosted its profits to $2.3 billion, up nearly six-fold since 2001. Meanwhile, profits at agricultural processor Archer Daniels Midland Co. have more than quadrupled to $2.16 billion during the same period.
Question: Why don't the "obscene, windfall profits" of Big Food get the same attention as the profits of "Big Oil?" Where are the Congressional hearings and proposals for windfall profits taxes on Big Food? After all, the increase in profits for major food companies from 2005 to 2007 are ridiculously and obscenely higher than the paltry 12% increase in profits for Exxon Mobil (see chart above).
28 Comments:
Question: Why don't the "obscene, windfall profits" of Big Food get the same attention as the profits of "Big Oil?"
Because in absolute terms, the total combined profit of all Big Food corps is just a small fraction of the profit of one Big Oil corp.
The "Gods" (politicians,) of course, are "Crazy."
Or, as Faulkner (and, whoever that old, old guy before him was) said, "Full of Sound and Fury, and signifying nothing."
It's been posited, and I somewhat agree, that one needs to look to the end of Whale Oil to find an appropriate analogy to today's situation. Basically, what you'll see is wildly fluctuating prices as you approach "Peaking"/end of a disirable, necessary, vital, and FINITE Good.
There's apt to be a lot of Craziness, and Destructive actions taken as the herd approaches what looks like the precipice. We're likely in for a couple of nutty years (starting now, or, at least within a year, or two) while we sort out our future direction, and, then, probably another decade of considerable frustration, and pain.
The Good news, if there is any, is that we've already made considerable progress on the two most viable of the short-term fixes. I'm speaking, of course, of Hybrids, and biofuels. We're, also, getting a leg-up on the coming shortage of Nat Gas by promoting Wind, Solar, and Biomass.
BTW, there's more than a little "opportunistic" pricing going on here (like the theatre chain that defended an extra $1.25/customer in admission, and concession charges by citing higher Popcorn Costs (about $0.03 per Tub.) Yep, that's right; the paper in the container costs more than the popcorn. Oh well, That's Capitalism; Right Folks.
Personally, I love it. :)
Does history have an impact on cultural memory?
Farmers are those admirable settlers who tamed the land. Oil men are evil monopolists who run each other out of business with unfair business practices.
(Except in reality the big farms have put the little farmers out of business too.)
I own 100 shares of a stock that recently wemt up 200% in price. Should I expect, according to this blogger, a Congressional hearing about my obscene, windfall profits?
harokopos...you're a dope...specifically a far left dope...the kind who thinks the Daily Kos provides unbiased news on the economy
Anony, I wouldn't rule Anything out. The "Mob" can get Crazy when it goes into denial (first stage? Yep, Anger - at least, I think that's right.)
Actually, they'll quieten down after a while. They, already, seem to be getting a glimmer of the problem. Once they accept the existence of the problem they'll start working toward solutions. This is America, you know.
I'd imagine, right now the politicians are embaressed that they got blind-sided like this.
Right now, I'm embarrassed that I cain't spel embarrassed.
> We're, also, getting a leg-up on the coming shortage of Nat Gas by promoting Wind, Solar, and Biomass.
You are on some pretty impressively powerful drugs if you imagine that any currently encouraged Wind or Solar systems have the slightest hope of ever replacing nuclear, oil, or coal as a power source in anything but the occasional niche market.
If you aren't on drugs, then you need massive analytical assistance in formulating your ideas, because the one's you're using are utterly inadequate to the task.
Despite decades of subsidization, Solar has yet to produce even a vaguely effective solar cell, requires a huge amount of toxic chemicals to produce any cells, and almost certainly represents a negative net energy production when the entire fuel cycle is taken into account.
Wind shares similar issues, and, as the results in Texas wind farms the last winter showed, the time when you most need energy is when wind decides to crap out. It's also got lots of "not in my back yard" detractors.
Biofuels? The only one of these which makes any rational sense are ones derived from waste biomass. Anything which converts "surplus food" means choosing between feeding starving people and making biofuel, and generally ties to higher food prices all around.
See if you love those higher prices when you lose your job because of the economic impact, rufus. Come back and smile to us then, hey? Do it before you have to give up your internet connection because you can't afford it any more, mind you.
:-/
> I'd imagine, right now the politicians are embarrassed that they got blind-sided like this.
LOL, what, by the same thing that constantly blind-sides them, The Law of Unintended Consequences?
If that ever embarassed them, they got over the initial shock a century or more ago.
Nowadays they just shift the finger pointing a little and claim that was the real problem all along. The fingers involved in the pointing are never the three constantly pointing back at them, mind you.
Haven't you'all seen the latest farm bill. Ag is going to be getting millions more in tax dollar subsidies due to rising commodity prices.
Time to visit Washington to feel close to your money as per quote from Bob Hope last week.
What we really need is a windfall tax on Google.
/wondering why the socialists haven't thought of that one yet
The United States Dollar's Quantum Valuation Pattern
Relative to other leading economic nations, America's governments, corporations, and citizens have borrowed proportionally more. Under this primary GNP growth through debt pushing on the proverbial string parameter and to a correlative and accompanying measure - under the conditions of inappropriately low interest rates and imprudent lending terms which fueled that borrowing - the US dollar has fallen - in a relatively precise fractal manner - against a basket summation of other leading currencies. While the dollar has fallen nearly 50 percent against basket currencies in the last 12/30/24/18 :: x/2.5x/2x/1.5x months, it has fallen to less than 15 percent below its lows from 1987 to 1994. The world requires inflation of all currencies for growth in order to service debt and population growth. in spite of the 2 percent US interbank lending rates and US treasury rates which directly foster malinvestment speculation in stocks and commodities, the latter of which is killing the pay check to pay check surviving middle class, a necessary saturation curve mathematical fractal correction of the US dollar to the summation basket fiats is now and will occur.
American politicians still believe in the illusion of farming being a business dominated by tiny put-upon family-owned farms. Therefore their profits are A-OK.
Why don't the "obscene, windfall profits" of Big Food get the same attention as the profits of "Big Oil?"
Just a wild-ass-guess here but maybe it's because food didn't DOUBLE in price in under two years?
"Because in absolute terms, the total combined profit of all Big Food corps is just a small fraction of the profit of one Big Oil corp"...
"Just a wild-ass-guess here but maybe it's because food didn't DOUBLE in price in under two years?"...
Oh dear! Now profits are a bad thing?!?!
Hmmm, I wonder what the widows, orphans, retirees who have oil company stocks (or stock in ancillary oil support companies) in their portfolios think about that?
BTW e.harokopos and anon @ 12:31 AM what do you think about the situation where gasoline taxes are about double the profit margin oil companies make?
What's really interesting is how the cost of gasoline has doubled in price since the Dems took over Congress...
Just remember Pelosi and the Dems have announced a plan, how do you like it so far?
Why don't the "obscene, windfall profits" of Big Food get the same attention as the profits of "Big Oil?"
Don't give the bad guys any ideas! Some socialist news programs have already picked up this theme. I suspect we'll see more of it soon - especially if it involves profits from GM crops.
juandos. Profits are a good thing. I was pointing out that oil price increases received more attention because any time something doubles in price in a short time it receives attention.
Juandos,
My comment only refered to the question as to why the Big Oil profits have attracted so much attention as compared to Big Food profits.
I do not see how you and some others deduced from my statement that I believe profit is a bad thing.
The fact that you and others ignore is that oil companies were asked to testify in congressional hearings about the huge profits. amongst other things.
Does that mean US senators think profit is bad thing?
What is bad, is the connection of profit to market manipulation , if it exists.
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I think people are actually more concerned with the rate of increase in fuel prices than the percentage of profits oil companies make, but it makes them feel better with a scapegoat.
Even though I somewhat understand, and even appreciate, how markets work, it still upsets me that the price of diesel fuel escalated from $1.62 when I brought my truck in June 2004 to $4.89 today. To make matters worse, I have four gas stations that sell diesel fuel on my six-mile drive home everyday to remind me of that fact.
I know it does not do any good, but I still mentally flip the sign off every time I drive by. No amount of rationalization such as “but Europe has higher fuel prices” or “food company profits are higher than oil company profits” are going make me feel better. I want cheap oil. I want cheap oil now.
You get about 10 gallons of diesel from a barrel of oil. You get approx. 20 gallons of gasoline. Europe exacerbates this problem by giving diesel a $0.35 tax break vs. gasoline.
The situation for diesel is likely to get worse.
Interestingly, one of the biggest "Winners" in the Profits game of late has been Tyson (also, Hormel, Smithfield.) Having said that, I barbequed a Chicken on Memorial Day. I paid about $1.00/lb. for this chicken that had been fed on that Humongously Expensive field corn (about $0.11/lb.) , and fed 4 People on one $5.00 Chicken! Okay, my son ate a hamburger; but, you get the idea.
I'm going to the store after while to get the ingredients for a (patent pending) Rufus Beef Stew. I'll spend about $12.00. We'll eat on it until a week, or so, from now I'll finally throw the last little bit out.
The Point of all this: Food is still pretty cheap. Gas Ain't.
"I was pointing out that oil price increases received more attention because any time something doubles in price in a short time it receives attention"...
Ahhh anon, how do we know that ONLY the oil companies had price doubling or more in a short period of time?
How many people have read/heard/watched the news have seen stories about the price fertilizer going up faster than the price of crude and or gasoline?
Singling out the oil companies was/is politicos pandering to fools... Sadly these fools are also allowed to vote...
e. harokopos says: "The fact that you and others ignore is that oil companies were asked to testify in congressional hearings about the huge profits. amongst other things"...
Well sadly that insane and humiliating chapter in asinine behavior by Congress is something I don't feel the needs to be pointed out...
Its at best shameful... Its a loud declaration by Congress that they have NO clue when it comes to the market place...
Those hearings that were a waste of taxpayer dollars will NOT result in one more drop of oil coming into the country or dropping the price of gasoline by even a penny...
"I want cheap oil. I want cheap oil now"...
Hmmm, so walt g have you asked your Democrat or R.I.N.O Senator or Representative why they are impeding your desire for oil?
I know that if I were a producing - exporting country for crude and I saw America's huge domestic reserves being put out of bounds by the people American citizens elect to represent them in D.C. I then would charge the US (and anyone else willing to pay it) every penny I could...
Juandos said: "Singling out the oil companies was/is politicos pandering to fools... Sadly these fools are also allowed to vote..."
I agree if they are not involved in cartel practices to raise the price of oil.
But for most people, these elected officials are obligated to investigated that possibility, since there were articles in the media about it.
You are correct that oil companies are not part of the problem but only if, oil companies do not contribute to the problem by taking advantage of their position to influence price.
However, I did not take either side and I am amazed by your response. I only pointed out the fact that Big Food profits are a small fraction of Big Oil profits.
On the other hand, you seem to underestimate the fact that food prices followed the oil price rise and the cause of the crisis is viewed as the oil rally, not the food rally.
What bothers me is that since profit margin of Big Oil is way up, there is some non-linear relationship governing their profits as a function of oil price and I do not know what it is. Normally, if they have a fixed production cost of products and consumer demand, their profit margins should remain the same OR EVEN FALL due to elasticity in demand.
Howeve, we show the opposite happening and I let you explain it to me.
"I agree if they are not involved in cartel practices to raise the price of oil"...
Completely agree e. harokopos but haven't there already been several investigations of big oil at the behest of Congress (both Dems and Repugs have gotten in on this act) over the last four years or so and hasn't every investigation of them come up with zilch?
Rowland Nethaway’s column: Big Oil grandstanding gains nothing addresses some of that...
Alex Epstein over at he Ayn Rand Institute has a better idea: Investigate Big Congress, Not Big Oil
It's politically correct to demonize the 'evil' oil companies, and 'protect' the farmers. Also, a good question would be: How many politicians are represented in the farming areas? And how much is the Farming intersests giving to their campaigns?
It's politically correct to demonize the 'evil' oil companies, and 'protect' the farmers. Also, a good question would be: How many politicians are represented in the farming areas? And how much is the Farming Interests giving to their campaigns?
> How many politicians are represented in the farming areas? And how much is the Farming Interests giving to their campaigns?
Searchable Database for Campaign Contributions
Tell us what you find
:oP
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