Excellent links.  It's stunning how politicians can say "The public shouldn't know what we're doing in their name with their money" with a straight face.

Uncephalized:

Exactly.  And pundits talk seriously about taxing soft drinks and other "unhealthy" food...we're supposed to pay agribusiness to grow corn we don't want, and then pay again because it's "too cheap"?  

Franco:

I've been surprised more than once by the EU rules for "fit for sale".  I can understand protected designations, i.e. you can't call it "Champagne" unless it's from Champagne, but I don't understand not being able to sell a cucumber unless it's of a particular size.  I guess they get turned into pickles?

Sean:

Point taken.  I apologize for any implications of my phrasing.

I'm pretty sure we're not in substantial disagreement here.  We agree that inappropriate intervention in the market is causing these particular issues -- by pushing commoditization on the one hand, and on the other end, by regulating or outright prohibiting food transactions between producer and consumer.

Perhaps I need to clarify what I mean by "commoditization".  

Clear expectations are one thing: if I buy butter, I should expect it to be made from cow's milk, and to contain appx. 100% butterfat within reasonable limits of processing technology.  Furthermore, I should expect it to be free of adulterants (e.g. margarine), or contaminants (e.g. cleaning agents, excessive bacteria).

Most importantly, I have a choice of origins and brand names, and "butter" as a product is not itself fungible.  A stick of Kerrygold is not equal to a stick of Wal-Mart house brand butter, and there are no butter futures on the COMEX.  This is because consumers like you and me understand that there is a difference and are willing to pay for it, and because government policy doesn't enforce uniformity of butter.  (Dairy price supports are based on milk production AFAIK, not on downstream products like butter.)  In other words, butter has not been fully commoditized.

Steel is similar to butter in that it is a downstream product, not a true commodity.  Iron is the fungible raw material, and it is indeed traded on commodity exchanges.  Steel, like butter, is not completely fungible, because (as you correctly note) quality varies between producers.  Indeed, steel is purchased in a specific form from a particular foundry, not on a commodity market, though since there are only so many producers of steel it is possible to come up with average "market prices" for it.  (See: metalprices.com)

Moving on to the function of markets and trading: commoditization indeed allows the farmer the security of selling his crop forward -- at the cost that he can no longer differentiate the quality of his product from anyone else's, and must compete purely on price and volume.  

My contention is that this is a bad tradeoff, and that the profit from farming has consequently shifted from the farmer to middlemen and processors, as evidenced by the relative profit I mentioned from eggs (58 cents per consumer dollar) vs. corn syrup (4 cents per consumer dollar).

I don't blame traders for profiting via trading!  I blame the government for inappropriately forcing farmers into the commodity system via price supports -- and the fact that 36 percent of all American farms disappeared between 1970 and 1992 supports my argument.  The tradeoffs you mention, of predictability and efficiency vs. profit for the middlemen, make a lot more sense when talking about truly fungible raw materials, i.e. iron, copper, etc.

"Ultimately it is simply up to consumers to be more aware and choose higher quality food the market will follow as much as it is allowed."

Absolutely.  By not consuming corn, wheat, or soybeans, we're opting out of the vast majority of this broken system.

Thank you for your thoughts!  We'll probably continue to butt heads here and there, but our goal is shared, and I always appreciate your contributions.

Asclepius:

That's an excellent set of points.  If you want anonymous, fungible transactions over long distances (i.e. "exchanges"), you're going to require a large infrastructure to enforce the uniformity that makes it possible.  What looks like "efficiency" mostly just ends up moving profits from the producer to traders, middlemen, and other functionaries.  We see this in the relative cost of food at the supermarket vs. the cost of the agricultural products from which they are produced.  (I gave some examples in this article.)

Again, inappropriate commoditization.

Kirk:

The cornucopian argument is that we have plenty of every resource we need to support eleventy-billion people.  Continually rising commodity prices show that this is not the case.

Matt:

Unfortunately that report counts grains as healthy!  They're only counting as "junk food" the fraction of corn and soy that gets turned into HFCS, seed oil, and cornstarch.  It's all environmentally destructive, it's all junk food, and the true numbers are many times worse.

James:

We're spreading the knowledge as best we can.  All we can do is make it available for those with eyes to see and ears to hear.

Eddie:

You can look at agricultural commodities and see a similar curve (though less sharply rising).  

More importantly, fossil fuels are absolutely necessary to bring you the results of modern commodity agriculture: as I've said many times before, the Haber process alone (by which ammonium nitrate fertilizer is made) consumes 3-5% of world natural gas production.  

No more fossil fuels, no more 200 bushels per acre of Iowa corn.  

I have charts and maps showing US agricultural productivity previous to the Haber process, and it's perhaps a fourth of where it is now.

Raul:

King Corn is a great film.  It moves a bit slowly, but it shows just how disconnected from any sort of rationality our modern system of food production has become.

Ted:

You're correct.  And as I said to Matt, the PIRG numbers are vastly understated since they're only counting the HFCS, seed oil, and cornstarch parts as unhealthy.  100% of grain subsidies are unhealthy for Americans.

JS