Glencore: The global food crisis is good for business

Commodities trading giant Glencore is under attack from aid groups after describing rising global food prices as a business opportunity: Glencore’s director of agriculture trading, Chris Mahoney, sparked the controversy when he said: "The environment is a good one. High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities. "We ...

By , a former associate editor at Foreign Policy.

Commodities trading giant Glencore is under attack from aid groups after describing rising global food prices as a business opportunity:

Commodities trading giant Glencore is under attack from aid groups after describing rising global food prices as a business opportunity:

Glencore’s director of agriculture trading, Chris Mahoney, sparked the controversy when he said: "The environment is a good one. High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities.

"We will be able to provide the world with solutions… and that should also be good for Glencore."

The head of the Food and Agriculture Organization told the Independent,  "Private companies like Glencore are playing a game that will make them enormous profits."

Glencore went public last year with a valuation of more than $60 billion — higher than Boeing or Ford. Ken Silverstein profiled the company and its frequent ties to repressive and corrupt regimes for FP’s May/June issue: 

Another way Glencore makes so much money is by leveraging information to take advantage of the wild swings that have marked global commodity prices in recent years, with oil yo-yoing from $147 a barrel in mid-2008 down to $40 later that year and more recently back up over $100. Poor countries that sell commodities often end up losers when prices go down — like Zambia, which in recent years has been intermittently walloped by a combination of rising prices for agricultural products and sharply falling prices for copper and the other mineral exports on which it depends. But Glencore, like a casino where the house always wins, "benefits directly from the volatility," as Deutsche Bank noted cheerfully in a report on the IPO for potential investors.

On the site today, Robert Hormats looks at how another global food crisis could still be prevented. 

Joshua Keating was an associate editor at Foreign Policy. Twitter: @joshuakeating

More from Foreign Policy

Russian President Vladimir Putin and Chinese President Xi Jinping give a toast during a reception following their talks at the Kremlin in Moscow on March 21.
Russian President Vladimir Putin and Chinese President Xi Jinping give a toast during a reception following their talks at the Kremlin in Moscow on March 21.

Can Russia Get Used to Being China’s Little Brother?

The power dynamic between Beijing and Moscow has switched dramatically.

Xi and Putin shake hands while carrying red folders.
Xi and Putin shake hands while carrying red folders.

Xi and Putin Have the Most Consequential Undeclared Alliance in the World

It’s become more important than Washington’s official alliances today.

Russian President Vladimir Putin greets Kazakh President Kassym-Jomart Tokayev.
Russian President Vladimir Putin greets Kazakh President Kassym-Jomart Tokayev.

It’s a New Great Game. Again.

Across Central Asia, Russia’s brand is tainted by Ukraine, China’s got challenges, and Washington senses another opening.

Kurdish military officers take part in a graduation ceremony in Erbil, the capital of Iraq’s Kurdistan Region, on Jan. 15.
Kurdish military officers take part in a graduation ceremony in Erbil, the capital of Iraq’s Kurdistan Region, on Jan. 15.

Iraqi Kurdistan’s House of Cards Is Collapsing

The region once seemed a bright spot in the disorder unleashed by U.S. regime change. Today, things look bleak.