In two hours on one scorcher of a recent Tuesday, Sarah Kavage gave away 110 pounds of flour.
But those 110 pounds were just a drop in the bucket. She still had 18,000 more pounds to go.
“Trading grain,” Kavage says, “used to be this very intimate relationship between the product and the buyer and the seller. Before there was the Board of Trade you would come to the waterfront and you had your little sacks of grain loaded up on your wagon and the buyers and sellers are looking around for each other and the buyers are examining the crop and trying to set a price and the price is determined based on the quality of the individual crop.
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But that same year a global food crisis sparked riots around the world and added an estimated 250 million people to the ranks of the global hungry as the price of staple foods shot sky-high. Commodity crops were headline news, and Kavage couldn’t shake the feeling she was onto something.
The North American wheat market, Kaufman pointed out in Harper’s, was able to prosper thanks to numerous mechanisms that protect farmers and consumers from wild swings in price—things like futures contracts, which allow millers and bakers to stabilize their costs. But what’s good for farmers isn’t necessarily good for bankers. Bankers like volatility—that’s how they make money. Kaufman’s article, in brief, argues that the Commodities Index, by allowing speculators to perpetually roll over futures contracts without ever having to actually buy any wheat, created an artificial demand for wheat, driving up prices and causing panic around the world at the perceived shortage of wheat in a year that, ironically, saw one of the most robust crops of hard red winter wheat in years.
Greenfield is a 106-year-old hydropowered mill owned by Dave Rinkel and his family, the fourth and fifth generations of Rinkels to run the business. For years Greenfield Mills operated around the clock, grinding flour for Kentucky Fried Chicken breading in five states—until in 1986 KFC was bought by PepsiCo, which took its business elsewhere. In one fell swoop Greenfield lost its biggest client, and since then, says Dave Rinkel, they’ve focused on smaller accounts: grocery stores, Amish bakeries, pie shops. “With the economy the way it is,” he says, “it actually pays better.”
