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I don't understand the logic behind commodity food economics. Why is there so much excess wheat sitting around waiting for prices to jump? Surely that will go b

I don't understand the logic behind commodity food economics. Why is there so much excess wheat sitting around waiting for prices to jump? Surely that will go bad eventually. How much food will get wasted because of volatile markets? When I think of wheat, it's not just bread either. Breweries are a fast-growing industry that are springing up everywhere. I've seen so many of them become major boons to cities as they occupy formerly unused warehouse or industrial spaces. Maybe they could work out a cooperative deal with brewers to sell excess to them at lower costs to keep driving up demand for craft beer by making production more affordable. The real upside in all this, if wheat becomes cheaper maybe the places around me will make something other than ridiculously bitter IPAs.

niftich 8y ago
The interactions are complicated. Government subsidies on many agricultural commodities guarantee a price floor, but that's little comfort to farmers whose livelihoods depend on being able to sell at prices considerably higher. As with many things among actual people, the comparative differences are significant: if you can sell more for more money and have spent less money, you win much more so than your neighbors who've overspent and ended up with less profit. Conversely, a massive, diversified corporation can better weather local circumstances than a farmer running a smaller operation. This favors further consolidation, as individuals get ruined and or want to exit the space, or they move towards higher-margin products. Current purchasing tastes favor high-end produce to be close to its consumption, so pivoting to Organic in Kansas may not pay off nearly as much as in New York, Illinois, or California.