Jamaicans definitely have a very special relationship with food. Our love of preparing and eating good food is culturally celebrated in poems, songs, wise sayings and folklore. Many people will travel far and wide just to partake in a fancy food festival or curry goat cook-up.

Food also has a major effect on our economy. Apart from the profits that food providers can make, other businesses can benefit from our fascination with food. If you’re planning an event and you want to encourage people to participate, just let it be known that free food will be available!

The benefits of the food industry

On the positive side, our country is experiencing a resurgence in the quantity and quality of food service professionals. When I was in school, over 20 years ago, it was not considered ambitious to take a home economics class, as you didn’t see how it could contribute to a lucrative career.

Today, there is a perceived glamour to the food industry. More youngsters and adults are considering the financial and personal rewards that can be attained from becoming chefs, caterers, pastry makers, beverage producers, food artists and organic farmers.

The spin-offs to the wider financial system are enormous as other entities can benefit from the growth in the food business. Providers of inputs and complementary products such as food preparation equipment, delivery services or advertising media will also see increased profits from this trend.

The problem of food costs

While we celebrate the financial returns that the food industry can bring, one major challenge that many of us face is the increasing cost of our food supply. It can be very difficult to keep our budgets under control when prices of basic food items are continually on the rise.

We are not alone in the problem of escalating food costs; it’s a global phenomenon that has many nations and world organisations concerned. Drought, diseases and destructive wildfires in major food areas are some of the factors that contribute to decreasing production and increasing prices.

Other international developments have played a huge role in the rising totals on our grocery bills. Increases in world oil prices lead to higher transportation and electricity expenses, and this has a direct effect on the cost of providing food items at your local supermarket in Jamaica.

The history of food finance

Another global financial trend that has implications for your food bill is what economists refer to as the ‘financialisation’ of food. This means that some of the major staples such as corn, wheat, soybeans and sugar have become financial commodities that can be exchanged for profit.

Here’s a brief history of trading in food commodities. Long ago, planters of food items would sell their produce directly to distributors and major manufacturers of processed foodstuff. Eventually they developed a contract system that would guarantee a certain quantity and price for a future date.

Over time, as more contracts were negotiated between producers and buyers, it was recognised that the future contracts for food delivery had a financial value separate from the food items. This started a market for the trading of the contracts among investors who had no use for the actual food items.

The economics of food prices

Today, investors can buy and sell futures contracts for a range of agricultural produce such as cattle, hogs, cocoa, coffee, orange juice and cotton. The wider commodities market also includes energy products such as crude oil and natural gas, and metals like gold and copper.

As commodity trading becomes more lucrative, some investors speculate on the future prices of food staples and may artificially drive up the costs of the food we eat. For example, wheat and corn, which comprise animal feeds and many of our processed foods, are subject to these price swings.

In 2012, a spokesperson from the UN conference on trade and development (UNCTAD) David Bicchetti blamed rising food costs on excessive trading in food commodities. Bicchetti said that the dollar amount of traded contracts was “20-30 times the physical production of the commodity.”

The plan for food security

 While Jamaicans may not have much influence on the international commodity markets, we must consider the negative effects that global trading can have on our food security. Food security is defined as the availability of food and people’s ability to access food to eat.

A country’s food security will be in jeopardy if a large number of citizens cannot get food or are threatened by malnourishment or starvation. In Jamaica today, we are blessed with a variety of agricultural produce and foodstuff that should ensure that the entire nation can be fed.

However, let’s not take our food for granted. Wherever possible, substitute imported food items for locally-grown options; promote backyard gardening to encourage healthier eating; and support the efforts of our Jamaican professionals so that our food industry can continue to develop.

Copyright © 2013 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, May 30, 2013

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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmart.org. Contact Cherryl