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[Economic]
Mapping the Global Divide
by Naresh Jotwani
Posted December 28, 2019

speculators vs producersImagine a transaction between a farmer and a trader of farm produce.

The farmer’s time and energy are fully committed to getting a decent harvest in the face of fickle weather and uncertain market prices, while also looking ahead to the next season. He can spare no time or energy for complex business transactions or financial calculations.

The trader has plenty of time, energy and incentives to master the tricks of finance and business. To him, the farm produce is merely a commodity which he can buy or sell, process further for value addition, pledge as collateral, dump in a foreign market … or whatever else brings in good profit. Only the trader’s cunning limits what he can or cannot do with a given commodity – and there is no limit to that cunning.

The farmer’s life depends on hard work; the trader’s life depends on cunning. Therefore the farmer would invariably have a weaker hand in any transaction with a dealer. More…