Remarks for Chairman J. Christopher Giancarlo at the 2018 Agricultural Commodity Futures Conference, Overland, Kansas

April 5, 2018


Thank you and good morning.  Welcome to the First Agriculture Commodity Futures Conference.  Good to have you with us.


The Commodity Futures Trading Commission is pleased to co-sponsor this event with the Center for Risk Management and Education at Kansas State University.  KSU has been a sound, reliable, and credible partner.  I would especially like to thank Dr. John Floros, Dean of the College of Agriculture.  He has been a steady and helpful presence throughout the sponsorship and planning stages of the conference.


His voice, and yours, are heard across the nation and around the world.


Like many of you, I was impressed by the recent movie about Winston Churchill, “Darkest Hour.”  As you know, in 1946, Churchill made his famous “Iron Curtain” speech in nearby Fulton, Missouri, just a couple of hours from here on I-70.  His speech was titled “The Sinews of Peace.”[1]


Much was made at the time about its location.  Many said it was a favor to President Truman.  But, others argued this was the ideal location.  Churchill traveled from Great Britain, and then together with President Truman from Washington, to speak in the American Heartland.


Why?  Churchill answered that question at the start of the speech.  Here in the heartland was the “opportunity” to speak to the world.  And, here, the world would listen.  The setting demanded attention.


So we know why Winston Churchill came here.  Why are we here?  Well, for the very same opportunity to speak from America’s heartland to the wider world.


The American agricultural market is significant.  Agricultural, food, and related industries contributed $992 billion to the U.S. economy in 2015, 5.5 percent of the gross domestic product.[2]  And, in 2016, agriculture provided 21.4 million full-and-part time jobs, 11 percent of total U.S. employment.[3]  In that same year, 2016, food accounted for 12.6 percent of American household expenditures.[4]  The agricultural swaps market was estimated in 2014 to be about $51 billion in notional amount.[5]


The figures in international trade are also sizable.  In Fiscal Year 2018, the Department of Agriculture projects that agriculture exports will exceed $140 billion, with imports at $119 billion, for a net balance of trade over $20 billion.[6]  That balance of trade is good for the nation and for American famers.  This country is the breadbasket to the nation and the world.


Our futures and swaps markets serve at least two critical roles in helping to feed the world’s growing population.  First, they allow markets to resolve imbalances dispassionately and efficiently by providing reliable and fair benchmarks for prices.  Second, they reduce price volatility in a resource-constrained world by removing the economic incentive to hoard physical supplies.  They allow Ag producers to quantify and transfer the risks of production to persons willing and able to hold that risk, stabilizing earnings and benefiting all parties, including consumers who may never get involved in derivatives markets.  These markets provide confidence to global consumers of American agriculture that the prices paid are fairly set free of market manipulation or interference.


This first-of-its-kind conference is called, “Protecting America’s Agricultural Markets:  An Agricultural Commodity Futures Conference.”  Our purpose is to examine key issues in our commodity futures markets that are part of the “sinews” of the American economy.


We will discuss current macro-economic trends and issues affecting our markets, like market speculation, high frequency trading, trade data transparency, novel hedging practices and market manipulation.  We will look at problems in convergence between cash and futures prices and volatile storage rates.  We will hear about advances in distributed ledger technology, algorithmic trading and other emerging digital technologies.  And we will hear about current regulatory activities in protecting participants from manipulation, fraud and other unlawful activities.


We will also discuss consumer awareness and customer education.  Market growth and surveillance are assisted, even stimulated, through consumer education.  The CFTC’s Office of Consumer Education and Outreach engages with a range of audiences such as retail investors, industry professionals, seniors, and vulnerable populations who may be targeted by unscrupulous individuals with the intent to defraud them of their savings.  We plan to expand this engagement in the year to come.


We have outstanding speakers and panels.  We will all benefit from the presentations.  Our common purpose is to consider and address issues of emerging market structure and trading practice to ensure that these markets remain the world’s most robust, dynamic and liquid for decades to come.  American commodity futures markets are vital national interests that we must protect and enhance.


I want to thank both Senators from Kansas for coming to this conference.  Senator Roberts is a graduate of Kansas State.  This is a homecoming for him.  And, Senator Moran went to college at Ft. Hays State, down the other way on I-70, with its outstanding Department of Agriculture and the valuable degree in Agricultural Business.  They have both been very helpful in setting up this conference, very supportive and encouraging.  Both will be speaking here.


I started by mentioning Churchill.  In 1946, the same year Churchill came to Fulton, he also purchased a farm contiguous to his home.  He wanted to experience the life of agriculture, feel the soil on his hands, grow crops, and study the weather.  He knew agriculture was important to the British economy.  He wanted to be part of the farming community.  Above all, he wanted to listen to other famers, to learn from them, to understand their fears and doubts, their joys and triumphs.


We have come here primarily to listen.  We want to hear your voice, and, in turn, be your voice in Washington.  We are now living through a technological revolution, which effects agriculture just as it does every sector of the American economy.  These changes can be confusing, even frightening.  Let’s not live in fear.


Through our discussions we will help each other.  And, help the consumer and the economy.


It is now my pleasure to introduce Dr. John Floros, Dean of the College of Agriculture at Kansas State University.


[1] Winston S. Churchill, Sinews of Peace:  An Iron Curtain has Descended.  (1946)  In NEVER GIVE IN!:  THE BEST OF WINSTON CHURCHILL’S SPEECHES (selected by his grandson, Winston S. Churchill)  413 (2003).

[2] Economic Research Services,  U.S. Department of Agriculture,  Agriculture Contributed $992 Billion to U.S. Economy in 2015 (last updated April 6 2017):  https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=83033

[3] Economic Research Services,  U.S. Department of Agriculture,  Ag and Food Sales and the Economy (last updated Oct 18 2017):  https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/ag-and-food-sectors-and-the-economy

[4] Economic Research Services,  U.S. Department of Agriculture,  Food Prices and Spending (last updated Mar 19 2018):  https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/


[6] Economic Research Services,  U.S. Department of Agriculture,  Outlook for U.S. Agricultural Trade (last updated Mar 9 2018):  https://www.ers.usda.gov/topics/international-markets-us-trade/us-agricultural-trade/outlook-for-us-agricultural-trade/