“The G20’s inaction won’t prevent financial speculators, including British investment banks, from making a killing by pushing up food prices to levels that are unaffordable for millions.”
That’s the view of agricultural scientist Charlie Clutterbuck. It comes after agriculture ministers from the world’s richest countries failed, at a meeting in Paris in June, to back up French President Nicolas Sarkozy’s strong words with a plan to tighten regulations in the commodity markets.
In 2007-08 a surge in food prices that triggered riots in some countries was widely blamed on speculation. None of which has prevented the price of food rising to record levels today or millions going hungry.
Sarkozy, the G20 Chairman, told ministers that “By addressing the volatility of agricultural markets, in assuring food security for the world for today and tomorrow, we will rebalance the structure of capitalism so that it once again contributes to the development and well-being of the people including a billion farmers.”
All of which proved a little hard for the likes of Britain’s farming minister Jim Paice to stomach who said, “We are not persuaded that speculation is causing volatility.” And what emerged from the behind closed-door discussions was hardly encouraging, with ministers preferring to pass on the problems to an October meeting of finance ministers and central bank governors ‘to take the appropriate decisions for a better regulation and supervision of agricultural financial markets.’
Charlie’s disappointed and so too are the World Development Movement [WDM] that campaigns on issues of global justice. Spokeswoman Heidi Chow accuses the Government of turning a blind eye to a number of reports from respected bodies such as the UN Food and Agricultural Organisation and the Organisation for Economic Co-operation and Development that “prove there is a link between excessive speculation and rising food prices.”
She has little doubt what lies behind the myopia saying “it’s because they’re standing with the City of London” or in Charlie’s words a government that appears “unwilling to take our own food security seriously is more dependent on speculation in the Gherkin than investing in our own cucumbers.”
Earlier this year the WDM released its own report on Barclay’s role in food speculation, following which campaigners held protests outside a number of the banking giant’s branches.
The report estimated Barclays could be making up to £340 a million a year from food speculation. Obtaining an exact figure is currently impossible because many - perhaps even most - deals are done secretly with no-one knowing what’s being traded or at what price or quantity. Recently Al Jazeera TV provided a picture of what might be happening when it discovered that the offices of a hedge fund in central London bought up 7% of the world’s cocoa crop, stored it for a few months and when chocolate reached record levels sold it on for massive profits.
WDM want the secrecy to end with all contracts forced to pass through regulated exchanges. They’re not against financial institutions playing a role in the futures market whereby farmers and producers get a guaranteed price for next year’s crops, a policy first established in Chicago in the 1920s to support grain producers.
“Providing credit is good, but not if it comes with dominance. What we don’t want is financial speculators that are not fulfilling a genuine need for producers or who are even interested in food” said Chow who pointed out that last year the Dodd-Frank Financial Reform Act that was passed in the US included provision to restrict financial speculators to 25% of the futures food market.
Now the WDM wants to see the British Government support similar proposals and limit the amount bankers can bet on food prices
But as the Con-Dem’s have, so far, done little to limit the power of the major banks isn’t that a little optimistic?
“We feel this is a fundamental issue as food is a basic human need. We want them to take action on something that is only profiting a very small number of people or institutions but affecting millions across the world including, of course, poor people in the UK who are being hit with massive food price rises” said Chow.