Are speculators still winning in the hunger casino?

By Amy Horton, 6 September 2011

It’s a year since we launched our campaign to curb financial speculation on food prices. A year packed with dramatising the impacts of speculation in games of human blackjack, meeting MPs, building international coalitions… and much more. But how far has all of this got us towards ending the scandal of banks causing hunger?

The problem certainly hasn’t gone away. In February world food prices broke the records set at the height of the 2007-8 food crisis and have hovered near that level ever since. By June speculators owned futures contracts for maize worth $15.7 billion, up 127.5% from a year before, while maize prices rose 102% in that period. With famine gripping the Horn of Africa, the release next month of the UN’s world hunger count looks set to be grim news.

A losing battle?

Against this bleak backdrop, the voices of WDM activists are making themselves heard. Thousands have sent action cards or letters to MPs to make them aware of the issue and demand action from the government, while others have organised face-to-face meetings. Ian Murray MP told us that food speculation was among the top three issues constituents were raising – testament to the work of the WDM Edinburgh group!

We took leading economist Jayati Ghosh from Jawaharlal Nehru university, New Delhi on a series of lobby meetings with MPs, during her visit to the UK where she also spoke at our packed-out public meeting last October.

Thanks to these efforts, a considerable number of MPs are now on side. 58 MPs have signed an early day motion in support of effective regulation. Several have asked parliamentary questions to ramp up the pressure on the government. We are gathering action cards targeting the Treasury and food shopping receipts with personal messages to George Osborne (if you haven't already, please post yours in to us).

Public awareness of the issue has exploded, not least because of WDM groups taking to the streets to play ‘human blackjack’ or hawk overpriced food as Barclays bankers. With the issue rising up the agenda, support for regulation now comes from groups as diverse as the National Farmers’ Union in Scotland, Oxfam and Starbucks.

WDM in action outside speculator Barclays

Global shift

WDM has worked to build an international movement to rein in speculation. We coordinated over 100 groups worldwide in calling for action. In July, the UN’s panel of experts on food security said emphatically that “Action regarding transparency in futures markets and tighter regulation of speculation is necessary”, reflecting policy advice submitted by WDM. Other key international organisations have also lined up in recent months to warn of the effects of unbridled speculation, including the previously sceptical Organisation for Economic Cooperation and Development – regularly cited by the UK government to defend its opposition to tough regulation.

Government backing down?

Key European institutions and countries such as France are spearheading reforms to clamp down on speculation in the EU. When our campaign began, the UK government looked set to be a major stumbling block. Ministers dismissed the problem, saying speculation did not affect food prices. But continued pressure from WDM’s activists and allies – pointing out the latest evidence, highlighting the devastating impacts of speculation, and demanding action – seems to be shifting their stance. The Treasury now says it “supports strong regulatory oversight powers” in markets for food futures contracts. It backs improved transparency and more exchange trading.

However, the government is not willing to introduce position limits to restrict speculators to a minority share of the market. Instead of this critical step, ministers favour a ‘flexible’ system of market management – deregulation by another name.

What next?

This autumn, the European commission will release its proposals for regulating food speculation. WDM will be working with partners across Europe to step up efforts to ensure MEPs support tough and effective rules, rather than succumbing to the influence of financial lobbyists. We’ve already made a start – thousands of activists overwhelmed the European’s Commission inbox in sending in responses to the public consultation earlier in 2011. Before a key European vote on legislation to make trading more transparent in July, our e-action urged MEPs to pass strong measures. They threw out attempts to weaken the proposals and Labour MEP Richard Howitt tweeted: