Exciting developments in the battle to regulate food speculation

Last week was a big week for our campaign to regulate food speculation, with developments on the relevant legislation in both the European parliament and Council of Ministers. 

In order to remove the harmful effects of food speculation we need caps known as ‘position limits’ on the amount of contracts speculators can hold in these markets. We’ve been concerned that the European commission’s proposals contain a major loophole which would allow countries to avoid using position limits by instead using 'alternative arrangements such as position management'. 'Position management' is a weak system which is already used in the UK, and has effectively resulted in deregulation. Under this system, hedge fund Armajaro was able to buy up virtually the entire European cocoa supply in July 2010, pushing prices to a 33-year high.

Council of Ministers

Last week, expert civil servants from each of the EU member states met to discuss proposals, including position limits, to regulate speculation on food and other commodities. 

Because these meetings are conducted in relative secrecy, we’ve had difficulty finding out exactly what went on at last week’s meeting. But what we do know is that two of the most influential countries, France and Germany, both spoke in support of position limits on speculators. 

Unfortunately, the UK was part of a small group of countries that was pushing to water down the proposals. However, no agreement has been reached amongst the different EU member states yet. 

European parliament

Last week Markus Ferber, the lead MEP for the legislation in the European parliament, announced that he wants to remove the loophole that would allow countries to avoid limiting the contracts speculators can hold. Our message has obviously got through to him. In publishing his proposals for amendments, Mr Ferber said "Excessive speculation on foodstuffs threatens the smooth functioning of commodity future markets and creates massive price volatility. We certainly need to contain that."

This is great news for the campaign – but there’s still more to do. 

Later this year, MEPs will have a chance to vote on Mr Ferber’s recommendations. We need to make sure MEPs from across the parliament agree with him, and vote for strong amendments to the proposals.

Once MEPs have come to a position amongst themselves, they need to agree the final legislation with the Council of Minister and the European Commission. 

We’ve come a long way on the campaign to regulate food speculation – but there’s still a lot of work to do before we can chalk this up as a victory over greedy speculators. 

Over the last few months, World Development Movement activists and campaigners have been lobbying MEPs across the UK about food speculation. If you would like to help, please get in touch! You can email me on christine.haigh@wdm.org.uk or phone me on 020 7820 4900 and I'll give you information about what to do.