Johann Hari urges ‘decent people’ to get involved in WDM’s campaign to stop bankers betting on food

I’m really pleased to see that journalist and art critic Johann Hari, described by the Daily Telegraph as one of the most influential people on the left in Britain, wrote a piece for the Independent last week urging people appalled about bankers speculating on food prices and causing hunger to get involved in WDM’s food speculation campaign. The article was circulated widely on the internet, including being passed on by Stephen Fry, and also appeared in the Huffington Post on Saturday. In it, Hari writes:

Only one force can stop another speculation-starvation-bubble. The decent people in developed countries need to shout louder than the lobbyists from Goldman Sachs. The World Development Movement is launching a week of pressure this summer as crucial decisions on this are taken: text WDM to 82055 to find out what you can do.”

He describes how deregulation of commodity markets in the 1990s has enabled bankers, such as Goldman Sachs and Deutche Bank, to speculate on the price of staple foods such as maize, soya and wheat. The speculators disrupt the market and drives up food prices ,something which is catastrophic for the world’s poor and caused the 2007-2008 food crisis:

At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 percent, maize by 90 percent, and rice by 320 percent. In a global jolt of hunger, 200 million people - mostly children - couldn't afford to get food any more, and sank into malnutrition or starvation. There were riots in over 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, called it "a silent mass murder", entirely due to "man-made actions."

The food crisis was caused by financial speculators, worried about the US real estate market, started looking for somewhere else to make their money:

Here's how it happened. In 2006, financial speculators like Goldman's pulled out of the collapsing US real estate market, and they were looking for somewhere else to make their stash of cash swell. They started to buy massive amounts of derivatives based on food: they reckoned that food prices would stay steady or rise while the rest of the economy tanked. Suddenly, the world's frightened investors stampeded onto this ground and decided to buy, buy, buy.

So while the supply and demand of food stayed pretty much the same, the supply and demand for contracts based on food massively rose - which meant the all-rolled-into-one price for food on people's plates massively rose. The starvation began.”

It would be pretty easy to stop the betting. All we need is legislation that requires two things:

1.  All futures contracts to be cleared through regulated exchanges. Most contracts are currently done in private, which means it is impossible to know how much of what is being traded. Contracts need to be brought out into the open.

2. Strict limits to be set on the amount that bankers can bet on food prices.

Both the Obama administration and the European Commission are both calling for regulation, but there is heavy lobbying by the multi-billion pound banking industry. We have to ensure that the UK plays its part in backing European proposals and does not cave in to the bankers.

Help us shout louder than the lobbyists.

To get involved in the campaign, sign up on www.wdm.org.uk/shopgoldmans or text 'WDM' to 82055.