Speculating on famine

Horn of Africa food crisis

I’m sure you have all been reading in the newspapers and seeing the images on the television of desperate people flooding into the huge Dadaab refugee camp in Kenya to receive food and medical treatment for malnutrition.  Aid agencies this week are saying some 10 million people could be soon affected by malnutrition as the worst drought for 60 years hits Ethiopia, Somalia and Northern Kenya.
 

Drought and Famine

The pioneering economist Amartya Sen showed in 1981 that the relationship between drought and famine is not as simple as crops failing and people not being able to eat as a result. Looking at previous famines in the Horn of Africa, Sen found that the overall volume of food being produced within the region had barely been diminished, and it is of course widely known that the world as a whole produces more food than it needs.

Therefore Sen’s key argument was that the cause of famine and hunger is actually people’s ability to purchase food in today’s society, where market transactions have spread to every corner of the world. Drought, he argues, means cattle and crops will perish, with the result being that farmers no longer have a livelihood from which to gain the monetary surplus needed to buy food.

Famines, food prices, and food speculation

The lack of income that people have at the present time in the Horn of Africa is being cruelly confounded by rapidly rising food prices. The FT are reporting this morning that the price of maize on the wholesale market in Kenya has risen 160% since July last year and the retail price of red sorghum has jumped 169% exceeding the peaks of the 07/08 food crisis.

Tackling food price rises is an absolute must if we are to start addressing hunger and famine. A starting point would be to look at the role that banks in the west are playing in pushing up food prices through speculating on the futures markets on cereals which make up the basic diet of so many people across Africa.

And what about the role of the UK government? Well, quite simply the government cannot call for the world to act through food aid on the one hand, but on the other work to water down the simple European measures to limit excessive and greedy food speculation by banks and hedge funds.

Ask the UK government to support effective regulation to curb excessive speculation