Food and hunger

Ahead of deliberations by MEPs on Wednesday, 25 campaign groups from across Europe today released a statement (PDF) urging the EU to use the review of its Markets in Financial Instruments Directive (MiFID) to curb financial speculation on food prices. 

The European Parliament’s Economic and Monetary Affairs Committee (ECON) will meet on Wednesday to discuss the report on the Commission’s MiFID proposal by the rapporteur, German MEP Markus Ferber. 

The campaign groups are calling for the updated MiFID to include position limits to prevent speculation on food and other commodities from driving up prices, meaningful transparency, oversight and supervisory powers to ensure effective regulation, and bans on harmful trading methods and on financial entities speculating in commodity markets.

Christine Haigh, campaigner at the World Development Movement, said:

Deregulation of commodity markets since the 1990s has led to increased food price volatility, contributing to the recent food price spikes that have left millions across the world facing hunger and poverty. We urgently need MEPs and the Council of Ministers to reregulate these...

The battle over EU commodity market regulation commences this week, with key bureaucrats meeting in Brussels tomorrow to thrash out an agreement on regulation of commodity derivative markets.

The European Parliament’s rapporteur for the review of the Markets in Financial Instruments Directive (MiFID), German MEP Markus Ferber, said on Friday that he intends to introduce strong controls on financial speculation in these markets:

Highly speculative investment must no longer influence the price of agrarian raw materials. Excessive speculation on foodstuffs and raw materials threatens the smooth functioning of commodity future markets and creates massive price volatility. We certainly need to contain that.”

It is unclear whether the officials from member states meeting tomorrow will make a similar recommendation. The UK government is known to be opposed to the introduction of ‘position limits’, which advocates believe to be the most effective tool in limiting speculative activity in commodity derivatives markets. The UK is expected to block any attempts to remove a loophole which would allow weaker ‘alternative arrangements’ at tomorrow’s meeting. Position limits would set maximum limits for the market share traders could hold.

The...

The news that Greg Smith, executive director of Goldman Sachs’ European equity derivatives business, resigned yesterday accusing the Wall Street bank of being morally bankrupt is the latest reminder of the morally dubious practices of one of the world’s biggest investment banks. Among its many divisions is a commodity derivative trading arm - big enough that the firm is generally regarded as one of the two top players in food and other commodity speculation, which experts increasingly agree is contributing to global food price spikes.

As our 2010 report highlighted, in 1991 lobbying by Goldman Sachs exempted many commodity speculators from the limits on trading created in the 1930s. Goldman Sachs’ commodity index fund was created the very same year. These commodity index funds have since become the primary vehicle for speculative capital involvement in food commodity markets.

Not only this, but these index funds give the bank involved two potentially conflicting roles: both arranging the buying of derivatives contracts for which they charge a...

This week I read a recent report by Friends of the Earth Europe. ‘Farming Money: How European banks and private finance profit from food speculation and land grabs’ is an interesting read for anyone concerned about poverty and social justice issues. 

The report looks at two major topics: food speculation and land grabs. Anyone who has been following the work of the World Development Movement over the last couple of years will be familiar with food speculation, and WDM in fact contributed to a section in the report about food speculation by British banks. 

In order to address the speculation problem, Friends of the Earth recommends two solutions. The first reform it advocates is increased transparency in food markets, with trade of futures contracts taking place on public exchanges rather than in secret - how the current ‘over the counter’ market operates, The second is ‘position limits’, meaning that there should be limits to how much of food markets can be controlled by speculators. 

Hopefully, the combined pressure of FoE and WDM in making these demands will force a change in the UK negotiating stance within the EU, where the UK has been blocking such legislation.  ...

10 per cent of Europeans are unemployed. To solve the crisis we need to grow… food. The idea of becoming a farmer may not seem very appealing. Isn’t the countryside scattered with producers struggling to eke out a living from supermarket prices that barely cover the cost of production? Driving tractors across vast monotonous landscapes or herding cows into industrial milking sheds? Don’t young people up sticks and head for the city, part of a great wave of migration around the world? 

Oil has taken their jobs. Diverse farming, which needs many skilled workers, has largely given way (in the global north) to giant monocultures powered by fossil fuel-hungry machinery and fertilisers. But with climate change almost at a tipping point and so many millions out of work, it’s clear that this is unsustainable.

Subsidising land grabs in Europe 

At a gathering of activists and food producers from across Europe yesterday, I heard about how some growers and community initiatives are realising an alternative, based on the principles of food sovereignty. But small-scale farmers said they face an uneven policy field. 80 per cent of the payments under Europe’s common agriculture policy (CAP) go to just 20 per cent of farmers. Smallholders are entitled to a...

Whilst rich countries are responsible for most of the emissions pumped into the atmosphere it is the poorest communities in the world that are being hit the hardest by climate change. But rather than providing compensation for causing climate change rich countries are using it to trap the world’s poor into new and dangerous climate debt. WDM is campaigning for climate justice for developing countries.

Barclays Bank has today won a Public Eye ‘shame award’, for speculating on food prices. Barclays’ activity is fuelling hunger and poverty worldwide, says the World Development Movement, which nominated the bank.

The award was presented today in Davos, Switzerland, to coincide with the World Economic Forum.

Barclays is estimated to make up to £340 million a year from speculating in food ‘futures’ markets, making it the biggest UK player in the markets. Massive influxes of speculative money in food markets have been driving sharp price spikes, sending the cost of food soaring beyond the reach of the world’s poorest people.

Barclays won the Public Eye ‘global award’, selected by a panel of judges. The ‘people’s award’, decided by an online vote, went to Brazilian company Vale, for its involvement in the construction of the controversial Belo Monte dam in the Amazon. Forty thousand people are likely to be forced from their land if the dam goes ahead.

Barclays CEO Bob Diamond responded to the Occupy movement by telling the BBC in November that banks must be “better citizens”. 

Rules to curb speculation are being...