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WDM activists who took part in the successful campaign to tackle food speculation may well remember the name of Sharon Bowles MEP, a Liberal Democrat who chaired the European Parliament's economic affairs committee (also known as ECON). ECON played a key role in co-drafting EU law and regulations for the financial industry in the wake of the economic and banking crises, including the Markets in Financial Instruments Directive (MiFID), to regulate speculation in commodities.

Sharon Bowles takes part in a seminar on EU anti-cartel policy. Credit: flickr.com/ALDE

Back in 2012, Bowles provoked the ire of WDM activists when she refused requests to meet representatives of 11 WDM local groups from her constituency region of the...

Limits to curb speculation on food prices agreed
UK blocks proposals for tougher regulation

EU negotiators last night agreed to introduce regulation to prevent speculation by banks and hedge funds driving up food prices and exacerbating the global hunger crisis. The new controls will place a limit on the number of food contracts that banks and other finance companies can hold, and will force traders to open their activity to greater public scrutiny.

Anti-poverty campaign group the World Development Movement has hailed the decision as an historic step forward, but said that the UK government’s opposition to tough controls has resulted in serious loopholes in the regulation. In particular, limits will be set at national rather than EU level, which campaigners say risks a regulatory ‘race to the bottom’ as countries could compete to set  weaker limits.

The group is urging the European regulator ESMA to ensure that the new rules are implemented effectively, and not watered down further by industry lobbying.

Goldman Sachs, Barclays, Deutsche Bank, JP Morgan and Morgan Stanley together made an estimated £2.2 billion from speculating on food including wheat,...

Over the last few years, the EU has been trying to pass legislation to curb speculation in the commodity markets. This is because the financial sector has been allowed to gamble on food prices, a practice which has increased volatility in global commodity prices, and has played a significant role in the sharp food price spikes of the last few years, leading to hunger, poverty and protests in many parts of the global south.

The World Development Movement has been campaigning on the issue of food speculation for the last few years and was hopeful that the EU would agree on a strong regulation that will curtail this disgraceful practice that sees food as merely a commodity to maximise profit rather than a right for people.

Photo: David Blackwell

The latest research carried out by WDM reveals how the UK government is not just in bed with the UK finance sector, but actually made the first move. We have exposed how government ministers have encouraged the City to lobby against key financial reform legislation, including efforts to properly regulate food speculation, and have worked with financial lobbyists to coordinate their efforts. 

This...

Negotiators could agree regulation tomorrow (12 December)

The UK Treasury and the finance sector have colluded in lobbying against European legislation which would prevent financial speculation driving up food prices, new research reveals today.

The World Development Movement has uncovered details of a series of meetings held by the then Financial Secretary to the Treasury Mark Hoban from 2010 onwards, urging finance companies to lobby against proposed regulation which includes provisions aimed at stopping speculation by banks and hedge funds pushing food beyond the reach of millions of people. The anti-poverty group has accused the government of whipping up opposition to the legislation, against the public interest.

The UK Treasury has lobbied against strong regulation to curb food speculation.

Mark Hoban and other Treasury ministers encouraged the City to coordinate lobbying efforts with the Treasury, and travelled to European capitals to persuade other governments to oppose tighter regulation of the commodity and other financial markets...

UK pension funds are betting an estimated £1.5 billion on food prices, meaning that around £180 belonging to the average UK pension saver is being used to speculate on global food prices, according to a report released today by the World Development Movement. The campaign group is calling for tough regulation to stop food speculation contributing to the global hunger crisis by driving prices up.

UK pension funds are betting an estimated £1.5 billion on food prices.

The report reveals how pension funds and other institutional investors have poured vast sums of money into the commodity markets in recent years, pushing global prices upwards and fuelling global hunger and poverty. Pension funds’ involvement in commodities has been facilitated by investment banks including Goldman Sachs and Barclays. Barclays announced in February this year that it was pulling out of food speculation, however it continues to facilitate speculation by investors such as pension funds.

The World Development Movement’s...

UK pension funds are speculating on food commodity prices, placing huge, long-term bets on rising prices.

 

You couldn’t make it up. Three years ago (conveniently just as we launched our food speculation campaign), hedge fund Armajaro caused a massive spike in cocoa prices

In an event that has become the poster child of the excessive and profiteering food speculation we’ve been challenging with our campaign, the trader took control of virtually the entire European cocoa market by buying up the majority of the cocoa futures contracts on the London exchange. With chocolate makers and the like still needing a supply of the beans, prices hit a 33-year high and other traders threatened to leave the market if it wasn’t better regulated.

Cocoa beans

Cocoa beans. Credit: flickr.com/carsten_tb

The incident not only exposed how speculators can push up prices, causing major problems for everyone else, but also how existing ‘regulation’ of the commodity markets was a total joke: in theory, the exchange should have intervened to prevent trades of this size taking place, but in practice they did...

Five banks made an estimated total of £2.2 billion from speculating on food including wheat, maize and soy between 2010 and 2012, prompting campaigners to accuse the banks of fuelling a global hunger crisis.

Goldman Sachs is the leading global player in food speculation.

Goldman Sachs, Barclays, Deutsche Bank, JP Morgan and Morgan Stanley were the top five global investment banks involved in global commodity markets between 2010 and 2012, making an estimated £640 million ($1 billion) from speculating on food in 2012 alone. Financial speculation fuels price spikes, pushing food prices beyond the reach of millions of people.

The figures were released today by anti-poverty campaign group the World Development Movement, which is calling for tough controls to curb food speculation. Proposed new regulation is due to be discussed at the European Union on Wednesday (6 November), but is at risk of being watered down by objections from the UK government [link to today’s press...

A leaked document has revealed attempts by the UK government to scupper proposed controls on food speculation ahead of negotiations in Brussels next Wednesday.

New rules to prevent banks driving food prices up through financial speculation are due to be finalised in the European Union. But a memo sent by UK negotiators to their counterparts from other European countries last week reveals the UK government’s push to prevent major loopholes in the proposals being closed in the draft regulation.

The memo states UK negotiators’ opposition to strict limits on the amount that banks and other financial players can speculate in commodity derivative markets – a measure that campaigners see as essential to stop speculation destabilising food markets and fuelling global hunger. Instead UK negotiatiors are pushing for the continuation of a system of self-regulation under which speculators have been able to cause huge spikes in the price of foodstuffs.

The memo is likely to have been written by the Financial Conduct Authority (FCA), the UK government body tasked with regulating the financial sector, and the FCA would certainly have reviewed it. Yet the changes it is calling for would constrict the FCA’s ability to...

Last month WDM supporter, Joel, gambled with his food for a week. Here he tells us why he put himself through the ordeal.

Playing with my Food

How would you feel if your food supply rested upon the toss of a coin? If your ability to eat depended upon arbitrary events which are entirely out of your control?



Last month I experienced this for myself by gambling on my own food for seven days. Before every meal I tossed a coin – heads I ate, tails I didn’t (and a no snacking policy prevented me escaping the inevitable bouts of hunger). The high point of my luck was three heads in one day, and the low point was the exact opposite – three tails resulted in me going without a meal on Friday.

So why did I put myself through this? It was an attempt to create for myself the horror of being at the mercy of a volatile food market – a type of market which, in recent years, has had a powerful influence on the lives of millions of vulnerable people around the world.

A Chaotic Market
Anyone following WDM’s campaigns will no doubt be aware of the issue of food speculation.

Following the relaxation of regulations in the...


Protesters outside the tory party conference last year

Remember being at school and spending ages working on something – a painting, maybe – only for some nasty kid to come along and ruin it just as you were adding the finishing touches? Last week the UK government was being that kid.

For the last two years, WDM has been campaigning hard to make sure new European rules on food speculation will be strong enough to prevent speculators flooding the markets for food contracts and causing massive spikes (or slumps) in food prices.

We’ve now reached the final stage of the negotiations (you can see how far we’ve come here).This is where the three EU institutions meet for regular negotiations to try and agree the final text of the legislation on food speculation alongside a whole packet of other financial reforms. 

After years of intense lobbying by WDM local group members, staff and our allies across Europe, a couple of weeks ago the European Commission published a proposed compromise text. It looked good. It wasn’t perfect, but most of our biggest concerns about ways speculators might be able...

Wednesday  9 October, was a crucial opportunity to clamp down on food speculation. EU decision makers met to agree new rules, but the outcome hangs in the balance. Hundreds of people have already tweeted the negotiators in a twitter storm to put pressure on them to put firm controls on food speculation.

But we didn't want to limit the messages just to people who have twitter accounts. There were over 1000 messages from those, without a twitter account, who wrote a message on our website for us to pass onto the decision makers. All these tweets will appear in this feed which we have tweeted to the negotiators.

We will be adding 50 of these posts to the feed a day. 

Last month I stood outside the European Parliament whilst a group of actors, dressed up as bankers, were wrapped in barrier tape by activists. This spectacle was designed to greet European decision makers as they entered one of the first key negotiation meetings on food speculation reforms. The problem being, that even though we have position limits in the proposed legislation, there is still a threat of dangerous loopholes entering the final text. These loopholes could make this legislation impotent against a powerful financial sector hell-bent on continuing their profit making despite the moral implications of food speculation. 

This week food speculation reforms are back on the agenda. We drastically need to keep the pressure up to remind negotiators of the need for strong, water tight, regulations. If not, millions of people are still vulnerable to global food price shocks that will force them below the poverty line. 

To do this, we need your help to conjure up an almighty twitter storm today and tomorrow. If we can get hundreds of tweets sent to key negotiators in the run up to Wednesday’s...

Yesterday morning, EU decision makers met to agree new rules on food speculation. We have been campaigning to ensure our demands for effective rules are heard by decision makers and to counteract the pressure of the financial lobby who are pushing for weak rules.

In advance of this crucial meeting, we've been asking people to sign up to help lengthen our barrier tape (and play our fun snake game at the same time). In the end we got over 4,000 sign ups and our European allies got over 35,000! Our Cardiff WDM group also co-ordinated a petition to Kay Swinburne - a Welsh member of the European parliament who is one of the key negotiators in the meeting.

Joining forces with other European campaigners (Friends of the Earth Europe, SOS Faim, Fairfin, CNCD, Oxfam Germany) we took our extra long barrier tape to Brussels for a stunt just before the start of the meeting. The key European parliamentary negotiators all came to watch our comedic street theatre which involved binding up food speculators with our giant barrier tape. The negotiators were also presented with our detailed demands, a length of the barrier tape and a cob of corn as visual reminders that they need to side with...

I abandoned my Nokia 6210 way back in the late 90’s and with it the irritatingly addictive game of what I used to call snake-bot (it’s not a snake because it doesn’t wriggle and like a robot because it’s so rigid– snake-bot). However, WDM’s reconstruction of the classic version ahead of the climax to their food speculation campaign has me craving the slender streamlines of my 5 inch Nokia once more. 


photo credit: Jamesshm26

Nostalgia is also a cruel beast, not only has the game forced me to reminisce after my 16-year old life, but has me harking back to the days when I could spend a £1 of my pocket money on a packet of crisps, a bar of chocolate and a can of pop and be left with some money to spare! To my desolation, this is now no longer possible. The price of food has indeed increased. But if I think the price of my junk food staples are shocking, then I would do well to consider the price increase of the raw ingredients that went into producing them. 

Whilst we would all accept that is it a scandal that over 4million people in the UK are...

Recently I joined members of Cardiff’s local WDM group to meet an influential member of the European parliament. Kay Swinburne, former investment banker and MEP for Wales, is one of just seven parliamentarians (out of a total of more than 700) who will be sat around the negotiating table in a month’s time when the final stage of negotiations on legislation to tackle food speculation kick off.


We were there to explain how major loopholes in the legislation could be addressed – and ask for her to push for these changes to be made. But while she was certainly charming, and complementary towards WDM’s campaign (apparently our stunt last year outside the European parliament  was one of the most amusing things to happen in Brussels in a long while), we left unconvinced of her support for strong rules.

Back in the autumn, MEPs collectively voted in favour of a system which would make limits on speculation mandatory across the EU. The question is whether negotiators will leave big enough loopholes for banks and hedge funds to get around...

Just so you don’t forget that it is up to no good, Goldman Sachs has made the headlines again today. Not content with making millions from betting on food prices, it has come under investigation for pushing the price of metal above its fundamental value.


(photo credit: Rocor)

The physical metal market is prone to manipulation because, like the commodity futures market, it is overseen by a light-touch regulatory approach. This allows big players like Goldman the freedom to make money without fear of accountability. 

Consumers are suffering across the world because of the lack of regulation in our financial system. Here’s one way you can take action.

 

Last week, it was reported that Morgan Stanley – one of the top five global players in commodity speculation – is scaling back on it’s international commodities business. The reasons cited are declining revenues and increasing cost of regulatory compliance. 

The co-heads of Morgan Stanley's global commodities unit said that the decrease in revenues "is due to cyclical factors, and we firmly believe that the cycle will turn again in our favour in the future.”

Morgan Stanley’s retreat is a business decision based on profitability and like all business decisions if conditions become favourable again, they could easily return to commodities. As with other banks withdrawing from food speculation, we are not celebrating Morgan Stanley’s latest news. Only regulation can ensure that banks like Morgan Stanley are properly reined in from excessive speculation on food in a way that is permanent and binding. A small number of big banks should not be able to decide when they start or stop their excessive speculation, access to...

Little will be done to curb harmful food speculation today as EU finance ministers meet to approve their position on the new Markets in Financial Instruments Directive (MiFID II) – which sets new regulations for financial markets. According to a broad coalition of environmental and development organisations, loopholes in the legislation will render it ineffective to prevent food speculation, and the resulting food price spikes that hit the poorest the hardest.

Maize is one of the staple foods affected by financial speculation.

Anne van Schaik, accountable finance campaigner at Friends of the Earth Europe, said:

Food speculation profits financial institutions, and costs the world's most vulnerable the food on their plates. Watertight regulation of food speculation is vital to prevent excessive speculation driving up food prices – but finance ministers have failed to agree effective controls, such as limits to the bets that speculators can make.

Marc Olivier Herman, EU policy advisor at Oxfam, said:

EU...

It was AGM time again last Saturday as the World Development Movement hosted their annual meeting and conference in Leeds. The conference theme was timely, entitled 'Not the G8: A real agenda for global justice', two days before the G8 meeting started in Northern Ireland. There was a vibrant mix of attendees from long time supporters and WDM group members from all over the country, to local university students and lecturers.

There was a great line up of speakers. We hosted the personable Raj Patel, author of Stuffed and Starved; Dorothy-Grace Guerrero, the climate justice programme co-ordinator for Focus on the Global South who travelled all the way from the Thailand; and self confessed geek, anti-austerity and debt campaigner Luís Bernardo from Attac Portugal. Further contributors to our workshops were Ray Bush, professor of African studies and development politics at the University of Leeds; Richard Solly, co-ordinator of the London Mining Network; Matti Kohonen from the Tax Justice Network...

On Saturday 8 June protests were held in support of food sovereignty, rather than David Cameron and the G8's preferred approach. Known as the “New Alliance for Food Security and Nutrition”, it will see aid money support big business, and developing countries forced to implement policies which will exacerbate rather than reduce hunger. Here are some photos from the protests. 

Find out more about the background to the protests in our blog.

 

 

Strange as it sounds, the latest advocate of strict limits on food speculation is none other than the chief executive of one of Germany’s biggest banks - and one that's been profiting from it. In a letter sent earlier this week to Foodwatch, one of WDM’s German allies, Lars Hille of DZ Bank speaks out in support of regulation of the agricultural commodity markets as well as announcing his own bank’s withdrawal from the practice.

DZ Bank window

Credit: flickr.com/Awfulknitter

The move brings the total number of European banks who have responded to public pressure on the issue, with statements that they are reducing, suspending or withdrawing their involvement in food speculation, to eleven. While some of the announcements may have been more of a PR exercise (we turned up at Barclays’ AGM this year to make it clear that...

Guest blogger Mara Budgen compares the battle to regulate food speculation with European action to protect bees by banning neonicotinoid pesticides.

After two inconclusive votes in the European Parliament, the European Commission stepped in to approve a two-year ban (opposed by the UK) on the use of neonicotinoid pesticides. A European Food Safety Authority (EFSA) report, as well as many independent studies, urged such action on account of mounting scientific evidence that the pesticides pose a significant danger to bee populations.

Bees, as well as other pollinators, are an essential part of global food production, as they’re responsible for three quarters of all crop pollination. In fact, the decline in populations of such insects is a matter of concern for the entire agricultural sector (and, consequently, also for us).

Who knew that such a small gesture has a huge impact on the food we eat? Photo: Synapse

The EU’s decision to impose a moratorium on the use of...

I love food. So I remember being really excited in late 2009 when I heard that WDM was planning a campaign on food. At the time I didn’t work for WDM, but was a member of the South West London group.

Six months or so later, the campaign launched with a bang as our first report, The Great Hunger Lottery, was published the day after the infamous ‘choc finger’ incident, with which a hedge fund pushed cocoa prices to a 33-year high. The company in question, Armajaro, had bought up virtually the entire European cocoa supply via the futures market – vividly illustrating the damaging impacts of profit-hungry speculators.

Since I joined WDM as a full time campaigner at the start of 2011, we’ve come a long way towards achieving our aim of securing European regulation that will adequately curb food speculation and prevent it...

Yesterday was the Barclays AGM in London. Together with two of my colleagues I went inside to ask the board of directors why they continue to help institutional investors to speculate on food, even though they are well aware that this pushes prices up and forces people into hunger.

The AGM is hosted at the grandiose Royal Festival Hall in central London. After passing the initial airport-like security checks and registering our questions we queue up in front of the big hall. The nearest security guard informs us that a protest is taking place outside the venue.

A group of World Development Movement campaigners are outside dressed up as blue Barclays eagles. Both shareholders and journalists will have to pass them to get in here.

We are some of the first people to get into the grand hall where the AGM will take place. We want to make sure that we get an opportunity to ask our questions. While we wait for the ‘show’ to start, I get a text informing us that since yesterday almost 1,500 people have emailed Antony Jenkins, Barclays’ CEO, in the last 24 hours asking him to withdraw completely...

This morning, campaigners from WDM protested outside the Barclays AGM in London, as well asking some questions about Barclays' continued involvement in food speculation inside.

Here are some photos of the protest and a feed of tweets from campaigners inside the meeting.

Photo of the protest outside Barclays AGM

Photo of the protest outside Barclays AGM

Photo of the protest outside Barclays AGM

Find out more about our campaign to stop all banks betting on food - and take action by joining Bankers Anonymous, a five-step programme to help all bankers quit their addiction to gambling on hunger.

Campaigners from the World Development Movement will protest at Barclays’ AGM tomorrow, accusing the bank of contributing to global hunger through gambling on food prices.

Protests at Barclays' 2012 AGM.

Where: Entrance to the Barclays AGM, Royal Festival Hall, South Bank, London SE1 8XX

When: 10.30-11.30am, Thursday 25 April

Two suited, blue masked Barclays ‘eagles’ on Barclays bikes, carrying loaves of bread, will join protestors holding placards reading, ‘Barclays banks on hunger’.

Barclays announced in February that it was partially withdrawing from speculating on food prices, with chief executive Antony Jenkins saying the practice was “not compatible with our purpose”. But the bank continues to make money from enabling other financial players, including pension funds, to speculate on food.

Banks and hedge funds have been pouring millions of pounds of speculative money into agricultural commodity markets, pushing food prices beyond the reach of millions of people. Legislation to tackle speculation is on the table at the EU, but the UK...

Earlier this week, the price of gold dropped 15 per cent in just two days. Gold prices haven’t fallen so sharply since Margaret Thatcher’s first term as prime minister. Some have argued that the decline is due to expectations of greater gold supplies due to Cyprus having to sell off some its gold reserves to pay for its bailout. But Cypriot gold reserves are relatively small, so it’s hard to see how this provides the explanation for such a major nosedive in price.

Gold coins
Photo credit: hto2008

A more convincing explanation relates to the way in which gold is considered to hold its value, meaning that it’s an attractive investment for those looking to avoid their wealth losing value over time. But now it’s been suggested that speculators have been deciding to stop buying up gold (or more accurately, gold contracts – they don't get their hands on the metal itself)...


Photo credit: kholkute

The World Bank has just released its latest statistics on global food prices. The message, although determinedly optimistic, is still one that depicts shocking price increases for a large part of the world. While overall it seems that the price of internationally traded food has slightly fallen between October 2012 and February 2013, food prices are still very high and close to their historical peaks, just 9% below the all time high recorded in August 2012.

Though prices have dropped recently, the international prices of grains in February 2013 remained well above those of a year ago: wheat prices in February 2013 were 15% higher than in February 2012. Maize prices stood 8% higher than a year ago, and rice prices 5% higher than in February 2012.

A closer look at the statistics and it becomes clear that many countries in the global south are still experiencing disastrous price rises. Here are a few of the key facts: 

Since October 2012:

  • Wheat prices in Brazil and Bolivia rose by 13% and 11%
  • Wheat prices in some markets in Pakistan increased by 14% and in Mumbai, India, they...

Last month we launched Bankers Anonymous – a five step recovery programme to help bankers quit their addiction to gambling on food. So far we've asked people to take two steps: to write to their MP and to spread the word on twitter and Facebook. Now it's time for step three.

Politicians from all parties monitor their local newspapers because they want to find out what their constituents care about. We want to get food speculation into the local press to make it an issue that can't be ignored.

Europe’s finance ministers will be agreeing new rules to tackle food speculation soon, but these could easily be scuppered by the UK government's opposition to tough regulation.

Lets continue to keep up the pressure by getting the media talking about this.

Take action now

Deutsche Bank is one of the world’s leading players in food speculation. In public it denies that excessive speculation is one of the key drivers of recent food price spikes, but in private it has known it for years. Yesterday, German NGO Foodwatch pointed to Deutsche documents showing that the bank is fully aware of the impacts of excessive speculation on food prices and global hunger.

This case of corporate deception adds weight to the case for regulating the banks. Withdrawing from food speculation isn’t enough. Here’s why:

Profits before public interest

During the food price spikes of recent years, Deutsche was aware of the impacts that speculation can have on food prices. In 2009, a paper from the bank’s research department admitted, "Speculation has also contributed to...

Anti-poverty campaigners today launched 'Bankers Anonymous', a five-step programme to help investment banks kick their addiction to gambling on global food prices.

Barclays announced a withdrawal from speculating on food last week following public outcry over its effect on hunger.

The campaign by the World Development Movement asks people to take five steps to help win new rules to prevent banks driving food prices up through financial speculation.

Banks like Goldman Sachs are speculating on food prices, increasing volatility in the markets and fuelling sharp price rises. The World Development Movement is calling for strict controls to limit speculation.

Step one of the Bankers Anonymous programme asks people to write to their MP, urging them to call on George Osborne to back tough rules. Legislation to curb speculation is being discussed at the EU, but the UK government has so far opposed effective controls.

Goldman Sachs...

“There are absolutely thousands of undiagnosed gambling addicts in the City. The difference is that the odds are slightly more in your favour than if you're gambling in a Ladbrokes, and so there are many more people who can be successful gambling addicts." Unnamed trader, quoted in the Guardian

Back in November, the story of Kweku Adobol, the trader who lost UBS £1.5 billion, spilled out of the financial pages and into the mainstream limelight. There was shock at how a trader’s gambling addiction can wreak such massive damage. The story also revealed to the outside world just how widespread addiction to gambling is behind the trading desks of investment banks. This shouldn’t come as a surprise. Traders are incentivised by a bonus structure which rewards risk-taking with big cash pay-outs, and are cushioned by the confidence that if their...

Barclays, which announced an end to its speculation on food on Tuesday, made up to an estimated £278 million from the trade in 2012. The figure brings the bank’s total revenue from food speculation from 2010 to 2012 to an estimated three quarters of a billion pounds.

The bank has pulled out of speculative deals with hedge funds. Campaigners welcome this move but are disappointed by its decision to continue selling investment products that allow other financial players, like pension funds, to speculate.

The £278 million figure was released today by the World Development Movement, which is calling for regulation to prevent banks betting on food prices and contributing to the global hunger crisis.

Barclays has been the leading UK player in speculating on food. Goldman Sachs is widely recognised as the world leader.

Barclays’ withdrawal follows announcements in 2012 by several German, Austrian and Scandinavian banks that they would reduce or suspend trading in food commodity markets. But German giant Deutsche Bank, one of the banks indicating a withdrawal, has since returned to speculating on food.

Legislation to curb speculation is on the table at the EU, but the UK government has so far...

Along with its annual results yesterday, Barclays revealed its new strategic plan to haul the bank from the pits of public disdain. As part of its new direction, Barclays – the UK’s leading commodities speculator - announced it is pulling out of food speculation. After three years of public campaigning and calling on the bank to stop betting on hunger, this is very exciting news!

Barclays had a massive PR job on its hands to mend its toxic reputation, earned from the Libor rate scam, the PPI mis-selling scandal and the interest-rate swaps rip-off of small businesses. It could have left its agricultural commodities division untouched. But it couldn't afford to ignore commodities.

Why? Well with three years of protests outside its local branches, protests outside and inside its AGM, media stories exposing Barclays’ leading...

Barclays chief Antony Jenkins announced today that the bank would stop speculating on food, saying the practice is “not compatible with our purpose”. It is unclear whether the bank will continue to broker speculative deals for its clients. Campaigners have renewed calls for tough regulation to prevent speculation fuelling price spikes and contributing to the global hunger crisis.

Jenkins announced the move today as part of the bank’s strategic review. He said the end to the bank’s trading in agricultural commodities for speculative purposes was an example of Barclays “putting its words into action”. He told UK MPs last week that he would build a “socially useful” bank and “shred situations where we're short-termist, too aggressive and too self-centred.” But Jenkins made no commitment to change the bank’s speculation on other commodities, such as oil, which has a knock-on impact on food prices.

World Development Movement campaigners protesting outside Barclays' 2012 AGM

Until now, Barclays has been the leading UK bank involved in speculation on food including staples like wheat, maize and soy. The bank...

A new campaign If… on hunger and food security has launched, run by a group of development organisations. WDM has decided not to join this campaign.

WDM campaigns to tackle the root causes of poverty and injustice. Our current campaign on food goes to the heart of one of the problems with our food system: the power of the financial sector and the role of commodity speculation in causing food price spikes. We are also actively engaging with and contributing to a long term vision and solution – food sovereignty – guided by our allies in the global south.

As a small organisation, we do not have any additional campaign capacity to contribute to a food campaign with a different focus. The If... campaign is concerned with food security - ensuring people have enough to eat. However it will not be challenging the power and impact of the financial system on food prices, nor is it grounded in the principles of food sovereignty. WDM believes that these principles, which are about power, control and rights, must underpin future changes to our food systems.

We welcome many of the campaign demands in the If......

Goldman Sachs made up to an estimated £251 million (US$400 million) in 2012 from speculating on food including wheat, maize and soy, prompting campaigners to accuse the bank of contributing to a growing global food crisis.

Goldman Sachs is recognised as the leading global player in financial speculation on food and other commodities, and created the first commodity index funds which allow huge amounts of money to be gambled on prices.

Anti-poverty campaign group the World Development Movement released the estimate today following the publication of Goldman Sachs’ 2012 results. The group is calling for tough rules to curb financial speculation on food, to prevent banks and hedge funds driving up prices.

The US has passed legislation to limit speculation, but the controls have not been implemented due to a legal challenge from Wall Street spearheaded by the International Swaps and Derivatives Association, of which Goldman Sachs is a leading member. Similar legislation is on the table at the EU, but the UK government has so far opposed effective controls. Goldman Sachs has lobbied against controls in both the US and the EU.

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

Dan Iles takes a look at the latest World Bank food price figures.

The recent World Bank’s quarterly Food Price Watch, released this November, yet again paints a concerning picture in terms of continued high food prices across the world. Worryingly, the World Bank recognises a new norm of high and volatile food prices but still refuses to mention any reference to food speculation and the actions of financial institutions. 

Key points:

  • International food prices remain close to all-time highs. Food prices in October are still 7% higher than a year ago, and the prices of grains remain particularly high. Prices of grains are 12% above their levels 12 months ago and very close to the all-time high observed in 2008
  • The national price of wheat increased by 27% in Tajikstan between July and September
  • Countries reliant of US exports of maize are still very vulnerable to price fluctuations. The price of maize in Haiti and Honduras went up by 28% and 19% respectively between July and September 
  • The World Bank...

Yesterday, Rich Ricci, the appropriately-named chief executive of Barclays' corporate and investment arm, told the parliamentary commission on banking standards that the bank was thinking of pulling out of agricultural commodities trading.

With Barclays being the biggest UK player in food speculation, and among the top handful globally, we’ve certainly been making sure that that they feel the heat for their role in contributing to the food price spikes that spell hunger and poverty for the world’s poorest people.

In January, following our nomination, Barclays won the global Public Eye award for the world’s worst company as a result of their role on food speculation. In April, shareholders at their AGM were greeted by WDM campaigners dressed as eagles, and in September the bank hit the headlines when the Independent published figures based...

Barclays Bank has hinted it is considering pulling out of food speculation due to ‘reputational risk’. The World Development Movement is calling on the bank to commit to ending its involvement in commodity markets, and is urging George Osborne to back tough rules to curb speculation at a European level.

Rich Ricci, chief executive of Barclays’ corporate and investment arm, told the UK's Parliamentary Commission on Banking Standards yesterday, “If I decided to stop trading soft agricultural products it is not driven by regulation. It is because it doesn’t sit socially well with the large constituent of our customers”, according to the FT newspaper.

Barclays is the biggest UK player in food commodity markets, making up to an estimated £500 million from speculating on food prices in 2010 and 2011.

The World Development Movement’s director Deborah Doane said today:

Barclays appears to be relying on the police force of public opinion to tell it that speculating on food prices is wrong, rather than acknowledging its own moral responsibility. This is precisely why it is essential that strong regulation is introduced. Food speculation has devastating consequences, and George Osborne and...

The World Development Movement has launched a new film today parodying Barclays’ role in speculating on food prices. Actors Jolyon Rubinstein and Heydon Prowse pose as Barclays bankers attempting to sell spoof investment products to unsuspecting passers-by, with "profit margins so ridiculous, it’s almost criminal".

The 'bankers' reveal to their potential customers that their investments will force people to go hungry, but reassure them, "Those people are in a place you’re never going to go to."

Barclays Speculate’ also features Josie Long, Joseph Dives and Leila Farzad.

The film shows Jolyon Rubinstein being escorted out of a Barclays branch by armed police after delivering a bag of maize. Jolyon said:

The police seemed sympathetic as to why we felt it necessary to highlight just how much money Barclays is making through food speculation by pouring corn all over the bank’s floor.

Barclays is estimated to have made up to £500 million from speculating on food prices in 2010 and 2011.

On Friday I was privileged to join five well-informed WDM supporters from the Tunbridge Wells constituency for an important meeting. The group were going to see their MP, Greg Clark, who also happens to be financial secretary to the treasury - the minister with responsibility for regulating food speculation.

Some of Greg Clark's constituents before the meeting

With just two weeks to go until finance ministers from the 27 EU member states discuss their position on new regulation to curb financial speculation on food and other commodities, they were intent on making sure he heard that the public is angry about the way banks are allowed to gamble on food prices, and want to see the UK back tough rules to limit their involvement in the markets.

The constituents were given a fair if short hearing, and had chance to hand over a copy of our photo petition, containing messages from hundreds of people who want to see the UK government support action on food speculation.

But we ended the meeting with work still to do. Not only did he leave us with...

A vote in the European parliament today failed to remove loopholes in new regulation to prevent banks driving up food prices through financial speculation.

MEPs voted in favour of limits to speculation, but allowed loopholes to remain which risk rendering the new rules ineffective.

Campaigners in the UK sent more than 14,000 messages to their MEPs this week, asking them to stop food speculation by banks and hedge funds pushing food prices beyond the reach of millions of the world’s poorest people.

World Development Movement campaigner Christine Haigh said:

Watertight regulation is essential if we are to stop excessive speculation fuelling devastating food price spikes. If it remains in its current form, the controls will be too weak to properly tackle speculation. Now it’s down to George Osborne and his fellow finance ministers to back strict rules.

George Osborne and other European finance ministers are due to vote on the proposed regulation on 13 November.

More detail

If the amendments to remove the loopholes had been passed, they would have:

  • Ensured that the limits apply to all commodity contracts, for their full duration,...

At last! A meeting last Friday with an MEP, an influential one, about the European parliament's moves to tighten their grip on food speculation (as well as other commodities trading).

Thanks to a robust exchange of letters in the Guardian recently, WDM gained this window for us to put what we consider must be non-negotiable expectations of the process to Sharon Bowles, Lib Dem MEP and chair of the Economic and Monetary Affairs (ECON) committee.

WDM local group members were joined on Friday by WDM’s director Deborah Doane for meeting with Liberal Democrat MEP Sharon Bowles

It was very short notice but four local group members were able to make it, along with WDM’s director Deborah Doane and campaigner Christine Haigh. Ms Bowles gave us an hour of her time, did a lot of explaining but also agreed to hold out on certain key issues. One can never be sure until the votes are in, but my impression was that she wants to curb the unethical activities in the markets and...

Last week, the Guardian newspaper published a letter from the World Development Movement’s director Deborah Doane which raised concerns about the suitability of Sharon Bowles MEP, candidate for the new governor of the Bank of England, because of what we see as her support for ‘light touch’ regulation of the financial sector. 

Sharon Bowles replied via the Guardian noting that a member of her staff has met with a World Development Movement (WDM) staff member, and that she doesn’t have sufficient time in her diary to entertain all meetings that are requested of her. 

While she is correct that a member of her staff has met with a WDM staff member in Brussels, we would like to stress why we felt this was inadequate. First, we are a movement-based democratic organisation, with 16,000 members and supporters, alongside a network of over 50 local groups. Members of 11 of our local groups* in the south east of England, where Ms Bowles has her constituency, have contacted her a number of times in the past year about food speculation. This is an issue on which Ms Bowles...

The World Development Movement’s director Deborah Doane has responded to predictions that poor harvests in the UK will lead to rising food prices, warning that financial speculation could send prices soaring even higher. 

Deborah Doane said today: "Food prices are rising steeply due to poor harvests, and if the 2008 food price crisis is anything to go by, we may see financial speculation driving prices up even further in the coming months.

"In the absence of effective regulation of the finance sector, banks and hedge funds are effectively gambling on food prices.

"Here in the UK, the poorest people are already cutting down on fresh fruit and vegetables because they can’t afford them. In developing countries, where people spend up to 90 per cent of their incomes on food, price spikes force millions of people to go hungry.

"Banks like Barclays, which made an estimated £500 million on food prices in 2010 and 2011, are taking advantage of changing prices for their own gain. Unless we stop this by regulating the finance markets, speculation will turn the current price rises into an even greater crisis for people both in the UK and worldwide."

A costumed Lady Luck and a croupier in black tie, with a roulette wheel and giant playing cards, protested in front of the Tory party conference in Birmingham this morning, calling on George Osborne to stop bankers driving up food prices through financial speculation.

Ahead of the Chancellor’s keynote speech, campaigners asked him to back European regulation to curb financial speculation in commodity markets. Speculation is fuelling price volatility and pushing food prices beyond the reach of millions of people in developing countries.


 
George Osborne is due to meet his European counterparts on Tuesday 13 November to agree on the new legislation. The UK government has attempted to block effective controls on speculation.
 
World Development Movement campaigner Christine Haigh said: “We brought Lady Luck to the Conservative party conference to highlight the fact that banks and hedge funds are essentially gambling on food prices. Steep price spikes fuelled by speculation make the weekly shop more expensive for families in the UK, and for the poorest people in developing countries...

If there’s such a thing as time travel, can you also experience class and culture travel?  If so I think I experienced it today…

This morning I travelled to the Conservative Party Conference with activists from the World Development Movement.  We were taking part in a protest calling on George Osborne to support regulation to stop bankers betting on food prices. Food speculation has contributed to food price spikes in recent years.

I left home (Croydon) at 5.am. Initially the dark streets were deserted, occasionally punctuated by the fluorescent strips of the street cleaners. Gradually the bus stops became more populated with people in normal clothes, many (I’m assuming) cleaners, going to clean the office blocks before the arrival of the suited city folk that I saw towards the end of my journey to Euston.  The delegates that WDM was leafleting as they entered the Conservative Party Conference completed the spectrum of the different social groups that wittingly or unwittingly, perform their roles in the theatrical production which is our global economic structure. 

...

Last night we projected images from our supporters onto the Tory party conference, calling for bankers to stop betting on food.

For the past month we've been collecting as many photos as possible from members of the UK public holding up messages to George Osborne to regulate food speculation. We've had a great response with hundreds of photos and last night we projected those messages onto the Tory party conference:

The Tory party conference starts today and so we know that George Osborne is in town. By projecting messages on the conference venue and on surrounding buildings we are hoping that he feels the mounting public pressure for him to support new EU proposals to clamp down on excessive speculation.

We started off at the NIA, opposite the Tory conference venue:

...

On the eve of the Tory party conference, photos of people holding messages asking George Osborne to regulate food speculation will be projected onto the wall of the Tory party conference.

On Saturday night, WDM's ‘photo petition’ will be projected onto Birminghan's International Convention Centre before moving it to a series of locations around the venue in Birmingham.

The World Development Movement is calling on the Chancellor to back European regulation to curb financial speculation in commodity markets. Speculation is fuelling price volatility and pushing food prices beyond the reach of millions of people in developing countries. 

Yesterday the European Parliament’s Committee on Economic and Monetary Affairs (ECON) adopted its report on the review of the Markets in Financial Instruments Directive (MiFID). This piece of legislation is critical to achieve stronger regulation of commodity derivative markets and limit harmful financial speculation on food

NGOs welcomed the introduction of mandatory limits on speculation but warn that a number of loopholes must be fixed to make the proposed rules effective. 

Marc Olivier Herman, Oxfam’s EU policy advisor, said: 

Betting on food prices is unacceptable in a world where nearly 1 billion people are going hungry. The vote shows that there is a majority in the European Parliament in favour of limiting harmful financial speculation. However, the text adopted yesterday falls short of what is needed to tackle food speculation.” 

Christine Haigh, the World Development Movement’s policy officer, said: 

The text adopted yesterday by the Economic Affairs Committee contains dangerous loopholes: an overly narrow definition of the limits to be imposed on speculation and generous exemption clauses excusing some companies from...

Early morning in Brussels and a group of us - representing different organisations from across Europe – unloaded a truck filled with 925 pots and pans representing 925 million people suffering from hunger in the world today.

Each pan has a message written on it from EU citizens calling for an end to excessive speculation on food.

Together we laid out all the pans to spell out the words 'stop food speculation.' 

...

Campaigners from WDM were joined today by Friends of the Earth Europe, Campact and SOS Faim to spell out ‘Stop food speculation’ using hundreds of pots and pans in front of the European parliament building.

The 925 pots and pans used represented the 925 million people facing hunger worldwide. The protest comes on the day of a key vote by MEPs on proposals to prevent banks and financial investors driving up food prices through financial speculation.

Photo of food speculation stunt in Brussels, with pots and pans spelling out Stop Food Speculation

MEPs are voting today on a raft of proposed financial reforms known as MiFID (the Markets in Financial Instruments Directive). WDM is calling for strict rules to stop speculation driving food price increases and price volatility. 

Campaigners handed over a petition with over 100,000 signatures from across Europe on Wednesday to the lead MEP for the legislation, German Markus Ferber, and lead MEPs from the other main political groups.

The World Development Movement’s director Deborah Doane said: “We are experiencing the third food price spike in five years, and each one forces millions of people into poverty and hunger....

The World Bank's latest Food Price Watch reveals stark rises in food prices. Among the most striking statistics are:

  • In July, world food prices jumped 10 per cent.
  • Maize prices hit a record level after rising 25 per cent in that month.
  • The price of maize in Mozambique, where people spend over half of their income on food, more than doubled between April and July.
  • South Africans faced a 27 per cent hike in wheat prices during those three months.
  • Over the last year, maize prices soared by 174 per cent in Malawi.

The Bank identifies drought as the key driver of the price rises but the World Development Movement is warning that financial speculation is exacerbating the scale of the spikes.

 

Ben Jennings has this month produced a cartoon reflecting the Olympics and the recent 'hunger summit'.

Did the summit address the root causes of food and fuel price spikes? Or did it risk further entrenching the root causes of hunger? The cartoon highlights the names of three multinational businesses who all had a place at discussions last week.

And David Cameron playing beach volleyball? You saw it here first.

With much of the UK captivated by the Olympics last week, the anniversary of the riots that rocked cities across England last summer received little attention. While it is to be welcomed that violence on such a scale has not been seen in the UK again since, in recent weeks various commentators have suggested that more disorder is likely, as young people report continued anger and disenfranchisement.

It’s perhaps unsurprising, given the social and economic conditions inner city communities across the country are facing. As the Joseph Rowntree Foundation recently showed, five years on from the financial crisis, which was caused by the reckless behaviour of some of the richest people on the planet, it is the poor who are paying the heaviest price through cuts to publis services and benefits, while bankers continue to reward themselves with bonuses bigger than many people will be paid for a lifetime of hard work.

Recent analysis of findings of...

With all eyes on London for the Olympics closing ceremony, David Cameron is aiming to create a global Games legacy, by convening a 'hunger summit'.

This afternoon, athletes, world leaders, business chiefs and a select group of NGOs gathered in Downing Street. They announced a new target to cut child malnutrition by the next Olympics.

Whereas other development indicators have seen some progress, after 2005, 1.5 million more children suffered malnutrition than in the first half of that decade. This is not just population growth – the proportion of malnourished children rose. In South Asia, almost one in five children is stunted by malnutrition.

This research comes from Save the Children, who explain that, "When prices of food and fuel increase, children are the first to go without."

So did the hunger summit address the causes of food and fuel price spikes?

Unfortunately not, the summit-goers took an approach that risks further entrenching the root causes of hunger: it focused on encouraging big business to market its products to the 'bottom billion' of poor consumers, alongside technical fixes such...

On Sunday, David Cameron will attempt to capitalise on the international presence in London for the Olympics to convene a ‘hunger summit’ – but campaigners have warned that the prime minister’s big business approach ‘risks entrenching the root causes of hunger’.

Political and business leaders and humanitarian groups at the summit are expected to announce a new target to reduce child malnutrition by the next Olympic Games in Rio in 2016. Former England football captain David Beckham has presented a letter to David Cameron urging him to tackle deprivation of essential nutrients early in a child’s life, which causes stunted growth.

The World Development Movement’s food campaigner Amy Horton said today:

“It’s great that David Cameron is using the Olympics to focus attention on the need to reverse the rising incidence of child malnutrition. But by promoting the role of big business in developing countries’ food markets, his approach risks entrenching the root causes of hunger.  

“Increasing the power of multinational companies over the world’s food is not going to improve child nutrition. Instead of corporate land grabs, we need local control over the resources on which food production depends. We need governments to be able to regulate international...

World food prices jumped 6 per cent between June and July, according to new figures from the UN Food and Agriculture Organisation.

Cereal prices rose 17 per cent to a level only slightly below that reached during the 2008 food crisis.

Maize and wheat prices increased sharply.

The price of soybeans has also reached a record high.

Attention has focused on the severe drought that has damaged the harvest in the US, the world’s biggest exporter of cereals. There have also been calls for governments to relax requirements for the use of biofuels used in transport fuels, which consumed almost 40 per cent of the US maize harvest in 2011.

Researchers, campaigners and market players have also highlighted the influence of financial speculators in exacerbating the price spike.

New regulation needed

Effective European regulation is vital to stop speculation driving up the price of food.

The World Development Movement is calling on the UK Government, in particular Chancellor George Osborne, to...

Partially as an ironic jab at preconceptions about people wearing certain types of clothing, and partially because all waterproof gear is black, I headed to Knutsford, the centre of George Osborne’s Tatton constituency, kitted out like a ninja, all in black.  Joining me was my faithful cameraman and co-flyerer Pablo.

We were armed only with blu-tack and 5000 flyers, asking the question ‘What can one person in Knutsford do about...

As I approached the registration desk and collected my identity badge I was glad I’d followed my better senses. Blending in as I seated myself and took in the lavish corporate backdrop, it was clear that upholding sartorial conventions is taken seriously. As the Libor scandal envelops the financial world perhaps I wasn’t alone in quipping to myself that these conventions seem to be taken rather more seriously than following financial regulations or, dare I say it, any ethical code.

While Lord Turner and the other chairmen discussed the FSA’s ongoing prudential reform process, I planned my question. Although talking at length about how to regain the trust and confidence of the public, the fact that the FSA acts primarily in the interests of the finance sector was woefully overlooked.

FSA AGM

WDM has recently reported on how regulatory capture has meant that the FSA is lobbying for the City in European negotiations on regulating finance. Financial speculation is pushing up food prices, squeezing household budgets in the UK and making food unaffordable for millions of people...

Last week we launched our exposé of the Financial Services Authority (FSA) – UK's supposedly 'independent' regulator of the financial services sector. We revealed how the FSA – funded by the banks and staffed by ex-bankers – acts as a lobby arm for the banks. It’s a classic case of 'regulatory capture' where an industry watchdog, created to act in the public interest, instead promotes the interests of the businesses it's supposed to regulate.

Its mis-directed influence undermines the public interest especially in the area of winning new rules to tackle food speculation. The FSA's influence has pervaded into every level of EU decision making on financial reform through staff secondment and the lobbying of MEPs. The City of London want to continue betting on food without any restrictions and FSA has been working behind the scenes to forward this agenda.

We wanted to expose the FSA but also hold it to account. So alongside our report we launched an online action to get people to email Adair Turner, chair of the FSA, and then to follow up with a phone call. The FSA is not widely known by the public and so is not used to direct public...

Christine Haigh, food and finance campaigner

Researching the report we’ve released this week on how to regulate food speculation, I was struck by a sense of déjà vu.

Back to fundamentals: why position limits are needed to prevent food price hikes shows how limits on the number of contracts traders can hold are used to prevent speculators disrupting commodity markets almost everywhere that they exist – from São Paolo to Singapore.

The report also tracks their contested introduction in the US following the Wall Street Crash of 1929. At that time, the world was suffering a severe economic downturn following a financial crisis caused by the unregulated and irresponsible gambling of the financial sector. In the aftermath, attention inevitably turned to measures to help prevent the same thing happening again.

However, the financial sector was doing its best to avoid regulation, predicting major problems if its risky activities were reined in. When position limits were first proposed, the president of the Kansas wheat exchange claimed that “any sort of legislation that is enacted will...

WDM research

The great hunger lottery - WDM report showing how speculation on food impacts the poor, and what can be done about it.

Broken markets - WDM report showing that financial speculation has a clear impact on rising food prices and countering arguments to the contrary.

Barclays PLC and agricultural commodity derivatives - Report showing that Barclays Capital makes up to £340 million per year from food speculation.

Back to fundamentals (report) - WDM report explaining why position limits are needed to protect consumers, producers and businesses from the impacts of food speculation.

Back to fundamentals (briefing) - Policy briefing explaining why position limits are needed to protect consumers, producers and...

European proposals for the regulation of the commodity markets are inadequate to prevent excessive speculation from contributing to food price spikes, according to a new report released today.

Proposals discussed yesterday by the European parliament’s Economic and Monetary Affairs (ECON) committee rely on a system of ‘position management’ or ‘position checks’ to prevent market manipulation and excessive speculation from distorting commodity prices. But the report, from the World Development Movement, argues that the proposals are doomed to failure and that a system of position limits is essential.

Financial speculation on the commodity markets is fuelling price volatility and contributing to price spikes, increasing food bills for consumers and driving up hunger and poverty.

The report, ‘Back to fundamentals’, shows that:

Position limits are the international norm for regulating the commodity markets.

Position limits have a track record of success - US markets functioned effectively for...

After my brief encounter with Barclays, where I presented them with a “shame” award for their role in food speculation, I was eager to cause some more mischief, this time with the Financial Service Authority (FSA).

recent WDM report has revealed that the FSA’s relationship with city banks like Barclays has been getting rather “cosy”, and the regulatory body has been lobbying for the very firms that it’s meant to be regulating. The FSA has also been offering its “impartial” advice to the UK government to help MPs decide on the important MiFID legislation, which includes controls on food speculation, but the FSA’s advice seems to be based solely on the demands of the city giants.

Because of this, I decided to give the FSA a quick call. Tucked away upstairs in the WDM office’s meeting room (to avoid the inevitable embarrassment of ranting down the phone in front of fellow WDM employees); I dialled in the general enquiries number and was met with a surprisingly jovial FSA receptionist. She seemed a little confused when I started talking about food speculation and quickly...

Participants arrive at the camp built specially for the Food Sovereignty Forum in 2007, in Selingue, Mali (Photo: Donkeycart)

 

Food sovereignty is about the right of peoples to define their own food systems. 

Advocates of food sovereignty puts the people who produce, distribute and consume food at the centre of decisions on food systems and policies, rather than the demands of markets and corporations that they believe have come to dominate the global food system. This movement is advocated by a number of farmers, peasants, pastoralists, fisherfolk, indigenous peoples, women, rural youth and environmental organizations.

The 6 pillars of food sovereignty:

  1. Focuses on food for people: The right to food which is healthy and culturally appropriate is the basic legal demand underpinning food sovereignty. Guaranteeing it requires policies which support diversified food production in each region and country. Food is not simply another commodity to be traded or speculated on for profit.
  2. Values food providers: Many smallholder farmers suffer violence, marginalisation and...

The UK’s financial regulator is compromised by corporate capture and is increasingly acting as a lobbying arm for the sector it is supposed to regulate, a new report reveals today.

The report, ‘Financial Services Authority: watchdog or lapdog?’, by the World Development Movement, documents how funding from the City of London, a board dominated by figures from the banking sector, and a rapidly revolving door have led to a close relationship between regulators and the financial sector. 

The report exposes the Financial Services Authority (FSA)’s use of its resources to influence financial reform legislation in the financial sector’s favour. It argues that the regulator is working to prevent effective regulation of the commodity markets, where financial speculation has contributed to sharp spikes in food prices.

A text drafted last week by an FSA secondee in the European parliament has proposed to severely weaken European Commission proposals to regulate the commodity markets, failing to reflect the concerns of many MEPs.

FSA staff have been seconded to every UK and EU institution involved in financial reform, and are lobbying MPs in the European...

Speculation in basic foodstuffs is a scandal when there are a billion starving people in the world. We must ensure markets contribute to sustainable growth. I am fighting for a fairer world and I want Europe to take the lead on that."
-Michel Barnier, european commissioner for the internal market

Banks, hedge funds and pension funds are betting on food prices in financial markets, causing drastic price swings in staple foods such as wheat, maize and soy.

A woman tossing black beans

These markets were originally developed for the benefit of those involved in the production of food, yet over the last 10 years they have changed almost beyond recognition. Deregulation has enabled speculators to dominate, causing drastic spikes and crashes in prices. 

Effects of rising food prices

Massive food price increases are catastrophic for people in poverty in the global south, who spend most of their income on food. This results in:

  • Increased hunger as food becomes unaffordable.
  • Malnutrition as smaller quantities of expensive foods such as fruit and...

11 October 2011

Dear G20 Finance Ministers,

We write to you ahead of the October meeting of the G20 Finance Ministers to urge you to commit with your counterparts to take effective action to curb excessive speculation on food commodities. Excessive financial speculation is contributing to increasing volatility and record high food prices, exacerbating global hunger and poverty.

While there are many pressures on food prices, fundamental changes in supply and demand cannot fully account for the dramatic price fluctuations that have occurred in recent years.

In June, a report for the G20 by international organisations including the IMF and the OECD noted that “too much speculation can cause frequent and erratic price changes” in futures markets. Evidence suggests that financial speculators are less likely to make trading decisions based on information regarding supply and demand and are more prone to herding behaviours than commercial traders. Excessive speculation undermines the price discovery function of futures markets, driving real prices away from levels determined by supply and demand.

The High Level Panel of Experts on food security for the Committee on World Food ...

At the recent Barclays AGM, World Development Movement campaigners dressed up as evil Barclays eagles to highlight the bank's role in speculating on food prices. This inspired our favourite cartoonist, Ben Jennings, to take the eagle to new heights. 

A cartoon depicting an evil 'eagle banker' smoking a cigar

Protestors dressed as Barclays eagles

Shareholders attending the Barclays AGM in London on Friday were greeted by the World Development Movement’s two ‘evil eagle’ bankers on Barclays bikes as they entered the meeting, and our chants of ‘one two three four, Bank on hunger no more!’, and ‘speculation means starvation, what we need is regulation!’. Catchy, huh?

Our Barclays eagles were popular with the crowd of press photographers, and their pictures appeared in London’s Evening Standard that afternoon and most of the national papers the next day. As the AGM began, our policy officer Christine spoke live on the BBC News Channel about how speculation by banks like Barclays contributes to food price spikes.

A shareholder looks at the protestors dressed as Barclays eagles

Inside the meeting, Barclays’ CEO Bob Diamond was at pains to emphasise his call for banks to be ‘better citizens’. But two of our campaigners were there to challenge him, asking how Barclays could be a good citizen when its involvement in food speculation is fuelling hunger and poverty...

WDM campaigners outside the Barclays HQ© Jess Hurd/World Development Movement

It’s been the hot topic of conversation in the WDM office for last few weeks - the Barclays AGM. In preparation for the big day tomorrow we held a photo stunt at Barclays HQ to hand in the Public Eye 'shame award' that Barclays won earlier this year for its role in food speculation. 

We met inside the Canary Wharf shopping centre already feeling nervous about any security presence as we had been informed that security goes into lockdown as soon as they catch even a glimpse of a banner or placard. Being careful not to draw too much attention to ourselves, we quickly changed into our glamorous evening wear and started to make our way towards the Barclays building. Despite the cold and struggling to walk in four inch heels (not something I do often!) we got some great shots from outside the Barclays offices. We also attracted some slightly bemused looks from office workers who seemed to find the photo shoot good entertainment for their morning cigarettes. 

After finishing the photos came the moment of truth – could...

 

Stop Barclays betting on hunger

Barclays is the UK’s biggest player in food speculation. Despite closing parts of its agricultural commodity trading business, Barclays continues to play a role driving up food prices and leaving millions facing hunger and malnutrition.

On 12 February 2013, after three years of public campaigning by WDM that called on the bank to stop betting on hunger, Barclays announced it would no longer trade in agricultural commodities “for speculative purposes”, saying that the practice was “not compatible with our purpose”. This was a campaign success worth celebrating.

However, despite ending its controversial speculative deals with hedge funds, Barclays continues to offer opportunities for others to speculate on food. It remains the biggest UK high street player in food speculation and will retain a role as a broker for pension funds and large traders such as Cargill and Glencore to...

Campaigners from the World Development Movement will protest at Barclays’ AGM tomorrow, exposing Barclays’ role in fuelling global hunger by betting on food prices.

Where: Entrance to the Barclays AGM, Royal Festival Hall, South Bank, London SE1 8XX

When: 10.30-11.30am, Friday 27 April

Two suited, blue masked Barclays ‘eagles’ on Barclays bikes will join protestors holding placards reading, ‘Barclays banks on hunger’.

The campaigners also staged an award ceremony outside Barclays HQ in Canary Wharf today to hand over a ‘shame award’, which the bank won for speculating on food prices.

The World Development Movement estimates that Barclays made up to £189 million from speculating on food in 2011. The bank is the biggest UK player in commodity markets, and claims to be in the global top three. 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 CEO Bob Diamond, currently in the spotlight over his £17.7 million pay package, responded to the Occupy movement by telling the BBC in November that banks must be “better citizens”. Diamond...

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...



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