International institutions dither as millions go hungry

Eight months ago, the world’s most powerful countries tasked the world’s most powerful institutions with investigating what to do about volatile food prices. The World Bank, IMF and others have just delivered their report to the G20.

The report is clear that there is a general consensus that speculation has amplified food price spikes, with devastating effects. But its recommendations amount to little more than a call for more research. The 925 million people who are undernourished can’t afford to wait.

The report recognises that “Food price increases can have major repercussions on the whole economy”. For example, 43 developing countries cut their taxes on imports in an attempt to lower food costs during the 2007-8 food crisis, meaning less money for essential public services. Short term price spikes can have long term impacts, such as stunting children’s growth or scaring off investors in destabilised economies.

Looking at the role of speculation, the report says:

While analysts argue about whether financial speculation has been a major factor, most agree that increased participation by … financial markets probably acted to amplify short term price swings and could have contributed to the formation of price bubbles.

Once again, the case against the influence of speculation relies heavily on a handful of studies led by the economist Scott Irwin, whose methods are disputed and have come in for heavy criticism.

So what do the policy responses of the report’s title involve? There’s a call for more transparency in the markets, which pretty much everyone agrees is necessary. Beyond that, there’s a list of policy options on which “debate is on-going at national and international levels”, without any comment on which might be most useful, and a feeble call for more research.

The buck is passed to finance ministers – they, rather than those responsible for agriculture, development or business, apparently, are best placed to decide what action (if any) to take. The financial crisis and its aftermath have shown how reluctant finance ministers are to subordinate City profits to the broader public interest.

Yet the evidence for the impact of speculation on food prices is compelling and mounting by the day.

So if you find this indecision inexcusable, show your support for action against speculation by writing to the Treasury.