City speculators drive up the price of Christmas turkey

This year, the British public will be paying more for their Christmas turkey because of City speculators. Betting on commodity prices by hedge funds and investment banks has led to rapidly rising prices of animal feed [1], driving up the retail price of turkeys.

Paul Kelly, an award winning turkey farmer and breeder, warned that turkey prices this Christmas are going to be more expensive than last year and we will be paying up to £3 extra for our festive bird. He said:

“It’s all down to feed prices which have been rising at a rapid pace this year. And it’s entirely fuelled by speculators in the commodity food markets. It’s got nothing to do with wheat stocks. It’s city money men who are driving these prices.”

In spite of the wildfires destroying Russian wheat during the summer, the US and Europe and other grain producing regions have had good harvests this year and the UN even issued a statement saying that global wheat stocks are sufficient.[2]

Since the financial crisis began, market analysts have noted a wave of speculative money pouring into commodity derivative markets, including food. Many experts link this activity by banks and hedge funds to recent volatility and sudden inflation in the retail costs of food and energy.[3]

Paul Kelly adds:

“My contacts in the City are telling me that the price of wheat is soaring because of financial speculation. It’s not good for farmers or consumers. What is happening is fundamentally wrong and obscene.”

The UK based anti-poverty campaigners, the World Development Movement are campaigning to stop excessive speculation on basic foods [2]. While increased food prices are bad for consumers in the UK, they have a devastating impact in the developing world where over 1 billion people go hungry.

Deborah Doane, director of the World Development Movement said:

“As City traders enjoy their Christmas bonuses, their speculative activities are fuelling food price inflation. This is bad news for the millions who live on the breadline in developing countries, as well as for hard-working families struggling to get by here in the UK. Even on Christmas Day, the British public is facing higher food bills at a time they can least afford it, as again we bear the brunt of bankers’ greed.”

Deborah Doane continued:

“Proposals to stop speculation on food prices are being discussed right now in Europe. The UK government needs to get behind effective regulation to stop the City playing with the lives of millions around the world, causing havoc with the prices we all pay for basic foods.”

ENDS

Contact: Murray Worthy, 0207 820 4900, murray.worthy@wdm.org.uk

Notes for Editors:

1. Price of wheat based turkey feed has gone from £95 per tonne in June 2010 to £177 per tonne in December 2010. Source: Farmers Weekly: http://www.fwi.co.uk/gr/graphs.pdf

2. UN FAO November 2010 Outlook “FAO expects supplies of major food crops in 2010/11 to be more adequate than two years ago, mainly because of much larger reserves.” http://www.fao.org/docrep/013/al969e/al969e00.pdf

3. The UN's Special Rapporteur on Food, Olivier de Schutter, said that the increases in price and the volatility of food commodities can only be explained by the emergence of a "speculative bubble" which he traces back to the early noughties. ttp://www.srfood.org/images/stories/pdf/otherdocuments/20102309_briefing_note_02_en.pdf

4. Further details on the World Development Movement’s campaign can be found at http://www.wdm.org.uk/food