Brussels/Berlin, 9 May 2022. The international consumer organisation foodwatch has sharply criticised excessive speculation in agricultural commodities. The financial bets on the commodity exchanges fuel the current price increases for grains, for example. Speculative excesses must finally be prevented, foodwatch demanded. To do so the EU must set effective trading limits, so-called position limits. However, this has so far failed due to the resistance of the financial lobby.
"In the face of looming hunger crises in parts of the world, gambling on agricultural commodity prices is intolerable. Prices are rising because companies and governments fear they will no longer be able to buy enough wheat, sunflower oil or other staple foods. Financial speculators are fuelling the soaring agricultural commodity prices: they are betting on rising prices and hoping for quick profits. Transparency is needed about who has what grain reserves - this is the only way to counter the fear of shortages. The EU urgently needs to set speculation limits and put an end to betting on rising prices." demands Matthias Wolfschmidt, Strategy Director of foodwatch International. "Apparently nothing has been learned from the 2008 crisis, which has fatal consequences for millions of poor people worldwide who are threatened by hunger. The financial industry is already a winner of the Russian invasion of the Ukraine."
Food prices have risen massively around the world in recent weeks. According to the United Nations, prices are 34 per cent higher than a year ago and have reached their highest level since 1990. Prices are rising for two reasons: On the one hand, companies and traders fear a shortage of wheat, vegetable oils and phosphate fertiliser from the Black Sea region as well as oil and natural gas from Russia due to the invasion of the Ukraine. On the other hand, financial bets on rising commodity prices are adding to the burden and additionally fuelling prices, foodwatch criticised.
According to foodwatch, the price increases on the commodity exchanges in Paris and Chicago are not least due to considerable failures on the part of the European Commission and the US government. For years, the EU and the USA have not pushed the financial market supervisory authorities under their control to implement effective instruments to limit speculation and had even carried out deregulations in 2020.
On Friday, the research group Lighthouse Reports published the detailed report called "The Hunger Profiteers" describing the speculation on commodity exchanges. The United Nations is also currently warning about the consequences of financial bets. The UN's World Food Programme, for example, says it needs about 50 per cent more funds than in 2019.
In its 2011 report "The Hunger Makers”, foodwatch had already published extensive research on agricultural speculation and called for effective regulation of the business. In particular, it is crucial that the absolute number of commodity futures contracts concluded for speculative purposes be limited. To this end, "position limits" must be defined.