Ahead of G7 summit: foodwatch calls for strict regulation of food speculation
Ahead of the G7 summit in Germany, the international consumer organisation foodwatch has called for strict regulation of speculation in agricultural commodities. At their meeting, the heads of state must agree on stronger common rules to curb betting on commodity exchanges. According to foodwatch, excessive speculation is fuelling the current price increases for grain. People in poorer countries are threatened by hunger as a result.
"The G7 have to tackle the issue of food speculation at their Summit! Since the attack on Ukraine, speculation has been growing dramatically. This is additionally driving up rising food prices in a fatal way. Investors on the stock exchange make a quick buck with bets on maize and wheat whilst people in countries like Yemen or Ethiopia can no longer afford basic foods. This gambling at the expense of the poorest has to stop," said Jörg Rohwedder, Executive Director of foodwatch International.
The consumer organisation launched an online protest petition at www.foodwatch.org/en/signer/restrict-food-speculation-feed-people-not-banks/. The demand: The G7 shall introduce strict trading limits for speculative transactions on food commodities. These so-called "position limits" determine how many financial bets investors are allowed to make on certain commodities. Today, the limits in the EU, are far too lax to effectively limit food speculation, foodwatch criticised.
A certain degree of financial speculation with agricultural commodities is important, so that farmers and agricultural companies can hedge against fluctuating prices, explained foodwatch. However, financial bets are no longer serving this original function. The volume of speculative transactions on the commodity exchanges has increased dramatically since the outbreak of the Ukraine war. The research network Lighthouse recently showed that e.g. two large agricultural investment funds have invested about two hundred million dollars in 2021 and that this amount increased six times only in the first four months of 2022.
Food prices have risen massively around the world in recent weeks. According to the United Nations, prices are 34 per cent higher than one 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 additionally fuelling food prices, foodwatch criticised.
The United Nations are warning that a severe hunger crisis is on the rise. The UN's World Food Programme needs about 50 per cent more funds than in 2019 because of rising prices.
In its 2011 report "The Hunger Makers”, foodwatch had already published extensive research on food speculation and called for its effective regulation.
Link:
foodwatch petition against excessive agricultural speculation: https://www.foodwatch.org/en/signer/restrict-food-speculation-feed-people-not-banks/