Over the past few years, price hikes in basic foods have created dramatic shortages in many of the world’s poorest countries. In 2008, the world saw a major crisis with skyrocketing prices over a short time span for crops like rice, wheat and corn. Food riots erupted in 25 countries and more than 100 million people were added to the world’s undernourished and starving.
Now, with food prices rising again, a similar crisis could be just around the corner. We urge political leaders and heads of government in the European Union, United States and elsewhere to act immediately to avoid the repetition of such a scenario. While developing solutions to hunger and malnourishment in the world is a huge challenge, reining in financial speculation on agricultural commodities is of paramount importance. With global financial markets still in turmoil, agricultural commodity ‘futures’ have become increasingly attractive to financial investors and speculators. Enormous amounts of capital are flooding these markets, causing sudden food price spikes that can be lethal for low-income families in developing countries. Increased volatility caused by the influx of ‘hot money’ into and out of commodity markets is also causing havoc for farmers, who cannot predict what price their crops will command from one month to the next.
At the moment, action to crack down on excessive speculation in commodity markets is being considered in the US and EU, and in both places there are opportunities to implement reforms that would stabilise food prices. The G20 governments have also identified it as a top priority. This political context represents an historic opportunity to secure a sustainable relationship between financial markets and agricultural markets.
The financial services industry has already spent billions of Euros trying to persuade governments not to limit speculation. These lobbyists represent a small but powerful group of vested interests who are profiting from an activity that is fundamentally harmful to the vast majority of people.
We call on governments and parliamentarians to listen instead to the millions of consumers, workers, farmers, businesses, religious groups, academics, international development activists and others who believe effective controls over financial speculation on agricultural commodities is necessary to defend the world’s poorest people and the world’s food producers from exposure to sudden food price hikes and extreme price volatility.
Rules are needed in several key areas. These include ensuring full transparency and supervision of financial markets in food commodities, imposing strict limits on the level of participation by purely financial actors in commodity futures markets, and banning financial institutions from buying up physical stocks in food and farmland.
This is an urgent matter. Not only because of the live discussions in the US, EU and G20, but mostly because prices in agricultural and food markets are becoming more volatile with each passing month. Unless steps are taken to stop excessive speculation, it is only a matter of time until a disastrous new chapter in the global food crisis begins.
* Please find the signatories >>> here.