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After the Olympics David Cameron hosted a ‘hunger summit’ at Downing Street, bringing together world leaders and celebrities to talk about the global problem of malnutrition in children. But the focus at the summit was on big business, hi-tech solutions, involving GM crops, and more efficient ways of delivering food aid. There was no attempt to tackle the vested interests which exacerbate, and profit from, rising food prices.
The soaring cost of food is usually explained by things like increased demand, climate change causing floods and droughts, and rising costs of production and distribution. Of course, all these factors play a part. But what is less publicised is the role of financial speculators.
Up until 2000, global commodity trading was regulated, so speculation was limited. Then the markets were deregulated, and as the dotcom bubble and then the housing bubble burst, traders increasingly turned to agricultural commodities to make a quick profit. Investment banks and hedge funds gamble on the prices of such essentials as corn, wheat and rice, causing wild fluctuations in prices.
Yaneer Bar-Yam, a researcher who has studied these markets says: “People are starving because the markets are out of equilibrium. Food prices have nothing to do any more with the real price of food, or the availability of food,”
Since the credit crunch these markets have grown increasingly volatile, as more and more traders pile in, and this summer has seen prices fluctuate wildly. In July one US hedge fund manager, who already oversees a fund of $14.7 billion said, “It’s like a big money tap has been turned on.”
But many people believe that making a profit from driving up the price of essential foods while people starve is morally wrong, and it seems this has registered with some in the financial community. Just this month, Austria’s Volksbanken became the sixth European bank to withdraw from trading in food-based investment funds.
Michael Barnier, European Commissioner for the Internal Market has said: "Speculation in basic foodstuffs is a scandal when there are a billion starving people in the world. We must ensure markets contribute to sustainable growth. I am fighting for a fairer world and I want Europe to take the lead on that."
There are calls for regulation to be brought back, and a strict cap on the sums that can be gambled this way. The UK government with its laissez-faire approach, is opposing this, refusing to tackle the vested interests of big financial institutions like Barclays Capital, a key player in the market.
The World Development Movement is running a campaign to put pressure on George Osborne to drop his opposition to such regulation, and is particularly targeting voters in his constituency of Tatton, one of the wealthiest UK constituencies outside Central London.
Let’s hope they are responsive. After all, ‘Give us this day our daily bread’ is not much to ask.
© Bernadette Meaden has written about religious, political and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is a regular contributor to Ekklesia.Tweet