Thursday, 11 April 2013

Food Speculation


Join us in the fight for economic justice and an end to global poverty.



What is the problem?

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."
-Michel Barnier, european commissioner for the internal market
Banks, hedge funds and pension funds are betting on food prices in financial markets, causing drastic price swings in staple foods such as wheat, maize and soy.

A woman tossing black beans
These markets were originally developed for the benefit of those involved in the production of food, yet over the last 10 years they have changed almost beyond recognition. Deregulation has enabled speculators to dominate, causing drastic spikes and crashes in prices.

Effects of rising food prices

Massive food price increases are catastrophic for people in poverty in the global south, who spend most of their income on food. This results in:
  • Increased hunger as food becomes unaffordable.
  • Malnutrition as smaller quantities of expensive foods such as fruit and vegetables are eaten in order to afford staple foods
  • Increased burden on women to earn more money by taking up risky employment such as sex work or domestic work.
  • Households using up savings, going into debt or selling assets to pay for food.
  • Families unable to afford healthcare and education as more of their income is needed to buy basic food.
In the last six months of 2010 alone, more than 44 million people were driven into extreme poverty as a result of rising food prices. At the same time, banks and financial investors are making a killing. We estimate that Barclays makes up to £340 million a year from betting, or speculating, on food prices. In the last five years, the amount of financial speculation on food has nearly doubled, from $65 billion to $126 billion.
Our report, The great hunger lottery explains food speculation and its impacts on the world’s poorest people while our latest report, Broken markets provides a more technical explanation of how financial speculation drives up food prices.

How did we end up like this?

‘Futures contracts’ have been used for hundreds of years, helping farmers deal with the uncertainty of growing crops (such as unforeseen weather conditions). A futures contract means a farmer can sell his or her crops at a future date at a guaranteed price. However, these contracts can also be bought and sold by speculators who have no interest in the actual food being traded. Instead, by buying and selling the contracts they could profit from the prices changing over time – betting on the price of food.
These markets for futures contracts worked well until the late 1990s, when aggressive lobbying by bankers led to regulations being rolled back. New and complicated financial products created more ways to make money from betting on food.
Since 1996, the share of the markets for basic foods like wheat held by speculators – who have no connection to food – has increased from 12 per cent to 61 per cent.
Find out what we are doing about it.

Who is supporting us?

WDM is not alone in identifying excessive speculation as a key factor in driving up global food prices. Lots of world leaders, civil social organisations, financial and business experts, academics and media commentators all support regulation of these markets.
The movement supporting the campaign.

  • What is being done?
  • The movement supporting the campaign
  • Frequently asked questions
  • How banks cause hunger
  • 450 economists tell the G20: regulate speculation on food prices
  • Barclays: profiting from hunger
  • Infographic - How banks cause hunger
  • Local activists taking action on food speculation
  • What is food sovereignty?
  • Gambling on life in East Africa
  • If...
  • Stop bankers betting on food: our campaign to curb commodity speculation

    Banks are earning huge profits from betting on food prices in unregulated financial markets. This creates instability and pushes up global food prices, making poor families around the world go hungry and forcing millions into deeper poverty.

    What is the problem?

    A woman tossing black beansBig investment banks are betting on the price of staple foods, like wheat, maize and soya. This is causing food prices to rise and making people go hungry.

    Read more

    What is being done?

    A thumbnail of the infographicWDM is campaigning to put pressure on the UK government to back European proposals regulating betting on food prices in financial markets.

    Find out more

    Food speculation resources

    Indian woman throwing grain out of a basketFind out more about food speculation and how it is
    affecting the world's poorest people by looking at our resources.

    Read our research

    Take action - Bankers Anonymous

    Traders at a stock marketBankers are addicted to
    gambling on food - and driving
    up the price of food. Join our
    five-step programme and help bankers quit their addiction.
    Take action

    What is food sovereignty?

    Leila Ladera in VenezuelaFood sovereignty puts the
    people who produce, distribute and consume food at the centre of food systems, instead of markets and corporations.
    Find out more

    Join us in the fight for economic justice and an end to global poverty.

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