With the increasing waves of the futures market and other investment derivatives, you can bet the farm of the fact that someone, somewhere will be making a buck out of another’s misery. Financial investors betting on the price of food are driving up prices, putting the lives of millions at risk, campaigners claim.
According to Graeme Green (October, 2012), Last month, it was revealed Barclays had made about £500million over the past two years on food speculation. In Britain, the average household food bill increases by about five per cent each year. But in the developing world, where a higher proportion – up to 90 per cent – of income goes on food, rising prices can be a matter of life and death.
There are many reasons for rising prices, including the weather. But food speculation is a major contributing factor, with the activity of investment banks, hedge funds and other financial players in commodity markets leading to high and unpredictable prices.
Graeme Green (October, 2012) reported on the Metro that the regulations that were previously in place to protect those who grew or sell food were removed in the 1990s. With the amount of money to be made gambling on the markets, the banks, hedge fund managers and pension funds moved in. Financial speculation on food almost doubled between 2006 and 2011. In 2006, the value of financial assets in food markets was £40billion; by 2011, it was £78billion. Financial speculators now dominate commodity markets, holding more than 60 per cent of some markets in 2011, compared with 12 per cent in 1996.
Sources: World Development Movement, United Nations, Defra
