Sep 12, 2012
Food is our nourishment. It is the source of life. Growing food, processing, transforming and distributing it involves 70 per cent of humanity. Eating food involves all of us. Yet, it is not the culture or human rights that are shaping today’s dominant food economy. Rather speculation and profits are designing food production and distribution. Putting food on the global financial casino is a design for hunger.
After the US subprime crisis and the Wall Street crash, investors rushed to commodity markets, especially oil and agricultural commodities. While real production did not increase between 2005-2007, commodity speculation in food increased 160 per cent. Speculation pushed up prices and high prices pushed an additional 100 million to hunger. Barclays, Goldman Sachs, JP Morgan are all playing on the global food casino.
A 2008 advertisement of Deutsche Bank stated, “Do you enjoy rising prices? Everybody talks about commodities — with the Agriculture Euro Fund you can benefit from the increase in the value of the seven most important agricultural commodities.”
When speculation drives up prices, the rich investors get richer and the poor starve. The financial deregulation that destabilised the world’s financial system is now destabilising the world food system. The price rise is not just a result of supply and demand. It is predominantly a result of speculation. Between 2003 to 2008, commodity index speculation increased by 1,900 per cent from an estimated $13 billion to $260 billion. Thirty per cent of these index funds are invested in food commodities. As the Agribusiness Accountability Initiative states, “We live in a brave new world of 24-hour electronic trading, triggered by algorithms of composite price indices, fits of investor ‘lack of confidence’ and of unregulated ‘dark pools’ of more than $7 trillion in over the counter commodities derivatives trades.”
The world commodity trading has no relationship to food, to its diversity, to its growers or eaters, to the seasons, to sowing or harvesting. Food diversity is reduced to eight commodities and bundled into “composite price index”. Seasons are replaced by 24-hour trading. Food production driven by sunshine and photosynthesis is displaced by “dark pools of investment”. The tragedy is that this unreal world is creating hunger for real people in the real world.