News, Politics

Economists call on G20 finance ministers to stop food speculation

Economists call on G20 finance ministers to stop food speculation
October 11th, 2011
Author: Jeff Taylor

Over 450 economists from around the world have written to the finance ministers of the G20 countries calling on them to put a stop to financial speculation in commodity markets, which causes higher prices and fuels hunger.

The letter signed by economists [1], from top universities such as Oxford, Cambridge, Berkeley, Cornell and the London School of Economics, adds to the ongoing and growing campaign to stop food price speculation.

The G20 agriculture ministers have already made their concerns known on this issue with their ‘Action Plan on Food Price Volatility and Agriculture’ [2] where they ask their finance ministers to tighten up regulation in this area.

But of course just about the whole of the financial system is against this.

The markets are now abusing a price mechanism that was set up to smooth the price of commodities out over time for the benefit of supplier and user alike. Now we have speculators who have no interest in that particular market and who never take delivery of the commodity sat in the middle of trades purely to profit. They add no value to the transaction and actually get in the way of proper market price discovery.

Deborah Doane, director of the World Development Movement, said "Excessive lobbying from the finance sector seems to be delaying political action, both here in the UK, and elsewhere. This is despite the obvious suffering caused by speculation on this most basic human need, and despite the growing number of voices calling for action. Instead of propping up cynical financial gambling by speculators, the G20 finance ministers must act to ensure that strict rules are put in place to limit the hold of bankers over the world’s food markets."



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