Touch the Soil News #320
In the throes of the 2008 financial crisis, there was a concurrent food crises unfolding as well. For those that might remember, financial speculators betting on global grain shortages caused prices in the actual market to spike – sending entire nations into food crisis mode. Almost overnight, the number of people starving around the world jumped from around 800 million to 1 billion.
The memory of the effects of this artificially contrived human starvation event (from low-consciousness speculators) has been simmering around the globe. Back in early 2014, the European Union agreed to introduce controls to regulate price speculation on basic foodstuffs such as sugar, wheat and corn. The EU legislation – known as the Markets in Financial Instruments Directive – is scheduled to come into effect in 2018.
However, in the interim, a story just broke from The Guardian – one of the world’s most respected news enterprises. In a letter to the European Union finance commissioner, some of the world’s high profile NGOs (non-governmental organizations) are challenging the new regulations to limit food speculation. Their challenge is that the EU regulations are too weak and that they need to be strengthened to curb speculations on commodities and the “disastrous impacts it can have on the world’s poorest populations.”
What needs to be understood in terms of humanity is that one person in three in the world lives in poverty. Wealth speculators trying to gain more wealth are doing so by aggravating the ability of one third of the world’s population to afford food. In simple terms, food prices are a matter of life and death. Artificial financial speculation in the food arena can whiplash into crimes against humanity.
The NGO’s who are signatories to the letter include ActionAid International, Friend of the Earth, Europe, Global Justice Now, Oxfam International and the Center for Research on Multinational Corporations.
1930s migrant mother Florence Thompson with some of her children lives in astute poverty adjacent of farm fields in California. This picture of her has become internationally famous for illustrating the whiplashes of the Great Depression. The Great Depression, like many other economic calamities, was heavily tainted with financial speculation. (Photo: Dorothea Lange for the Farm Security Administration)
Bringing an awareness of the dangers of speculation on basic food stuffs into the public and international debates is good news. The average citizen will – for the first time – become aware of how certain financial activities destabilize global food security and foment hunger. Just because it is financial, does not necessarily mean it is beneficial to humans or the planet.
In simplistic terms, speculation on commodities can have two large effects (whether intended or unintended). 1) When speculators bid up the prices of basic commodities – millions of people can starve. 2) When speculators bid down the price of commodities – many farmers can be bankrupted.
Unfortunately, starving people and bankrupting farmers has been an agricultural mega-trend for the past 80 years. Fortunately, some of the causes of this economic illness are beginning to be understood.
Following is a video – a bit technical but understandable – of the dangers of financial speculation, especially over food commodities: