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In Brief 20

Financial speculation increases hunger

World market prices for food are currently at the highest level they have been for a century. Find out more! (2011)

The Food Price Index of the Food and Agricultural Organization FAO is currently at 236 points – this is higher than during the hunger crisis in 2008 and the highest value since the introduction of the index in 1990. The FAO rightly fears that current price increases will once again drive millions of people into hunger.The fundamental factors pushing up prices on the global food market – the growing demand for (animal-based) food and energy crops as well as increasing mineral oil prices – have been joined in recent years by further price-drivers: capital investments on the commodity markets.

A study conducted by the Bremen University of Applied Sciences (Bass, H. 2011) on behalf of Welthungerhilfe estimates that the involvement of investors on the forward markets for grain in 2008 was responsible for around 15 percent of the observed price level on the spot markets. Also at the present time, via various mechanisms, a ties on international financial markets are having a negative impact on the import prices of developing countries and are being transferred from there to local markets. The German government, the European Union and major agricultural trading countries, first and foremost the USA, must therefore, immediately and with an international display of solidarity, use their political power to curtail price-driving speculative investments in food markets. In order to do this, the involvement of financial market players from outside the industry and speculative investors on the food markets must be monitored according to internationally binding rules. Important instruments in this connection are the implementation of strict duties to report, as well as the introduction of position and price limits. A stock market turnover tax on food-based betting transactions is, according to our present estimates, a suitable instrument to make the business more expensive for “non-commercial” financial market players. This would make it possible to decelerate the financial market activities and thereby impede speculation.

In Brief 20
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