Following our exposé of Barclays Bank’s harvest of super profits from betting on food last year, we’ve gone further to pull the fig leaf off some of Europe’s biggest food gamblers with a new report released jointly with Friends of the Earth Europe.
some well known banks, pension funds and insurance companies as food gamblers and funders of land grabs in poorer countries, causing hunger and starvation. As a result, supply and demand is no longer the sole determinant of food prices as the actions of financial speculators and the performance of their investments become more critical. The sad consequence of this irresponsible profiteering is that high food prices hit the most vulnerable the hardest, threatening their right to food. The rapid price swings also affect poor farmers, threatening farm viability and making it more difficult for farmers to maintain a predictable income.
Our report identifies the biggest culprits in food speculation as Deutsche Bank, Barclays, the Dutch pension fund ABP, the German financial services group Allianz and French banking group BNP Paribas. We have since nominated Barclays for the 2012 Public Eye ‘shame’ awards for its financial speculation in food prices. Barclays is estimated to make up to £340 million a year from speculating in food ‘futures’ markets, making it the biggest UK player in the markets.
The effects of food speculation are disastrous for everyone – Northern consumers are saddled with rising living costs whilst people in poorer countries experience more hunger and poverty. It was food speculation that fuelled the 2008 food crisis when prices skyrocketed for crops such as rice, wheat and corn. Food riots erupted in 25 countries and more than 100 million more people were officially classed as undernourished or starving. After a price fall in 2009, food prices again reached record heights in June 2011.
Rising food prices and food shortages were also at the heart of popular disenchantment in the Arab Spring uprisings that animated the world in 2011. When the protests first kicked off in Tunisia they were quickly dismissed as another bout of bread riots and Arab regimes responded by adjusting food prices and offering more subsidies.
Coupled with food speculation in threatening people’s access to food across the world is the growing trend of large-scale acquisitions of farmland in developing countries. These land grabs often disrespect the rights of local communities and land-users. Such land deals often lack their free prior informed consent, violate or disrespect customary land rights, result in loss of access to natural resources, fail to deliver on employment and development, drive landlessness, and can involve violence and intimidation.
It is deeply concerning that a significant number of financial institutions across Europe appear to also be involved in financing land grabs directly or indirectly. Allianz has a fund that invests in Bulgarian agricultural land, Deutsche Bank has a fund that invests in Brazilian farm land, and a subsidiary of the Italian insurance group Generali has purchased land in Romania. Other financial institutions are involved in financing large agribusinesses whose activities include purchasing or leasing land in third countries: ABP, HSBC, Lloyds, Unicredit, AXA and Credit Agricole. Some of these have financed agribusinesses with explicit links to land grabs and human rights abuses, notably ABP in Mozambique, AXA in India and HSBC in Uganda.
The report concludes with some compelling recommendations which must be taken seriously if this deeply intolerable state of affairs is to be ended and justice for the world’s poor secured. A good starting point would be to plug the omissions and loopholes in the European Commission’s proposed new rules for improving transparency in commodity derivatives markets. For instance, it is essential to cap the size of bets speculators can make, and to ban index speculators and similar types of investors from agricultural commodity markets.
– from wdm.org.uk