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Ending food speculation
WDM campaigners have won a major victory which will prevent food speculation by banks and hedge funds.
27-01-2014 | The EU has taken a historic step to introduce regulation to prevent speculation by banks and hedge funds driving up food prices and exacerbating the global hunger crisis. The limits to curb speculation on food prices were agreed on 14 January 2014 following more than three years campaigning by anti-poverty charity the World Development Movement (WDM). The new controls will place a limit on the number of food contracts that banks and other finance companies can hold, and will force traders to open their activity to greater public scrutiny.
WDM has hailed the decision as an historic step forward, but said that the UK government's opposition to tough controls has resulted in serious loopholes in the regulation. In particular, limits will be set at national rather than EU level, which campaigners say risks a regulatory 'race to the bottom' as countries could compete to set weaker limits.
The group is urging the European regulator ESMA to ensure that the new rules are implemented effectively, and not watered down further by industry lobbying.
Goldman Sachs, Barclays, Deutsche Bank, JP Morgan and Morgan Stanley together made an estimated £2.2 billion from speculating on food including wheat, maize and soy between 2010 and 2012. Speculation increases price volatility and has been a major factor in the sharp spikes in global food prices of the last six years.
WDM director Nick Dearden said: "Public outrage over food speculation has been huge and the fact that the EU has listened to that anger is a victory for public pressure. But the UK's role in watering down the regulation has been a disgrace. The Treasury has put the profits of banks like Goldman Sachs above the basic human need for food, with the result that the new rules could be too weak to be effective. This agreement is a good step forward, but now we need to make sure the limits are set at a level that properly tackles excessive speculation."
The new rules on food speculation are part of a major piece of European financial reform, the Markets in Financial Instruments Directive (MiFID). Once it has been officially approved by MEPs and EU finance ministers, it must be incorporated into national legislation in each of the 28 EU member states.
To find out more about WDM and how you can support their campaigning work, visit www.wdm.org.uk.
Or read our interview with former WDM director Deborah Doane to find out why ultimately we all pay the price for food speculation.
Project CV: WDM
WDM is a vibrant network campaigning for a fairer world. Working in solidarity with activists around the world, WDM tackles the root causes of poverty. The NGO researches and promotes positive alternatives that put the rights of poor communities before the interests of big business.
Triodos Bank and WDM have worked together since 2003 as both our charity partners and loan customers.