G20 finance ministers fail to tackle soaring food prices

Date: 17 October 2011

George Osborne and his G20 counterparts failed to commit to the controls needed to curb soaring food prices at their Paris meeting which concluded on Saturday.

The finance ministers promised better regulation of commodity markets, where banks and hedge funds bet on the price of basic foods – but campaigners say the measures are not strong enough to prevent speculators driving up prices.

More than 450 economists wrote to the finance ministers ahead of their meeting this week, adding to increasingly vocal calls for controls on speculative activity. ‘With around 1 billion people enduring chronic hunger worldwide, action is urgently needed to curb excessive speculation and its effects on global food prices,’ said the letter.

The French government, currently holding the G20 presidency, is pushing for effective regulation. But ahead of the meeting, UK Chancellor George Osborne, heavily influenced by City of London lobbyists, was expected to prevent agreement on tougher controls at the Paris meeting, alongside the Brazilian and Australian finance ministers.

The US government has already moved to limit speculation on food prices, with a key decision by regulators due tomorrow. The European Commission is due to announce similar proposals on Thursday, 20 October, and campaigners are calling for strong European regulation.

The World Development Movement’s policy officer Murray Worthy said today:

There is growing international consensus that speculation is fuelling hunger, and while the finance ministers have taken a first step towards controls, they fall a long way short of what is needed. European and American regulators must now take up the challenge and set strict limits on reckless financial speculation. If they fail, the needs of a billion hungry people will continue to be sacrificed for the sake of the tiny financial elite who make huge profits from betting on food.”