UN and French government call for urgent action on record food price

UN and French government call for urgent action on record food price

Date: 4 February 2011

Press release, 04.02.2011

At a joint press conference, Director-General Jacques Diouf of the UN Food and Agriculture Organisation and the French Agriculture Minister, Bruno Le Maire called financial speculation on food both economically dangerous and morally unacceptable. They called for an international response at the G20 to the record food prices and volatility including regulation of financial speculation on commodity markets. The World Development Movement welcomes this and supports action to tackle dramatic food price rises and volatility by reducing speculation on food by banks, hedge funds and pension funds.

Julian Oram, head of policy at the World Development Movement said:

“We welcome the FAO and French government’s clear and urgent call for action to curb financial speculation on food. Banks and hedge funds are playing a key role in causing the current record food prices. When speculative flows of hot money pour into commodity markets, it dramatically pushes up the price of basic foods. There are of course long-term upward pressures on food prices, for example due to the impacts of climate change and the use of land for biofuels. But this doesn’t explain the sudden and very dramatic prices rises that we are seeing now and in 2008 during the food crisis, or the wild price swings we’ve witnessed in food over recent years.

“A new financial reform law was passed in the USA this summer which aims to prevent excessive speculation on food commodity derivatives. But the UK has been dragging its feet on the issue and we are concerned that the government could try to block similar reforms in Europe because of strong resistance by the banking industry. “If the government really wants to reduce world hunger, they should break free of the grip of banking lobbyists and crack down on predatory financial speculation to ensure stable and lower food prices. The UK should also focus on supporting and investing in small scale farmers in developing countries, particularly women, who produce the majority of the world’s food.

“The increase in the price of basic foods, like bread, milk and sugar, mixed with high rates of unemployment and frustration at political repression, is causing mass protests and unrest in Algeria, Tunisia, Sudan, and Jordan. Unless the banks are forced to stop betting on food, more people will continue to go hungry. And it’s affecting people in the UK, especially those on low incomes, because food prices are contributing to rising inflation.”