Speculating Banks Profit as World's Poorest Go Hungry
Goldman Sachs, Morgan Stanley among those accused of reaping financial harvest from growing food crisis
Reports over the weekend saw some of the world's most powerful financial institutions accused of profiteering on the backs of the world's poorest people and those most vulnerable to the wild price fluctuations caused by over-rampant speculation on the price of food commodities like wheat, soy beans, and corn.
" Barclays is the UK bank with the greatest involvement in food commodity trading and is one of the three biggest global players, along with the US banking giants Goldman Sachs and Morgan Stanley," reported the UK's Independent, citing research from the World Development Movement.
Christine Haigh, policy and campaigns officer at the WDM and one of the analysts behind the research, said the behavior of the banks "risks fuelling a speculative bubble and contributing to hunger and poverty for millions of the world's poorest people."
As droughts have devastated grain crops in major agricultural strongholds like the US and India this year, experts warn of a food crisis taking shape across the globe. The accusations of 'profiteering' by groups like WDM and Oxfam International, however, transcend the price changes due to external conditions like drought or farmers who use commodity indexes to protect the price of their crops, and speak to the greed and recklessness of investors who create volatile trading conditions by speculating on the future prices of such commodities with no regard for the harm it does to real people.
"Fragile populations around the world, living on or near the poverty line, will be dragged under by price spikes and volatility," said Oxfam in a recent statement. "Nearly a billion people are already too poor to feed themselves, so any long-term food spike is guaranteed to trap millions more who are now just 'getting by'."
The World Development Movement report estimates that Barclays made as much as $840 million from its "food speculative activities" over the course of 2010 and 2011. Barclays made much more from food speculation in 2010, as the prices of agricultural commodities were rising, and a smaller sum in 2011 as prices fell.
As the Independent reported: "The extent of just one bank's involvement in agricultural markets will add to concerns that food speculation could help push basic prices so high that they trigger a wave of riots in the world's poorest countries, as staples drift out of their populations' reach."
Oxfam's private sector adviser, Rob Nash, said: "The food market is becoming a playground for investors rather than a market place for farmers. The trend of big investors betting on food prices is transforming food into a financial asset while exacerbating the risk of price spikes that hit the poor hardest."
And the Independent adds:
The revenues that Barclays and other banks make from trading in everything from wheat and corn to coffee and cocoa, are expected to increase this year, with prices once again on the rise. Corn prices have risen by 45 per cent since the start of June, with wheat jumping by 30 per cent.
Barclays makes most of its "food-speculation" revenues by setting up and managing commodity funds that invest money from pension funds, insurance companies and wealthy individuals in a variety of agricultural products in return for fees and commissions. The bank claims not to invest its own money in such commodities.
Since deregulation allowed the creation of such funds in 2000, institutions such as Barclays have collectively channelled an astonishing $200bn (PS126bn) of investment cash into agricultural commodities, according to the US Commodity Futures Trading Commission.
# # #
Urgent. It's never been this bad.
Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission from the outset was simple. To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It’s never been this bad out there. And it’s never been this hard to keep us going. At the very moment Common Dreams is most needed and doing some of its best and most important work, the threats we face are intensifying. Right now, with just two days to go in our Spring Campaign, we're falling short of our make-or-break goal. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Can you make a gift right now to make sure Common Dreams not only survives but thrives? There is no backup plan or rainy day fund. There is only you. —Craig Brown, Co-founder |
Reports over the weekend saw some of the world's most powerful financial institutions accused of profiteering on the backs of the world's poorest people and those most vulnerable to the wild price fluctuations caused by over-rampant speculation on the price of food commodities like wheat, soy beans, and corn.
" Barclays is the UK bank with the greatest involvement in food commodity trading and is one of the three biggest global players, along with the US banking giants Goldman Sachs and Morgan Stanley," reported the UK's Independent, citing research from the World Development Movement.
Christine Haigh, policy and campaigns officer at the WDM and one of the analysts behind the research, said the behavior of the banks "risks fuelling a speculative bubble and contributing to hunger and poverty for millions of the world's poorest people."
As droughts have devastated grain crops in major agricultural strongholds like the US and India this year, experts warn of a food crisis taking shape across the globe. The accusations of 'profiteering' by groups like WDM and Oxfam International, however, transcend the price changes due to external conditions like drought or farmers who use commodity indexes to protect the price of their crops, and speak to the greed and recklessness of investors who create volatile trading conditions by speculating on the future prices of such commodities with no regard for the harm it does to real people.
"Fragile populations around the world, living on or near the poverty line, will be dragged under by price spikes and volatility," said Oxfam in a recent statement. "Nearly a billion people are already too poor to feed themselves, so any long-term food spike is guaranteed to trap millions more who are now just 'getting by'."
The World Development Movement report estimates that Barclays made as much as $840 million from its "food speculative activities" over the course of 2010 and 2011. Barclays made much more from food speculation in 2010, as the prices of agricultural commodities were rising, and a smaller sum in 2011 as prices fell.
As the Independent reported: "The extent of just one bank's involvement in agricultural markets will add to concerns that food speculation could help push basic prices so high that they trigger a wave of riots in the world's poorest countries, as staples drift out of their populations' reach."
Oxfam's private sector adviser, Rob Nash, said: "The food market is becoming a playground for investors rather than a market place for farmers. The trend of big investors betting on food prices is transforming food into a financial asset while exacerbating the risk of price spikes that hit the poor hardest."
And the Independent adds:
The revenues that Barclays and other banks make from trading in everything from wheat and corn to coffee and cocoa, are expected to increase this year, with prices once again on the rise. Corn prices have risen by 45 per cent since the start of June, with wheat jumping by 30 per cent.
Barclays makes most of its "food-speculation" revenues by setting up and managing commodity funds that invest money from pension funds, insurance companies and wealthy individuals in a variety of agricultural products in return for fees and commissions. The bank claims not to invest its own money in such commodities.
Since deregulation allowed the creation of such funds in 2000, institutions such as Barclays have collectively channelled an astonishing $200bn (PS126bn) of investment cash into agricultural commodities, according to the US Commodity Futures Trading Commission.
# # #
Reports over the weekend saw some of the world's most powerful financial institutions accused of profiteering on the backs of the world's poorest people and those most vulnerable to the wild price fluctuations caused by over-rampant speculation on the price of food commodities like wheat, soy beans, and corn.
" Barclays is the UK bank with the greatest involvement in food commodity trading and is one of the three biggest global players, along with the US banking giants Goldman Sachs and Morgan Stanley," reported the UK's Independent, citing research from the World Development Movement.
Christine Haigh, policy and campaigns officer at the WDM and one of the analysts behind the research, said the behavior of the banks "risks fuelling a speculative bubble and contributing to hunger and poverty for millions of the world's poorest people."
As droughts have devastated grain crops in major agricultural strongholds like the US and India this year, experts warn of a food crisis taking shape across the globe. The accusations of 'profiteering' by groups like WDM and Oxfam International, however, transcend the price changes due to external conditions like drought or farmers who use commodity indexes to protect the price of their crops, and speak to the greed and recklessness of investors who create volatile trading conditions by speculating on the future prices of such commodities with no regard for the harm it does to real people.
"Fragile populations around the world, living on or near the poverty line, will be dragged under by price spikes and volatility," said Oxfam in a recent statement. "Nearly a billion people are already too poor to feed themselves, so any long-term food spike is guaranteed to trap millions more who are now just 'getting by'."
The World Development Movement report estimates that Barclays made as much as $840 million from its "food speculative activities" over the course of 2010 and 2011. Barclays made much more from food speculation in 2010, as the prices of agricultural commodities were rising, and a smaller sum in 2011 as prices fell.
As the Independent reported: "The extent of just one bank's involvement in agricultural markets will add to concerns that food speculation could help push basic prices so high that they trigger a wave of riots in the world's poorest countries, as staples drift out of their populations' reach."
Oxfam's private sector adviser, Rob Nash, said: "The food market is becoming a playground for investors rather than a market place for farmers. The trend of big investors betting on food prices is transforming food into a financial asset while exacerbating the risk of price spikes that hit the poor hardest."
And the Independent adds:
The revenues that Barclays and other banks make from trading in everything from wheat and corn to coffee and cocoa, are expected to increase this year, with prices once again on the rise. Corn prices have risen by 45 per cent since the start of June, with wheat jumping by 30 per cent.
Barclays makes most of its "food-speculation" revenues by setting up and managing commodity funds that invest money from pension funds, insurance companies and wealthy individuals in a variety of agricultural products in return for fees and commissions. The bank claims not to invest its own money in such commodities.
Since deregulation allowed the creation of such funds in 2000, institutions such as Barclays have collectively channelled an astonishing $200bn (PS126bn) of investment cash into agricultural commodities, according to the US Commodity Futures Trading Commission.
# # #