November, 13 2008, 01:43pm EDT
For Immediate Release
Contact:
Ben Lilliston,Communications Director,(612) 870-3416,blilliston@iatp.org
Speculation a Major Contributor to Global Food Crisis, New Report
Financial and Food Crises Linked by Deregulated Markets
MINNEAPOLIS, Minn.
Excessive speculation in agriculture commodity markets has played a major role in the rapid rise and fall in global food prices, contributing to a massive increase in undernourished people and commodity market instability, concludes a new report by the Institute for Agriculture and Trade Policy.
"As President Bush and the G-20 meet this weekend, it is important to recognize that many of the deregulatory measures that brought on the Wall Street collapse also contributed to the food security and agricultural market crises," said IATP's Steve Suppan, a contributor to the report. "Only prudential regulation and tough enforcement will repair the damage caused by crony capitalism to these markets and the people markets are supposed to serve."
The IATP report, "Commodities Market Speculation: the Risk to Food Secu- rity and Agriculture" (available at iatp.org), concludes that U.S. government deregulatory steps opened the door for large financial services speculators to make huge "bets" that destabilized the structure of agriculture commodity markets. According to the United Nations, global food prices rose an estimated 85 percent between April 2007 and April 2008. Prices rose for wheat (60 percent), corn (30 percent) and soybeans (40 percent) beyond what could be explained by supply, demand and other fundamental factors, the report found.
Commercial speculation in agriculture has traditionally been used by traders and processors to protect against short-term price volatility, acting as a sort of price insurance while helping to set a benchmark price in the cash market. But the elimination of speculative position limits for financial speculators and the rise of commodity index funds undermined traditional price risk management. These funds create a constant upward pressure on commodity prices, allevi- ated abruptly only when fund contracts are "rolled over" to take profits.
"The underlying fundamental for these funds is not the supply and demand of physical commodities, but the profit target," said Suppan. "As long as Wall Street players could hide their government-permitted debt loads, they were free to induce price volatility in excess of what could be explained by fundamental factors, and then profit by betting on the induced price movements." As of July 2008, $317 billion had been invested in commodities index funds, led by major traders Goldman Sachs and American Insurance Group. Commodity index funds bundle futures contracts of up to 24 agricultural and non-agricultural commodities, including oil, energy, and base and precious metals. The bundling of agricultural commodities with precious and base metal commodities means that the price movements (and the larger trading weight of the metals in the fund) can trigger the sale of a fund contract, regardless of the supply and demand situation in an agricultural commodity, according to the report.
At the global level, there is no multilateral agreement to regulate commodities exchange markets. And there is no multilateral framework to respond to global speculation in food prices. Thus far, the UN's Global Task Force on the Food Crisis has yet to analyze the role of speculation in fomenting the crisis.
The report makes a series of recommendations including: creating an independent global commodities exchange regulatory agency, establishing commodity-specific speculative position limits and requiring comprehensive and transparent reporting for all types of futures and options trades executed in the United States. On September 18, the U.S. House of Representatives passed the Commodity Markets Transparency and Accountability Act of 2008, which would take some of these initial steps. The bill will likely be reintroduced in 2009.
"The U.S. House of Representatives has begun to defend U.S. agricultural markets from predatory deregulation and excessive speculation," said Suppan. "The Obama administration and the Senate should not only support and improve the House bill, but help jumpstart multilateral negotiations so that excessive speculation in non-U.S. markets cannot further exacerbate global food insecurity."
The full report can be read at: www.iatp.org
The Institute for Agriculture and Trade Policy works locally and globally at the intersection of policy and practice to ensure fair and sustainable food, farm and trade systems.
LATEST NEWS
GOP Still Lacks Votes to Pass Budget Bill 'Because It's a Moral Monstrosity,' Says Senate Democrat
"We have been debating amendments for 21 hours and we are still going because through 12 hours of debate and 21 hours of amendment votes, Republicans still don't have 50 votes for their bill," said Sen. Chris Murphy.
Jul 01, 2025
Even after an all-night session of amendment votes and wrangling behind closed doors, Senate Republicans still did not have enough support to pass their reconciliation package as of Tuesday morning, leaving party leaders scrambling to placate GOP holdovers who are purportedly nervous about the legislation's unprecedented cuts to Medicaid and federal nutrition assistance.
Sen. Chris Murphy (D-Conn.) argued in a social media post that the reason for the GOP's inability to quickly rally its own members around the legislation is straightforward: "Because it's a moral monstrosity."
"We have been debating amendments for 21 hours and we are still going because through 12 hours of debate and 21 hours of amendment votes, Republicans still don't have 50 votes for their bill," Murphy wrote at roughly 5:30 am ET, as the marathon "vote-a-rama" continued with no end in sight.
With Democrats unanimously opposed to the bill, Senate Republicans can only afford to lose three GOP votes if they are to send the measure back to the House for final approval. Sens. Rand Paul (R-Ky.) and Thom Tillis (R-N.C.) have said they will vote against the bill in its current form, and Sens. Lisa Murkowski (R-Alaska) and Susan Collins (R-Maine) are undecided.
Republican leaders have been working to bring Murkowski into the yes column with a proposal that would temporarily exempt Alaska and other states from the bill's massive cuts to the Supplemental Nutrition Assistance Program (SNAP). Sen. Amy Klobuchar (D-Minn.), the top Democrat on the Senate Agriculture Committee, ripped the proposal as "absurd" and said it would reward the states with the highest SNAP error rates.
"Insanity reigns," Klobuchar wrote on social media.
Senate Republicans' margins became more difficult after Sen. Thom Tillis (R-N.C.) announced his opposition to the legislation over the weekend, pointing to the Senate version's devastating cuts to Medicaid.
"What do I tell 663,000 people in two years or three years, when President Trump breaks his promise by pushing them off of Medicaid because the funding's not there anymore?" Tillis asked in a floor speech on Sunday, citing an estimate of the number of people in North Carolina who could lose health insurance under the Republican bill.
Throughout the country, nearly 12 million people would lose coverage under the Senate reconciliation bill, according to the nonpartisan Congressional Budget Office.
"Kicking millions off healthcare, blowing up the national debt by trillions, and devastating generational economic harms—all being written into law on the fly," Sen. Patty Murray (D-Wash.) said early Tuesday morning after hours of debate and amendment votes.
Keep ReadingShow Less
At Least 95 Palestinians Killed in Israeli Attacks Including Massacres at Beach Café, Aid Points
"I saw body parts flying everywhere, and bodies cut and burned," said one eyewitness to a strike on the popular al-Baqa Café.
Jun 30, 2025
Israeli forces ramped up their genocidal assault on the Gaza Strip Monday, killing at least 95 Palestinians in attacks including massacres at a seaside café and a humanitarian aid distribution center and bombings of five school shelters housing displaced families and a hospital where refugees were sheltering in tents.
An Israeli strike targeted the al-Baqa Café in western Gaza City, one of the few operating businesses remaining after 633 days of Israel's obliteration of the coastal strip and a popular gathering place for journalists, university students, artists, and others seeking reliable internet service and a respite from nearly 21 months of near-relentless attacks.
Medical sources said at least 33 civilians were killed and nearly 50 others wounded in the massacre, including footballer Mustafa Abu Amira, photojournalist Ismail Abu Hatab—who survived an earlier Israeli airstrike and is reportedly the 227th journalists killed by Israel since October 2023—and prominent artist Frans Al-Salmi, whose final painting depicting a young Palestinian woman killed by Israeli forces resembles photographs of its slain creator posted on social media after her killing.
Warning: Photos shows image of death
Survivor Ali Abu Ateila toldThe Associated Press that the café was crowded with women and children at the time of the attack.
"Without a warning, all of a sudden, a warplane hit the place, shaking it like an earthquake," he said.
Another survivor of the massacre told Britain's Sky News: "All I see is blood... Unbelievable. People come here to take a break from what they see inside Gaza. They come westward to breathe."
Eyewitness Ahmed Al-Nayrab toldAgence France-Presse that a "huge explosion shook the area."
"I saw body parts flying everywhere, and bodies cut and burned," he said. "It was a scene that made your skin crawl."
Witnesses and officials said Israeli Defense Forces (IDF) troops opened fire on Palestinians seeking food and other humanitarian aid from a U.S.-backed Gaza Humanitarian Foundation distribution point in southern Gaza, killing 15 people amid near-daily massacres of aid-seekers.
"We were targeted by artillery," survivor Monzer Hisham Ismail told The Associated Press. Another survivor, Yousef Mahmoud Mokheimar, told the AP that Israeli troops "fired at us indiscriminately." Mokheimar was shot in the leg, another man who tried to rescue him was also shot.
IDF troops have killed nearly 600 Palestinian aid-seekers and wounded more than 4,000 others over the past month, with Israeli military officers and soldiers saying they were ordered to deliberately fire on civilians in search of food and other necessities amid Israel's weaponized starvation of Gaza.
Another 13 people were reportedly killed Monday when IDF warplanes bombed an aid warehouse in the Zeitoun quarter of southern Gaza City, according to al-Ahli Baptist Hospital officials cited by The Palestine Chronicle. IDF warplanes also reportedly bombed five schools housing displaced families, three of them in Zeitoun. Israeli forces also bombed the courtyard of al-Aqsa Hospital in Deir al-Balah in central Gaza, where thousands of forcibly displaced Palestinian families are sheltering in tents. It was reportedly the 12th time the hospital has been bombed since the start of the war.
The World Health Organization has documented more than 700 attacks on Gaza healthcare facilities since October 2023. Most of Gaza's hospitals are out of service due to Israeli attacks, some of which have been called genocidal by United Nations experts.
Israel's overall behavior in the war is the subject of an ongoing International Court of Justice genocide case, while Israeli Prime Minister Benjamin Netanyahu is wanted by the International Criminal Court for alleged war crimes and crimes against humanity in Gaza, including murder and using starvation as a weapon of war.
Since October 2023, Israeli forces have killed or wounded more than 204,000 Palestinians in Gaza, including over 14,000 people who are missing and presumed dead and buried under rubble, according to the Gaza Health Ministry, whose casualty figures have been found to be generally accurate and even a likely undercount by peer-reviewed studies.
The intensified IDF attacks follow Israel's issuance of new forced evacuation orders amid the ongoing Operation Gideon's Chariots, an ongoing offensive which aims to conquer and indefinitely occupy all of Gaza and ethnically cleanse much of its population, possibly to make way for Jewish recolonization as advocated by many right-wing Israelis.
Keep ReadingShow Less
'We Cannot Be Silent': Tlaib Leads 19 US Lawmakers Demanding Israel Stop Starving Gaza
"This current blockade is starving Palestinian civilians in violation of international law, and the militarization of food will not help."
Jun 30, 2025
As the death toll from Israel's forced starvation of Palestinians continues to rise amid the ongoing U.S.-backed genocidal assault and siege of the Gaza Strip, Rep. Rashida Tlaib on Monday led 18 congressional colleagues in a letter demanding that the Trump administration push for an immediate cease-fire, an end to the Israeli blockade, and a resumption of humanitarian aid into the embattled coastal enclave.
"We are outraged at the weaponization of humanitarian aid and escalating use of starvation as a weapon of war by the Israeli government against the Palestinian people in Gaza," Tlaib (D-Mich.)—the only Palestinian American member of Congress—and the other lawmakers wrote in their letter to U.S. Secretary of State Marco Rubio. "For over three months, Israeli authorities have blocked nearly all humanitarian aid from entering Gaza, fueling mass starvation and suffering among over 2 million people. This follows over 600 days of bombardment, destruction, and forced displacement, and nearly two decades of siege."
"According to experts, 100% of the population is now at risk of famine, and nearly half a million civilians, most of them children, are facing 'catastrophic' conditions of 'starvation, death, destitution, and extremely critical acute malnutrition levels,'" the legislators noted. "These actions are a direct violation of both U.S. and international humanitarian law, with devastating human consequences."
Gaza officials have reported that hundreds of Palestinians—including at least 66 children—have died in Gaza from malnutrition and lack of medicine since Israel ratcheted up its siege in early March. Earlier this month, the United Nations Children's Fund warned that childhood malnutrition was "rising at an alarming rate," with 5,119 children under the age of 5 treated for the life-threatening condition in May alone. Of those treated children, 636 were diagnosed with severe acute malnutrition, the most lethal form of the condition.
Meanwhile, nearly 600 Palestinians have been killed and more than 4,000 others have been injured as Israeli occupation forces carry out near-daily massacres of desperate people seeking food and other humanitarian aid at or near distribution sites run by the U.S.-backed Gaza Humanitarian Foundation (GHF). Israel Defense Forces officers and troops have said that they were ordered to shoot and shell aid-seeking Gazans, even when they posed no threat.
"This is not aid," the lawmakers' letter argues. "UNRWA Commissioner-General Philippe Lazzarini has warned that, under the GHF, 'aid distribution has become a death trap.' We cannot allow this to continue."
"We strongly oppose any efforts to dismantle the existing U.N.-led humanitarian coordination system in Gaza, which is ready to resume operations immediately once the blockade is lifted," the legislators wrote. "Replacing this system with the GHF further restricts lifesaving aid and undermines the work of long-standing, trusted humanitarian organizations. The result of this policy will be continued starvation and famine."
"We cannot be silent. This current blockade is starving Palestinian civilians in violation of international law, and the militarization of food will not help," the lawmakers added. "We demand an immediate end to the blockade, an immediate resumption of unfettered humanitarian aid entry into Gaza, the restoration of U.S. funding to UNRWA, and an immediate and lasting cease-fire. Any other path forward is a path toward greater hunger, famine, and death."
Since launching the retaliatory annihilation of Gaza in response to the Hamas-led October 7, 2023 attack on Israel, Israeli forces have killed at least 56,531 Palestinians and wounded more than 133,600 others, according to the Gaza Health Ministry, which also says over 14,000 people are missing and presumed dead and buried beneath rubble. Upward of 2 million Gazans have been forcibly displaced, often more than once.
On Sunday, U.S. President Donald Trump reiterated a call for a cease-fire deal that would secure the release of the remaining 22 living Israeli and other hostages held by Hamas.
In addition to Tlaib, the letter to Rubio was signed by Sen. Bernie Sanders (I-Vt.) and Democratic Reps. Greg Casar (Texas), Jesús "Chuy" García (Ill.), Al Green (Texas), Jonathan Jackson (Ill.), Pramila Jayapal (Wash.), Henry "Hank"Johnson (Ga.), Summer Lee (Pa.), Jim McGovern (Mass.), Alexandria Ocasio-Cortez (N.Y.), Ilhan Omar (Minn.), Chellie Pingree (Maine), Mark Pocan (Wisc.), Ayanna Pressley (Mass.), Delia Ramirez (Ill.), Paul Tonko (N.Y.), Nydia Velázquez (N.Y.), and Bonnie Watson Coleman (N.J.).
Keep ReadingShow Less
Most Popular