Campaign group Global Justice Now led the calls to introduce the rules after the 2008 crisis. The group’s director, Nick Dearden, warned the rules have already been “significantly watered down” – and removing them altogether would have dire consequences.
Dearden said: “If the British government gets away with removing these rules altogether, we will be back to square one, with financiers dictating who gets to eat.
“Rather than strengthening the rules to stamp out these destructive practices, the British government is this week debating a bill which would strip them away altogether.”
Hunger profiteers
This year’s rocketing prices were not in proportion to actual predicted shortfalls in food or fuel, according to the International Panel of Experts on Sustainable Food Systems (IPES Food).
Headlines declaring a quarter of the world’s wheat exports were threatened by the invasion, obscured the fact that this was just 0.9% of the global wheat supply.
But while fears of a shortfall may have been exaggerated, this didn’t stop the price increases from having a real impact on the availability of food. By April, more than one in five households with children in the UK were experiencing food insecurity, according to the Food Foundation.
IPES Food reported that speculators trying to profit from the gains were partly responsible for the skyrocketing prices – and a Lighthouse Reports investigation published earlier this year found Russia’s invasion of Ukraine had sparked record flows of investor cash into the futures markets, particularly in food.
Traditionally, businesses could use futures markets to manage fluctuations in the price of their goods – buying futures contracts to offset the risk of a price increase or selling them to offset the risk of a slump.
Speculators help to ensure that there are enough market participants for farmers and millers to offset their risks in this way. But since the liberalisation of rules on speculation in 2000, speculators have dominated futures markets, meaning they are now also the primary determinants of the futures price.
In the fortnight after the war began in late February, the wheat futures price rose by more than 50%. By April, two commodity funds that buy only agricultural futures had attracted net investor investment of $1.2bn – compared to just $197m for the whole of 2021.
The food price hikes helped push an additional 71 million people around the world into poverty this year.
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