ROME, June 8 (Thomson Reuters Foundation) - Food has increasingly become a target for opportunist investors looking for easy profit, hurting the world’s poor and fuelling instability, a senior U.N. agricultural official said on Monday.
Speculation by financial institutions on food futures has contributed to food price volatility, experts say, causing price bubbles and dips that have hit the world’s poorest the hardest, stoking political instability.
A spike in food prices in 2008 sparked bread riots across the Middle East, Africa and the Caribbean. Prices have dipped over the past four years following strong harvests and falling oil prices.
“Food futures markets have become an object of speculation,” Jomo Sundaram, an Assistant Director-General of the Food and Agriculture Organisation (FAO) told the U.N. body’s bi-annual meeting. “Cheap credit has accelerated financial speculation.”
As food prices have stabilised, now is the time for global regulations on speculation, just like there are World Trade Organisation rules on international commerce, said the president of Argentina, one of the world’s largest grain exporters.
“When it comes to food, there have to be global regulations (on speculative investments),” President Cristina Kirchner told the meeting.
“Are we going wait for the accumulation of grain and soy in some parts of the world, while people in other parts are dying of hunger?” she said.
New rules shouldn’t be seen as a struggle against private profit, but as a way to rein in the excesses of some investors, said Kirchner, without proposing a specific plan or timetable.
At 795 million, the number of hungry people worldwide has declined by more than 200 million since 1990, despite population rises, the FAO reported in May.
But the current period of low economic growth in market economies means the pace of reductions will continue to slow, Sundaram said.
As well as regulation of futures markets, cash transfers to the rural poor, who account for four out of five of the world’s hungry, could help tackle the problem, he said.
Public investments in the rural poor can drive economic growth by stimulating consumer demand - and help to combat hunger in the process.
To finance these programmes, governments in developing nations need to tackle tax evasion, especially in the extractive industries, the FAO official said.
“The poorer countries of the world are often rich in mineral and other resources, but often get little income,” he said. (Reporting By Chris Arsenault; Editing by Ros Russell; +39-068-522-4359; Reuters Messaging:; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian issues, human rights, corruption and climate change. Visit www.trust.org)