Weekend Economists Take a Chance and Call a Bluff July 26-28, 2013

[bread_and_roses]

26. Betting on Hunger: Is Financial Speculation to Blame for High Food Prices?

http://science.time.com/2012/12/17/betting-on-hunger-is-financial-speculation-to-blame-for-high-food-prices/

Betting on Hunger: Is Financial Speculation to Blame for High Food Prices?

Food prices have been on the rise since 2007, thanks in part to bad weather and increasing demand from biofuels and developing nations. But there's one cause that hasn't gotten much attention: financial speculation in crop markets. Are bankers artificially inflating the price of food?
By Kharunya Paramaguru Dec. 17, 201213 Comments

Correction appended Dec. 17, 2012

Remember the food crisis of 2007 and 2008, when rapid and extreme increases in global food prices led to riots and civil unrest in 28 countries? While we have yet to see unrest on the same level since, the shadow of that crisis, and the debate as to what the systemic causes were, remains. At the end of November, the World Bank warned in its Food Price Watch report that high and volatile prices are the “new normal.” In a world where nearly 1 billion people live in hunger — an estimate that Jomo Sundaram, assistant director general of the U.N. Food and Agriculture Organization (FAO), describes as conservative — high food prices can be fatal.

The shift in prices affects consumers in rich countries, who will see their grocery bills rise at a time when wages in much of the world are stagnant. But the real impact is felt by the global poor, in places like Tajikistan, where individuals spend nearly 80% of their income on food. Price spikes in those places can be devastating, even deadly.