International action needed to curb food price speculation: MEPs

By Mike Stones

- Last updated on GMT

Urgent international action is needed to prevent speculation in food commodities and agricultural raw materials which threaten food security in the European Union (EU) and worldwide, according to a resolution by Members-of-the-European Parliament (MEPs).

A spokesman told FoodNavigator: “Food speculation corrupts food prices by artificially moving them up and down, causing fluctuations which are not in response to supply a demand.”

The MEPs urged the G20 group of finance ministers and central bank governors to work for the convergence of market regulations by involving countries that are not part of their group in the fight against food price manipulation.

Prevent abuses

The European Commission should consider giving new powers to the European Security and Markets Authority to prevent abuses in commodity markets, argued the MEPs. Dealing in food commodities should be limited to investors who have a genuine link with agricultural markets.

MEPs also called on national governments not to impose curbs on exports, as these "provoke greater uncertainty in the markets and disrupt world markets, and therefore have the potential to drive prices up further at global level​".

Commodity speculation and climate change are combining to threaten both EU and global food security, warned the MEPs’ resolution. Drought, floods, fires and storms on a greater scale than in the past are cutting global agricultural capacity, it continued.

Soil and water management must be improved to prevent loss of farmland and the Commission should monitor national climate change mitigation measures,”​ said the resolution.

To combat the threat to EU food security, the union needs a strong Common Agricultural Policy with urgent action to remedy falling farm incomes, caused by higher production costs to meet health, environmental and animal welfare standards. Without such intervention, there can be no guarantee that there would be enough EU farmers to guarantee domestic food production, MEPs warned.

Market intervention tools, such as intervention and strategic stocks, should be an important part of EU food.

The resolution also criticized speculation in energy markets which was said to have a similarly destabilizing effect.

Alarm bell

The MEPs’ resolution was prompted by Food and Agriculture Organisation’s (FAO) monthly Food Prices Index which “really rang the alarm bell​,” said the spokesman.

France, which currently holds the presidency of the G20 group, had made action to curb food speculation one of its top three priorities, he added. All G20 companies, except Brazil, had agreed the need for action.

Meanwhile, poverty and famine still exist within the EU, according to the resolution. About 79m people in the EU still live below the poverty line; defined as 60 per cent of the average income in the country in which the person lives.

Plus 16m EU citizen’s received food aid through charities last winter.

Worldwide, the number of undernourished people reached 925m last year, according to FAO estimates. Rising food prices exacerbated by unpredictable supply shortages may cause that number to grow, it adds.

29 countries face food supply difficulties and are in need of external food assistance.

Related topics: Market Trends

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