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Thursday, September 22, 2011

The Poor and Food: The Future is Certainly Not Friendly

The Huffington Post, while not being everybody’s cup of tea ideologically speaking, did publish an extremely interesting post with a very clear graphic about the effect of bank speculation on food prices. It is worth taking a look at the post.

It highlights the little known role that banks have had in causing the dramatic rises in food prices that have hurt the global poor so deeply in the past few years. It’s really astonishing to consider the facts.

44 million people have been driven into poverty since the food crisis began in 2010.

People in poor households typically spend about 70% of their income on food. In five years, speculation on food prices has doubled.

In a nutshell, banks are speculating on ‘food futures’, thereby distorting the markets and causing food prices to rise dramatically.

Farmers enter into ‘futures contracts’ that allow them to sell their future crops at a guaranteed price; banks buy and sell these contracts in the hopes of making huge profits (which they do); and speculators bet on rising prices, which cause prices to actually rise, since food buyers and sellers take their pricing cues from the futures market. It’s a little confusing, as the business of making money in the highly abstract world of high finance usually is. However, the effects are clear and they are devastating.

Is there anything we can do? Aside from express our opinion about these practices in our political forums, we at HOPE International Development Agency feel that investing into the ability of the poor to grow their own food sustainably is always a smart measure. In this climate of oppressively expensive basic commodities, it seems local food security has never been more important.

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