Food speculation - in depth

Food speculation contributes to rapid and unpredictable swings in food prices, which hit the most vulnerable hardest – threatening their right to food, and making it more difficult for farmers to ensure a stable income. Higher food prices and rising demand for agrofuels drive large scale land-grabs in developing countries, with devastating social and environmental impacts. Banks and financial institutions sit back and profit while creating instability, hunger and poverty.

Profit before people

Food speculation involves billions of Euros flooding in and out of financial products based on foodstuffs. Banks and financial investors bet on food prices, entering into high-stake gambles which can create huge profits, whilst the most vulnerable suffer. 'Futures contracts', originally created to help farmers overcome variations in crop production and sell crops at a guaranteed price at a future date, are now bought and sold for the sole purpose of money-making. After lobbying for weaker regulations, banks have even created special products and funds to help financial players make money from betting on food.

Impacts

Excessive food speculation leads to market volatility and increases in food prices. Rising food prices lead to hunger and malnutrition for poor people across the world. Poor households, forced to spend a higher proportion of their income on food, are less able to afford other essentials such as healthcare and education. People are forced into deeper poverty and debt.

Land-grabs

High food prices, combined with increasing demand for agrofuels and raw materials, lead to large-scale acquisitions of farmland in developing countries. Land grabs refer to land deals that disrespect or violate rights of local communities and land-users. These deals threaten local communities' food sovereignty, result in loss of access to natural resources, fail to deliver on employment and development, drive landlessness, and have serious environmental impacts.

Reining in speculation

Friends of the Earth Europe campaigns for strict regulation of European financial markets, and tighter corporate policies on financial services and investments in food commodity derivatives. We campaign for an end to excessive and harmful speculation, and to the environmental and social damage done by financial markets. European policy-making must put the hunger of people before the hunger of financial institutions.

We call on financial institutions to investigate, publish and reduce their involvement in food speculation and investments in land. Banks, pension funds and insurers should phase-out and refrain from speculating in financial products based on staple foods, which threatens the human right to food. European regulators should introduce caps on the number and size of bets speculators can make, in order to curb excessive speculation, as well as improve transparency by ensuring that all futures contracts are cleared through regulated and transparent exchanges.

Don't let your money feed poverty.