How greed begets hunger

[Judi Lynn]

How greed begets hunger
Crop shortages alone are not behind global food crises. Speculators have been pushing prices up
Afua Hirsch guardian.co.uk,
Friday 13 August 2010 20.00 BST

The heatwave, forest fires and drought in Russia and central Asia may be unprecedented in recent times. But there is something familiar about the ensuing food crisis, as the price of wheat remains 50% higher than just six weeks ago.

It is just two years since the last such crisis. A spike in the price of agricultural commodities in 2007-08 caused panic from Italy to Haiti, drawing sharp attention to a deeper malfunctioning in the world's food markets.

This malfunctioning is creating disasters of an unfamiliar nature in the poorest countries. Niger, for example, a fragile west African nation, is experiencing its worst food crisis in years, but is not actually short of food. Mounds of cereals are piled high on market stalls – they are simply too expensive to afford.

The obvious explanation for the high price of food in Niger is a crisis of production. Like the wheat-producing countries currently at the centre of world attention, a harvest was destroyed by extreme weather. But the rise in price has been accompanied by a rise in another phenomenon – speculation in commodity markets. Derivatives packaging products such as wheat and maize have created massive profits for speculators with no interest whatsoever in the underlying physical commodities.

The number of derivative contracts in commodities increased by more than 500% between 2002 and 2008, a process that accelerated at the end of the last decade, when the collapsing US mortgage market and global recession were followed by a huge spike in food prices. There is clearly a causative link between these two phenomena. But clear battlelines have emerged in the argument over which way the arrow points.

More:
http://www.guardian.co.uk/commentisfree/2010/aug/13/how-greed-begets-hunger

[DJ13]

1. What kind of person would unrec this?

[Catherina]

4. One of those scornful new whatevers who puts profit over people. n/t

[R. P. McMurphy]

2. kick n/t

[Warpy]

3. It's 2008 all over again

and the first sign of The Big Dump was the crash of commodities prices as hedge funds all pulled out after months of their creation of multiple bubble markets caused rice riots in Asia and suffering here to to sky high gasoline prices.

There are only the barest signs that some commodities are softening right now, but the 2008 dump didn't start until about the third week of August.