The investment in the food market has become a new form of speculation, producing a high increase in food prices.

The year 2010 was one of the best crops ever. In terms of supply, this should have meant a reduction in prices as the market dictates the rules. But the opposite happened, and increasing prices soared by 25%. After the sub prime mortgages that led to the global financial crisis, Wall Street has decided to go for investing in food, which is directly related to increased poverty in the world.


Futures markets

This type of speculation is based on the so-called futures markets or derivatives, that include bonds, mortgages, currency, etc. In the case of raw materials are called commodities, And includes both agricultural and energy products and metals.If a large investor decide to invest in one of these products is committed to sell at a predetermined future, for which attempt to obtain benefits. The hoarding of wheat, corn or other grains is a common practice to lower the existing supply and cause prices to rise.

Large investment funds such as Goldman Sachs and Barclays are making a profit estimated at hundreds of millions of euros. About 60% of the land of grain crops in the world and belongs to these groups. But not only them, but banks, insurance companies and companies also decide to try to make money with these assets.

Voices of alarm

FAO (Food and Agriculture Organization) is warning repeatedly of the consequences this has on increasing poverty in the world. In his report The State of Food Insecurity in the World 2011 explains how the volatility of food prices hurts small farmers and poor families who can not afford adequate food. FAO also provides that food prices remain elevated for years to come. In part this is due to research carried out in search of bio fuels obtained from foods such as corn, sunflower oil or sugar cane.

However, the same organization is not too clear what measures would be adequate to control speculation. Elcontrol alienate prices speculators, but also subtract liquidity to the market for their protection (in theory to serve markets that future). Therefore, to those who bet on a common fund for the control of food, FAO is limited to advocate for transparency and behavioral research “suspects.”

Alternatives to the current system

Other organizations that are committed to radical change. This is the case of the meeting in the European Forum for Food Sovereignty “Nyeleni Europe 2011″More than 120 in total. Among other findings, the most important is the failure of the current industrial system and controlled by large companies concerned about profits and not a fair distribution of food. This causes more than 1,000 million people go hungry in the world, while there is surplus food.

For this reason, the forum calls for a decentralization of the system to change the methods of distribution and food prices. Want to bet on a more local agriculture and livestock and sustainable. This would be possible to apply effective policies, such as regulating what producers receive. Also bet that FAO focus the management of the food market, replacing the World Trade Organization.

Some political parties also share the essence of these ideas. This is the case of United Left, which includes in its political agenda the request for an international tribunal to try financial crimes. Its aim would be to judge the speculators who artificially manipulate the stock prices.

Speculation on food is not an easy problem to tackle. More and more arable land owned by large investment funds and companies that directly affect the real price of food with questionable practices. At the same time,millions of people are becoming more difficult to access, leading to humanitarian crises such as famine in Somalia. However, these abuses are beginning to have an answer.