Gambling with the World's Food

As a dutiful member of the World Development Movement I filled in and sent to my MP their postcard to protest against the speculation which was forcing up world food prices beyond the reach of many in the Third World. The following is in response to Mark Oban's reply. Quotations are from his letter.

3^rd October 2010

Mark Oban MP.,

HM Treasury,

House of Commons,

London,

SW1A OAA.

cc Mike Wood MP, cc WDM

Speculation in Food

My MP Mike Wood has very kindly forwarded to me a copy of your response to him (ref JMA720, dated 4^th October, 2010) with regard to my concern regarding speculation in food.

In my view your belief that “speculation in (food) markets plays an important part in providing liquidity (the volume of trade in a market ) and that this liquidly helps these markets to function effectively” is both misguided and naïve.

As I understand it “liquidity” is more or less synonymous with “ready money.” In this sense wholesalers and similar intermediaries do help food markets function by having sufficient ready money to buy an entire crop from a producer and then sell the product on to retailers as it is required. The further away the process of buying and selling is from the grower and consumer the less useful is the exchange. The purchase of food “futures” and derivatives, simply in the hope of a financial killing, has little to do with making markets in vital commodities “function effectively.”

The World Development Movement is holding a conference on this topic in Conway Hall on the 26^th October. I sincerely hope you will see it is part of your duty as the “minister responsible for this area” to attend and hear the facts from the point of view of those harmed by the process rather than those who profit from it. To further prepare yourself you will probably find it useful to read:

http://www.guardian.co.uk/commentisfree/2010/jul/22/food-speculation-starve-world-poorest

We in the rich world are rightly concerned by the harm that financial speculation by the banks has done to our economy, our level of employment, our GDP and our perceived ability to continue providing effective public services. Although our concern is great and occupying most of the attention of our political classes and our media this crisis has not, so far as I know, yet cost many lives. Since speculation in food will, it should occupy a far higher level of concern and we should put an end to it as a matter of urgency.

A Tobin-type tax on currency speculation has been proposed for many years. I suggest the government give urgent attention to the international imposition of a similar type of tax to curb all speculation.

Yours sincerely,

Peter Wrigley