Profiting off hunger: Wall Street makes big gains over food price spikes
Powerful firms like Goldman Sachs have made hundreds of millions of dollars in food future trades. Critics accuse them of profiting off starvation and market manipulation, while traders claim their profits are due to increasing consumption in China.
World food prices tracked by the UN Food and Agriculture Organization (FAO) have more than doubled in the past 10 years. The FAO’s Food Price Index, which baskets prices for five prime food commodities, peaked in 2008 and 2011, each time rising more than 50 percent from the previous year. The latest price spike was one of the key factors that triggered the series of uprisings in the Arab world resulting in the fall of several governments.
The year 2013 may see another price hike, following the worst draught in the US in 50 years and poor harvests in Russia and Ukraine. The UN has warned that the world may be approaching a major hunger crisis.
At the same time, the industry is bringing millions in profits to those who rushed to invest in food. Goldman Sachs made an estimated $400 million in 2012 from investing its clients’ money in a range of “soft commodities,” from wheat and maize to coffee and sugar, according to an analysis by the World Development Movement (WDM).
“While nearly a billion people go hungry, Goldman Sachs bankers are feeding their own bonuses by betting on the price of food. Financial speculation is fueling food price spikes and Goldman Sachs is the No, 1 culprit,” Christine Haigh of the WDM told the British newspaper The Independent.
The London-based organization – along with similar NGOs like Foodwatch, Oxfam, or Weed (World Economy, Ecology and Development) – have for years blamed financiers for inflating food prices, or for at least making the market dangerously volatile.
They argue that the amount of speculative money is too big in proportion to the physical inventories of the commodities. Deregulation in the late 1990s allowed financial institutions to bet on food prices, resulting in some $200 billion being poured into the market.
For example, hedge fund Armajaro virtually single-handedly sent the global price of cocoa to a 33-year high in July 2010 by buying around 15 percent of global cocoa stocks.
The overall effect of speculation on food prices is an issue of dispute. Influential analysts, such as US economist Paul Krugman, have argued that speculation is a marginal factor compared to rising demand from developing countries, as well as the expanding production of corn and maize for biofuels at the expense of foodstuffs.
Diagram from “The Food Crisis: Predictive validation of a quantitative model of food prics including speculators and ethanol conversion” By Marco Lagi,
A study by the New England Complex Systems Institute last year showed that the Food Price Index should only change if ethanol production had an impact. The study estimated that a 2008 ethanol price hike was largely due to speculation, while a 2011 spike was significantly fueled by investors.
Many financiers dismiss the accusations, and say they will continue bidding against food prices. On Saturday, Deutsche Bank Co-Chief Executive Juergen Fitsche told the Global Forum for Food and Agriculture that Germany’s biggest lender “will continue to offer financial instruments linked to agricultural products.”
“Agricultural futures markets bring numerous advantages to farmers and the food industry,” he said.
Others seem to be yielding to pressure. Last year, several German banks, including the second-largest Commerzbank, ceased to speculate on basic food prices for moral reasons.
- How The Fed’s Quantitative Easing Increases World Hunger (triplepundit.com)
- Goldman bankers get rich betting on food prices as millions starve (independent.co.uk)
- UN blames food price rises on trading in agricultural commodities (guardian.co.uk)
No comments yet.
or go to
From the Archives
Where Penn Intelligence and Central Intelligence Collide
By Jimmy Tobias | The Daily Pennsylvanian | December 3, 2009
… Penn has long been a stomping ground of the military and the U.S. intelligence establishment. There is one major difference, however, between the past and the present. Back then, when students learned about these issues, they took action. For instance, after the secret germ warfare research was revealed a series of large student protests shook the campus, including a six-day occupation of College Hall by 1,000 students and community members. Student action was supported by the faculty senate, which threatened to chastise Penn President Gaylord Harnwell if he did not cancel the secret germ warfare contracts. These actions worked: The contracts were canceled. Penn no longer engages in secret research.
These were the days when young people had their say. It was the age of the student power movement… Read full article
Aletho News Exclusive Content
This article will examine some of the connections between the US and UK National Security apparatus and the appearance of the anthropogenic global warming (AGW) theory beginning after the accident at Three Mile Island. … continue
Also by Aletho News:
March 8, 2011
February 25, 2010
February 7, 2010
December 26, 2009
December 4, 2009
May 9, 2009
- Remembering Muhammad al-Durrah and the stolen dreams of Palestine September 30, 2016
- Reduced to a number – robbing Palestinians of their humanity September 26, 2016
- Hundreds inspired at the launching of the Palestinian Youth Forum September 25, 2016
- US Peace Council Representatives condemn US Syrian narrative as a lie September 30, 2016
- “The 2001 Anthrax Deception” September 30, 2016
- He Who Hesitates Is Lost And Russia Hesitated September 29, 2016
- MH17 Inquiry: “To Whose Benefit?” September 28, 2016
- The Politics of Bombing: Wholesale, Retail and Improvised September 28, 2016
Tags9/11 Afghanistan Africa AIPAC al-Qaeda Argentina BBC Benjamin Netanyahu Brazil Canada Central Intelligence Agency China CIA Colombia Cuba Da’esh Donald Trump Egypt EU European Union FBI Federal Bureau of Investigation France Gaza Germany Hamas Hebron Hezbollah Hillary Clinton Honduras Human rights India International Atomic Energy Agency International Solidarity Movement Iran Iraq Iraq War ISIL ISIS Israel Israeli settlement Japan Jerusalem John Kerry Latin America Lebanon Libya Mexico Middle East Military National Security Agency NATO New York Times NSA Obama Pakistan Palestine Police Press TV Qatar Russia Sanctions against Iran Saudi Arabia Syria Turkey UK Ukraine United Nations United States USA Venezuela Washington Post West Bank Yemen Zionism
Brian Harry, Austral… on ‘If Germany is Really In… Brian Harry, Austral… on The latest reminder of why you… traducteur on 1948 Palestinian party subject… NobodysaysBOO on CNN fake Syria news buste… NobodysaysBOO on America Deserves Better, More… NATi on America Deserves Better, More… Brian Harry, Austral… on Peres: The Nobel Peace Laureat… roberthstiver on America Deserves Better, More… roberthstiver on Bahraini FM’s praise for… aletho on Russia says US inviting terror… Parakletos on Russia says US inviting terror… aletho on Afghans Learned the Art of Tor… masteradrian on Afghans Learned the Art of Tor… masteradrian on International investigators al… Brian Harry, Austral… on Israeli Nuke-Washing on the Wo…
Visits Since December 2009
- 2,708,673 hits
Contact:atheonews (at) gmail.com
- Colombia ex-rebels apologize for 2002 massacre September 30, 2016
- 1948 Palestinian party subject to campaign of arrests, political repression September 30, 2016
- Shimon Peres – Obituary of a Peace Politician September 30, 2016
- Iran may reverse steps if JCPOA violated: Nuclear chief September 30, 2016
- Afghanistan: UN mission condemns killing of at least 15 civilians in airstrike September 30, 2016
- Turkey might continue Syria incursion for years September 30, 2016
- Pictures Left Incomplete: MH17 and the Joint Investigation Team September 30, 2016
- ‘If Germany is Really Independent, It Must Close Ramstein’ September 30, 2016
- Solid facts? 5 flaws that raise doubt over int’l MH17 criminal probe September 30, 2016
- The Official and Implausible MH-17 Scenario September 30, 2016
- Former Palestinian minister of detainees’ affairs sentenced to Israeli prison September 29, 2016
- Peres: The Nobel Peace Laureate who was far from peaceful September 29, 2016
- Turkey says ready for work with Iran, Russia on Syria September 29, 2016
- America Deserves Better, More Importantly, the World Deserves Better September 29, 2016
- Bahraini FM’s praise for Peres sparks outcry September 29, 2016
- Kabul heading for night of the long knives September 29, 2016
- Russia says US inviting terrorists to attack its cities September 29, 2016
- Is “the Holocaust” Eurocentric? September 29, 2016
Looking for something?
Categories"Hope and Change" Aletho News Book Review Civil Liberties Corruption Deception Economics Environmentalism Ethnic Cleansing, Racism, Zionism False Flag Terrorism Full Spectrum Dominance Illegal Occupation Islamophobia Mainstream Media, Warmongering Militarism Nuclear Power Science and Pseudo-Science Solidarity and Activism Subjugation - Torture Supremacism, Social Darwinism Timeless or most popular Video War Crimes Wars for Israel
This site is provided as a research and reference tool. Although we make every reasonable effort to ensure that the information and data provided at this site are useful, accurate, and current, we cannot guarantee that the information and data provided here will be error-free. By using this site, you assume all responsibility for and risk arising from your use of and reliance upon the contents of this site.
This site and the information available through it do not, and are not intended to constitute legal advice. Should you require legal advice, you should consult your own attorney.
Nothing within this site or linked to by this site constitutes investment advice or medical advice.
Materials accessible from or added to this site by third parties, such as comments posted, are strictly the responsibility of the third party who added such materials or made them accessible and we neither endorse nor undertake to control, monitor, edit or assume responsibility for any such third-party material.
The posting of stories, commentaries, reports, documents and links (embedded or otherwise) on this site does not in any way, shape or form, implied or otherwise, necessarily express or suggest endorsement or support of any of such posted material or parts therein.
The word "alleged" is deemed to occur before the word "fraud." Since the rule of law still applies. To peasants, at least.
This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more info go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
This is information for anyone that wishes to challenge our “fair use” of copyrighted material.
If you are a legal copyright holder or a designated agent for such and you believe that content residing on or accessible through our website infringes a copyright and falls outside the boundaries of “Fair Use”, please send a notice of infringement by contacting firstname.lastname@example.org.
We will respond and take necessary action immediately.
If notice is given of an alleged copyright violation we will act expeditiously to remove or disable access to the material(s) in question.
All 3rd party material posted on this website is copyright the respective owners / authors. Aletho News makes no claim of copyright on such material.
Site infoAletho News
Blog at WordPress.com.