Trading in food commodities has hit new levels bringing with it, new levels of hunger.
The gains of international trading that were focused on metals, minerals and oil is now on food, as never before. When Armajaro, a commodity fund based in London recently made headlines when it bought £650 million cocoa futures, it accounted for about 7% of all cocoa grown globally this year.
Cocoa prices reacted by trading at a 30 year high although farmers who produced them in countries like Ghana are not benefited from such price hikes. Farmers are obviously unhappy at the increasing disparity between producing and trading prices. Nongovernmental organizations and public interests groups are accusing investors of using food as commodity derivatives, which destabilize and raise prices around the world. Philosophically, trading in own food hinged with its speculation and monetary gains, is a disturbing aspect of humanity.
When food drives hunger for money
The World Development Movement (WDM) an advocacy group for anti poverty had in its report, ‘The Hunger Lottery’ provided extensive evidence of the role of food commodity derivatives, suggesting that it drives up food prices throughout the world.
It says that the banks and the hedge funds that once caused the sub-prime mortgage crises and the global financial meltdown are also causing food prices to increase exorbitantly.
The WDM estimates Goldman Sachs to have made $1 billion in profits by speculating in food, during 2009. This, the report says has caused food prices becoming unaffordable for low income families, particularly in countries relying in food imports. Reports like these draw more investors to food commodities, which further deteriorate the situation.
That money- this hunger
The UN Commission of Experts on Reforms had pointed out that before the start of the financial crises, inflation due to rise in financial assets prices spread to petroleum, food and other commodities.
These commodities had come under the portfolio of financial investment and were therefore subject to speculation. This opinion is readily accepted even within the financial industry.
In April 2006 Merrill Lynch estimated that commodity prices were trading at 50% higher due to speculation. The 50% higher price was in no way relevant to the supply and demand situation. An emergency meeting by 75 FAO member states, about few months back, proposed steps to reign in food price volatility by addressing the root causes. The meeting highlighted the fact that international wheat prices jumped 60 to 80% since July 2010 with maize rising 40%.
A new low in human civilization?
These developments have huge consequences for hunger. The people affected by hunger increased by 75% in 2007, rising by another 40 million in 2008. It is currently anticipated that there are over 925 million hungry people in the world, in 2010.
Today hunger has seeped even into developed countries. The report ‘Hunger in America 2010’ shows that hunger is spreading at an alarming rate. The comprehensive study determined that 37 million Americans including 14 million children and 3 million seniors are annually fed by the charity program, ‘Feeding America’.
Hunger not only had an effect on what people ate, but also on the way they lived. People are increasingly made to choose between paying for their utilities and rent or buying food. The number of Americans, who face the uncertainty of where their next meal would come from, is also increasing. About 11 million Californians are estimated to be fighting hunger according to an investigation by California Watch and the Annenberg School for Communication and Journalism. While millions turn to food stamps to feed themselves, not all are welcome there either, given the elusive eligibility criteria.
New and permanent threat
The issues confronting the globe are spreading to newer types and newer levels, each new day. The spread of hunger today on the face of earth, despite no natural calamities, raises fundamental questions on the effectiveness of the progress of man.
Where did we believe all our developments would take us to, when we are actually getting back to hunger. With people facing the option of either food or other necessities, mankind has perhaps hit the lowest levels of life at any point of time.
What does the future hold for these sections when they face the challenge of getting their own food?. Although countries are initiating steps or would ultimately initiate steps to address this issue, the fact that food has been seen to be an avenue for making big money, would always be a threat to live with.
Crouching stomachs unleash
There is no doubt that the prevalence of hunger today, is to stay with us. We are not ignorant of the power of hunger amongst us. The WDM has warned that price rise could cause spread of hunger leading to civil riots as seen in countries like Bangladesh, Mexico and Haiti in 2008.
After all doesn’t it make sense for one to be in prison with a certainty of some food, rather than be outside it with uncertainty?. Given its spread and the new levels it has raised, the scale of these developments could trigger chaos of unexpected levels. With crouching stomachs and hidden danger, a new era in human civilization has begun. The power of unrelenting brains has brought us here; but will unrelenting stomachs get us back?
