Make people live off
the Land sustainably

Increasing the food sovereignty of countries in the South

Susan George, essayist and novelist

How long have people been speculating on food?

Deregulation of the food markets began with the Commodity Futures Modernization Act, a law passed in 2000 during the period of frantic deregulation in the United States. There have always been "speculators" in the food markets, ever since the opening of the big market in Chicago around 1860. But you had, on the one hand, farmers who were looking to sell their harvest - and who especially wanted to know in advance how much money they could expect to make over the course of the next growing season - and, on the other hand, processors - bakers, animal-fodder producers, etc. - who also wanted to agree on a fixed price in advance. So the “speculators” at that time were professionals who bet on how prices would change over time and who played a role in "smoothing" out the prices. Back then, the word “speculator” was not a pejorative term and many people thought that speculators played a useful role, otherwise speculation would not have endured 160 years.

But everything changed in 2000, when this new law was passed authorizing “over-the-counter” contracts: nobody knows who is buying what anymore. Contracts are not required to be recorded, and a mind-boggling variety of derivatives are now being traded. Before, there were rules in place to prevent just anyone from being able to manipulate food prices, but those rules have been removed. The hike in prices that has caused the number of people suffering from chronic hunger to increase by 100 million was the result of worried speculators.

When the subprime crisis hit in 2007, speculators got scared, pulled out of those markets, and began to invest vast sums of money in the food markets. With a volume of $13 billion in 2003/2004, these markets grew to $60 billion by 2008. In March 2008, the price of wheat jumped 31% in a single day. Only a small fraction of those buyers had the intention of having the food actually delivered to them: they were just buying the paper contracts and profiting from the rise in prices.

Since the American export price for products such as wheat, corn, soy, and to a lesser extent rice, is the de facto price for those products on markets all over the world, millions of people across the planet saw the price of their tortilla or chapati double, or even triple, overnight.

What can we do as citizens to improve the situation?

Since this is a purely financial phenomenon and one that is largely controlled by the USA (even though spectators anywhere in the world can take part!), citizens need to take part in campaigns to rally support for “putting the markets under supervision.” What people need to understand is that deregulation of these markets allows an extremely small group of people to make money and causes millions of others to go hungry. We can all protest land-grabbing by agribusinesses; we must all do what we can to help the victimized populations learn to farm organically so that they do not have to be indentured to agribusinesses. It is extremely important to fight to increase the food sovereignty* of countries in the South.

*Food sovereignty: It is the right of the populations and countries to put in place agricultural policies and price-protection policies that are best suited to their needs.

Learn more about spéculation alimentaire [food speculation]