The World Development Movement, a UK-based non-governmental organisation (NGO), has accused Barclays Bank of profiting from world hunger by betting on food crises and helping to push food prices up.
“The real problem is not that food is becoming more expensive, it’s that money is losing value. Central banks all around the world are simply printing too much money and so you need more money to buy food. It’s not the weather, it’s not speculation, it’s the inflation that central banks around the world are creating.“
– Peter Schiff, the CEO of Euro Pacific Capital
The NGO said Barclays had reportedly made more than $800m over the past two years from speculating on food markets and that investors were using the food market as a “playground”.
It said this has contributed to hunger and poverty not only for millions in poor countries, but also in developed nations.
The allegations come on the back of a World Bank global hunger warning. According to a report by the bank released this week, global food prices have hit record highs. In July alone, its global food index increased by 10 per cent.
And the price of specific commodities has risen even faster. Corn and soybeans have reached record prices in recent days.
The World Bank lays the blame for price rises largely on the weather: drought in the US has been exacerbated by a dry summer in Russia, Ukraine and Kazakhstan.
“There are other issues that are driving prices higher: There are many of us – seven billion … we are eating much more .… You have to be completely backward not to see that we have toasted this planet.“
– Aly Khan Satchu, a financial analyst
Critics say there is also a connection between prices and bank profits. But whatever the ultimate cause, all parties agree that the burden of higher prices will be borne mostly by the poor.
So, what is actually behind the rising food prices and what can the international community do about it?
To answer these questions, Inside Story, with presenter Teymoor Nabili is joined by guests: Christine Haigh, a policy and campaigns officer for the Food Speculation Programme at the World Development Movement; Peter Schiff, the CEO of Euro Pacific Capital; and Aly Khan Satchu, a financial analyst and CEO of Rich Investments.
“When food prices rise sharply, families cope by pulling their kids out of school and eating cheaper, less nutritious food, which can have catastrophic life-long effects on the social, physical and mental wellbeing of millions of young people.”
Jim Yong Kim, the World Bank Group president
FACTS ABOUT RISING FOOD PRICES:
- The World Bank says global food prices rose by 10 per cent from June to July
- According to the World Bank corn and wheat prices have gone up by 25 per cent
- Food prices are now one per cent higher than they were at their previous peak in February 2011
- The US heat wave and drought in eastern Europe has been blamed for the rising costs
- The last 12 months in the US were the warmest on record
- The US provides up to 60 per cent of the world’s food aid
- Seventy per cent of the US’ corn growing region is in drought
- High corn prices also affect meat and livestock prices
- The World Bank says that countries that import grains are particularly vulnerable
- Haiti, Sudan, Somalia and Chad are among the countries most at risk of food shortage
- A UN official says the US should suspend its bio-fuel programme
- The US has diverted about 40 million tonnes of maize to produce ethanol