Commodities Market Speculation: The Risk to Food Security and Agriculture

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Commodities Market Speculation: The Risk to Food Security and Agriculture is a report by the Institute for Agricultural and Trade Policy (IATP). In it, IATP argues that deregulation of commodities market trading encouraged speculative trading that contributed to a global food crisis and volatile food prices.

IATP asserts, "Analysts continue to research why commodity prices increased so much from 2006 to July 2008. Due to high prices, the total developing country food import bill rose from about $191 billion in 2006 to $254 billion in 2007. Today, developing countries are consuming less food. About 43 percent of more than 27,000 people polled in a recent 26-nation survey said that they had cut back food consumption as a result of higher prices. The number of those undernourished and food insecure in the world has increased along with prices. Over the last year, riots broke out over food prices, lack of available and affordable food, and insufficient food aid. The United Nations Food and Agricultural Organization (FAO) estimates that in 2007, 75 million people were added to the 850 million already defined as under-nourished and food insecure."

IATP continues, "Amidst the food price crisis, speculation is a major contributor to extreme price volatility, which is skewing agriculture commodity markets to such a degree that both farmers and consumers are losing out. This paper reviews the role of speculation in the global food crisis. It explains the particular role of U.S. regulation of commodities markets within the global regime. Finally, it offers policy recommendations for how governments can better regulate markets in support of food security and employment goals."

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