CMI REPORT
FOOD SECURITY AND SOCIAL CONFLICT
R 2014: 1
On the eve of the crisis, futures prices of these commodities were driving up spot prices – the price quoted for immediate payment of a commodity – creating a spiral of price increases as long as speculators continued to gamble on higher prices. Not surprisingly, this generated massive volatility, which made poor buyers of food increasingly vulnerable, especially in situations where staples like rice, wheat and maize are being targeted by traders who buy and sell ‘risk’ for profit. While the consensus opinion among economists and institutions like FAO and the OECD seem to be that there is no clear proof that futures speculation causes higher or more volatile prices, others see the need for international commodity markets for agricultural produce to be isolated from the harmful influence of financial markets. The policy autonomy of developing countries when it comes to food security is also an issue. This can be achieved by exercising greater policy discretion regarding the protection of their food markets and more control of strategic grain reserves, although we may see negative effects such 38 as those following the export bans by Asian countries in the wake of the food crisis.
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Oya, Carlos: Malfunctioning markets: Local and global food distribution. The Broker Online. Issue 23, December 2010/January 2011. 13