By: Dr. Mike Campbell
Finance ministers from the world’s 20 most advanced economies (the G20) are shortly to meet for a two-day summit in the French capital, Paris. In addition to the perennial questions of trade imbalances and artificial control of currency values as a tool to help exports, this gathering will be urged to tackle the very real problem of food price inflation and hikes in other essential items such as fuel.
The IMF has warned that these increases are widening trade imbalances and another international body, the World Bank, has suggested that food prices had reached “dangerous levels”, and had already forced 44 million more people into poverty since June of last year.
Food for Thought
Food, like any other commodity, is traded on international markets. Just as with oil, gold or other precious metals, there is a thriving “futures” market for food which is based on agreeing a price now for purchasing a given foodstuff at a future date. Critics argue that this price speculation is pushing the price of food artificially higher and that it is clearly detrimental to the poorest. The G20 is under pressure to discuss how commodity speculators can be controlled to ensure that food price spikes and volatility are minimised.
Food price inflation to an extent where it can drive large numbers into poverty and hunger is a morally and politically explosive issue. In 2008, rapidly rising food prices triggered rioting in a number of countries. China is aware of the fact that its economic strength has not filtered through to ordinary people and is concerned that food price inflation could sow the seeds of civil unrest.
Whereas speculation on oil or precious metal futures may percolate through to higher prices, anything that puts the basic necessities for human existence out of the reach of the poor risks very severe consequences both at the human and societal level.