Focus on effective global cooperation to overcome food crisis
June 3, 2008
For stable food prices, it is essential to restrict the speculative funds and profit-seeking activities by a handful of multinational corporations.
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2008 May 28 - June 3 TOP3 [AGRICULTURE]
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An increasing number of people cannot afford to obtain enough food to survive. The profit-first mandate of capital is behind the problem.
Speculation is one tactic to increase profits. Chicago’s futures markets, which have a strong influence on world grain markets, are rife with hedge funds and funds from major financial institutions. The situation is so extraordinary that, as a source from a U.S. farmers’ organization observed, the price of raw cotton “doubled in one day.”
The need now is for the international community to band together to set effective regulations on speculative money. The U.S. Commodity Futures Trading Commission (CFTC) has opposed regulating speculative investment on the grounds that soaring commodity prices are determined by market fundamentals. The CFTC, however, announced plans on May 29 to increase the transparency of crude oil futures markets, partially including measures on grain market dealings. Mounting criticism from within and outside of the United States, including from Congress, forced the CFTC to make a move.
Major multinational corporations in agribusiness that dominate grain production, processing, and distribution are also making huge profits in conjunction with speculation. The world’s largest grain provider Cargill rapidly increased its profits in the first quarter of 2008, up 86 percent from a year earlier.
Archer Daniels Midland (ADM), the world’s largest grain processor, also increased its profits by 42 percent. In its corn sales division alone, it boosted its profit about seven times what it made in the previous year. ADM has taken the lead in producing corn-based biofuels and is hugely increasing profits due to skyrocketing prices in crude oil under the U.S. Bush Administration’s energy policy.
The current boom in using crops for biofuels, not as food, now comes under international criticism, and thus the European Union (EU) has shifted its pro-biofuel stance due to the negative critiques.
For stable food prices, it is essential to restrict the speculative funds and profit-seeking activities by a handful of multinational corporations.
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