Drought-decimated wheat, Black Earth belt
|Drought-decimated wheat, Black Earth
Deregulation has gone too far, David Hallam,
principal trade and markets officer of the UN Food and
Agriculture Organization (FAO), told Emerging Markets
Position limits have been raised to the point where they
I would not go so far as to say that regulation is
needed, but that the issue needs to be looked at. We need to
examine how futures markets contribute or not to
The FAOs Committee on Commodity Problems last month
put unexpected price hikes and volatility on the
CFS agenda, pinpointing them as key threats to food security.
Some academic experts argue that underlying issues of excessive
food dependency and land-grabbing also need to be
The summer food price spikes were caused by local production
shortfalls, most notably in Russia, national policy responses
such as export bans, and speculative behaviour on markets,
Hallam said. They did not properly reflect market
Over the summer, people were asking whether we are
embarking on another crisis such as in 2007. The answer is no.
The fundamentals are stronger.
The FAO projects that global cereal production in 2010 will
be 1% lower than last year and still the third-largest on
Maximo Torrero, director (markets, trade and institutions)
at the International Food Policy Research Institution in
Washington, said that excessively volatile markets meant that
any supply choke can create a significant
Futures market regulations should be tightened, he argued.
Stricter speculative limits should be imposed; existing
position limit waivers for index traders should be phased out;
additional restrictions should be imposed on index traders,
their activity in other agricultural markets investigated and
data collection on index trading strengthened.
An international system for reporting the level of food
commodity reserves is needed, and an intelligence
unit that monitors reserves and price
Torero argued that a physical, public, globally
managed grain reserve should be developed. Determining
optimum stock is a politically loaded issue that
would have to be resolved, and methods found for sharing costs,
he pointed out.
Tony Weis, author of The Global Food Economy, argued that
both the 2007-08 food crisis and this summers price hikes
had exposed a fundamental flaw in the idea that food security
could be left to international markets.
Greater attention needs to be paid to the idea of food
sovereignty championed by Via Campesina, the international
peasant movement, he told Emerging Markets.
Food shortages in the Sahel, and in Pakistan, this year
showed that more nationally-oriented agricultural
policies have a role to play although climate change
will be a significant complicating factor.
Weis, assistant professor at the University of Western
Ontario, added that a big threat is posed to the poorest
peoples food security by a global surge of
land-grabbing, particularly related to rising bio-fuels