by Marion Nestle
Feb 14 2013

Barclays agrees to stop speculating on food. Is Fred Kaufman responsible?

World Development Movement proudly announces that Barclays bank has agreed to stop speculation on food commodities.  Betting on food drives up world food prices.

Until now, Barclays has been the leading UK bank involved in speculation on food including staples like wheat, maize and soy. The bank made up to an estimated £500 million from speculating on food in 2010 and 2011.

The effects of speculation on world hunger is the reason why Fred Kaufman wrote Bet the Farm: How Food Stopped Being Food (Wiley, 2012).  As I noted in an earlier post, his book is a riveting account of how banks make money by treating food as a speculative widget, driving up prices, and adding global hunger.

Did Bet the Farm have anything to do with shaming Barclay’s into doing the right thing?

World Development Movement takes credit.  Kaufman should too.

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  • Lots of people deserve credit for encouraging this change. Just this week Oxfam France released a report criticizing banks for speculation which helped convince BNP Paribas to suspend their ag fund.
    http://www.reuters.com/article/2013/02/12/bnpparibas-agriculture-idUSL5N0BCIO820130212

  • James Norris

    I think that the best part of industrial moving is something that all of us we need to consider. Thanks for sharing this information.

  • Laura Collins

    I know a lot of people that believe food prices are going to sky rocket. I just wonder where this all came from. I know some people that have gone to the extreme of years worth of food and drilling their own well.

  • Foster Boondoggle

    Crop futures markets were created because they allow farmers to sell their crops ahead of time — possibly even before the seeds are in the ground — thereby reducing their financial risk. Farmers *invented* the financial derivatives markets, and for very good reasons.

    Maybe the commodity funds became large enough to be a tail wagging a dog, but blanket condemnation of commodity markets is unhelpful. Your “speculation” is my risk hedging strategy. Without “speculators”, there’s no one to take the other side of the farmers’ trades. More risk for farmers means that over the long run they have to charge more to stay in business, so higher average prices over the long term. It’s not a simple tale of good and evil.

  • I’m really happy to hear Barclay’s is taking steps in the right direction, and as tempted as I am to say “too little too late”… it’s not too late, it’s never too late! Well, hopefully, haha!

  • I agree with most of the comments here in that future markets of food commodities are not necessary evil. As a finance student back in my undergrad days, I learned that the future markets were created to allow the farmers to hedge their “farming bets”. Farming depends on a lot of factors and the weather is the most unpredictable and uncontrollable of all them. Futures allow farmers to protect their investments. Unfortunately, speculators will always exist in any market. Anybody care to share examples of future markets in which the speculators have been successfully kept at bay?