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Food prices are hiked by by commodity gambling

06 December 2013

REUTERS

Prepare to shed them: a labourer sorts onions at a wholesale vegetable market in the northern Indian city of Chandigarth.The Indian  government's attempts to calm soaring onion prices, in its struggle to control inflation, have not been helped by heavy rains that have damaged the crop and delayed harvesting

Prepare to shed them: a labourer sorts onions at a wholesale vegetable market in the northern Indian city of Chandigarth.The Indian  government...

FOOD prices are being pushed up by speculative investment in global commodity prices, research released this week by the World Development Movement (WDM) suggests.

The study Dangerous Futures: How our pensions fuel hunger calculates that UK pension funds totalling £1.5 billion are being "gambled" on food prices - equivalent to about £180 for the average UK pension-saver.

The policy and campaigns officer for WDM, Christine Haigh, said that it was "virtually impossible" to calculate the full effect of commodity trading on food pricing, because, in the UK, a large proportion of the price included packaging, transportation, supermarket lighting and heating, whereas in the developing world prices were more volatile.

"Our research shows how ordinary people's pensions are being used without their knowledge to bet on food prices, contributing to a global hunger crisis," Ms Haigh said. "Legislation to prevent food speculation driving up food prices is long overdue, but the UK Government continues to block it."

European Union officials resumed negotiations on the EU's Markets in Financial Instruments Directive this week. The WDM are calling for a limit on the level of specul-

ative trading by any institution, similar to a law already implemented by the United States.

In a statement, a spokeswoman for the Church of England confirmed that the Church Commissioners and Pensions Fund "invest in a range of hedge funds, some of which trade in food commodity futures.

"All of these investments have been considered by trustees of these boards against ethical guidance from the Ethical Investment Advisory Group (EIAG)."

The EIAG welcomed the WDM's "efforts to raise awareness of the potential negative impacts of some investment strategies on food prices", and said that it met WDM officers when it prepared its own recommendations in this area, which were adopted by the C of E's national investment bodies in January 2011.

"The EIAG guidance bars investment in strategies which have a strong likelihood individually or collectively of contributing significantly to the pricing volatility of basic human necessities such as food or oil or to have an impact on the fortunes of individual economies," a C of E statement said. But it defended the principle of commodity trading: it "can help . . . to correct mispricings and [by] providing market liquidity".

www.wdm.org.uk/food-speculation/dangerous-futures-how-our-pensions-fuel-hunger

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