Guest blogger Mara Budgen compares the battle to regulate food speculation with European action to protect bees by banning neonicotinoid pesticides.
After two inconclusive votes in the European Parliament, the European Commission stepped in to approve a two-year ban (opposed by the UK) on the use of neonicotinoid pesticides. A European Food Safety Authority (EFSA) report, as well as many independent studies, urged such action on account of mounting scientific evidence that the pesticides pose a significant danger to bee populations.
Bees, as well as other pollinators, are an essential part of global food production, as they’re responsible for three quarters of all crop pollination. In fact, the decline in populations of such insects is a matter of concern for the entire agricultural sector (and, consequently, also for us).
Who knew that such a small gesture has a huge impact on the food we eat? Photo: Synapse
The EU’s decision to impose a moratorium on the use of neonicotinoids is an important move towards regulating the increasingly chaotic agricultural industry, and against the lobbying might of big business. In fact, corporate tactics such as threats by Syngenta, which makes the neonicotinoid thiamethoxam, to sue European Union officials, did not deter the EU in ratifying the precautionary measure to protect bee populations.
Such a case reminds us of another issue that concerns the agricultural industry: that of food speculation. Whilst neonicotinoids threaten crop production, excessive food speculation in the financial market exacerbates the scale and volatility of food prices. Having seen all-time peaks in 2007-8 and 2010-11, the high prices of basic staples such as grain, maize and soy have damaged the basic ability of millions of households in developing countries to feed themselves. At the same time, price volatility has made farming and budget planning increasingly unpredictable.
WDM has been campaigning since 2010 for the EU to employ regulation that will curb the damaging effects of speculation in futures markets (contracts that trade agricultural goods at a future date).
So far, the process of legally disciplining the markets in the EU has seen its expression in the Markets in Financial Instruments Directive (MiFID). The effort to negotiate the MiFID and make it a strong law that controls food speculation has had mixed results so far. In September 2012, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) passed a version of the text that half-heartedly limited individual traders. The following month, the European Parliament’s vote on the MiFID failed to tackle loopholes.
The hope is that, in the current and future MiFID deliberations, which will see it being voted by the European Parliament around the end of this year, the EU will take a stance in favour of robust and exhaustive regulation. We should take heed of the fact that a similar theatre is currently being played out across the Atlantic. President Obama signed the Dodd-Frank Act, which includes regulation of agricultural speculation, into federal law in 2010.
But the tireless lobbying of Wall Street has complicated efforts to implement the law. Thus, it is imperative that the heat be kept high on the EU, as the following months will be decisive in determining the success of the MiFID, and its strength vis-à-vis speculators such as Barclays and Deutsche Bank.
In the case of the ban on bee-damaging pesticides, the EU has upheld its own legal requirement to apply the precautionary principle. Even without absolute scientific certainty, evidence has sufficed to urge legislators to halt degradation by taking preemptive action. Similarly, even though proving that financial speculation drives up food prices and makes them volatile is difficult (for example, because many transactions occur through secret OTC deals), the evidence strongly points to a role for food speculation.
The sad fact is that we haven’t been able to prevent devastating economic and humanitarian degradation in the past few years, by letting global food crises like that of 2007-08 happen. But demanding that the EU regulate agricultural speculation by limiting traders’ holdings and sanctioning transparency means tackling one of the root causes of world hunger and poverty – as well as asking the institution to abide by its own principles.