The banks and our soaring food costs

all this moving money around, does make me wonder... money is an entirely human construct, we believe, therefore it exists...

what would happen if say China refused to accept American Dollars or the democracised Middle-East started to deal only with India and Russia?

we are no longer in the driving seat of our economy and the government is taking part in trying to shield us from this fact (to maintain control)... we have rested on our laurels for so long, we don't know the value of things anymore.

as seen in the Middle-East oppression and deception can only last for so long.

petrol, clean water and food are limited resources... what are we going to do about it?

Fact is we eat too much food in the West, especially meat. Now China is eating more as it grows richer.

Even if we don't use land to grow fuel something as simple as a frozen chip uses vast amounts of energy (and water) to grow and to manufacture.

Well, I suppose it's possible that there's a cunning plan to increase biofuel use to increase food security concerns in order to encourage Europe to grow transgenic crops, but I come into contact with a lot of people working in this industry, and I'm rather sceptical about it.

There are definite very serious concerns about food security at the moment, which is why a lot of funding is going into better forms of biofuels.

Environmentalists have major concerns about food security, as it looks like more land across the world may have to be put over to intensive food production, which is not particularly ecologically diverse. The talks I'm hearing are about how to balance increased food production, ecological diversity, amenity value of countryside, and fuel.

Yes, I think that speculation can be controlled. One way is to tax it at a high rate.

I think we are being lied to about the fuel/food conflict. I think the green, global warming policy is to deliberately use our food for fuel so that prices rise and so that we get a food shortage. This may even lead to mass starvation, as Monbiot has warned. Then the knight on a white horse will arrive; the GM food industry, saying that GM is our only salvation. Then we will have no choice but to accept it. All of the public's fears for our health will be swept aside by the "save the planet" brigade, who will tell us that we have "50 days to save the world from starvation".

That's interesting - thanks. Would you say that restricting speculation is a good thing? And is it actually possible? I would imagine that people spend a lot of time thinking up increasingly clever ways to make money and get around the regs.

I think Chil's points about the rising prices of UK veg are very worthwhile - the thing that's struck me is that in the UK agriculture world, people have been talking about the impacts of rising fuel costs, rising fertiliser costs etc, for several months, but it appears to be news to most people now.

Coming back to the food / fuel conflict again - I always think that the 20th century was an anomaly in not needing to choose between food for humans and 'fuel' in the form of food for horses. There are a lot of UK research teams looking to make sure that we don't go back to the food / fuel conflict, but from what I know of the research so far, I think we're going to run into problems with concerns around GM technology in the crops.

Increasing margins on commodity futures and forcing OTC forward contracts onto futures exchanges would curtail speculation to some degree.

Higher margins are beginning to happen on some futures exchanges already along with putting absolute limits on how many open speculative contracts a single entity may have in a given futures contract.

Futures contracts are time dependent. Lots of derivatives contracts are over the counter which means that they are between two parties without going through an official regulated exchange. They are off balance sheet, and the authorities don't know how many have been entered into or for what value. No one knows the overall liability. These type of derivative contracts led to the financial crisis, as regulators couldn't accurately determine the solvency of financial firms. If these contracts are cleared through a regulated exchange, then they become visible, and regulators are more able to quantify the risk.

Good news that the government is looking into alternatives to just using wheat for fuel rather than for food.

Are futures contracts one of these things that are extremely time dependent? So would the need for them to be cleared be a way of making them not be financially worthwhile?

Should say that the UK government, among others, funds a lot of the next-generation biofuel research, so they seem to be taking the food-fuel conflict seriously, as do certain large oil companies.

This is what the World Development Movement says should be done. Where there's a will there's a way.

"All futures contracts to be cleared through regulated exchanges. Most contracts are currently done in private, which means it is impossible to know how much of what is being traded. Contracts need to be brought out into the open.
Strict limits to be set on the amount that bankers can bet on food prices."

How would speculation on food be prevented? Is that actually possible?

BTW, there's a lot of research going on into alternative biofuels which will radically cut the food / fuel conflict. For example, the idea with wheat is to be able to use the straw for the biofuels, while the heads go for food.

They don't regulate banks adequately and bring the world economy to the brink of disaster, but they are really serious about saving the planet, they really mean it. You can trust them.

Get ready for the "carers" to launch lots of appeals to help the starving. But don't expect them to change their policies, they've got more important concerns, they're "saving the planet".

'it is cynical to burn wheat in our cars'

do you think they will change? I don't.
do you think it's just the market? I don't.
do you think they care? I don't.

Very good article. But as ever, he is another believer in global warming, and omits the obvious truth that diverting so much wheat prodcution into biofuels instead of food for the population, is also having an ompact on food prices. It's not just the nasty bankers and speculators, it's the lovely, caring green governmental policies, and the speculators ride on the back of their policies.

'Kenneth Richter, head of biofuels at Friends of the Earth, said last week's riots showed that food should not be used for fuel. "In a time of rising food prices and global shortages, it is cynical to burn wheat in our cars," he said.'

www.guardian.co.uk/environment/2010/sep/05/wheat-price-fears-over-biofuels

Another interesting article on the same subject.

Like they say, buy land . . . they don't make it any more

I still think that you're making a skewed argument and it is misleading. Food prices are rising but the commodity trading element of the cost increase is not the biggest reason in the majority of products. I sell an imported product to UK supermarkets and will be trying to make more money this year not because our product is traded on the commodity markets but because our costs of production have risen.

My cauliflower example was actually in the news the other day, along with purple sprouting broccoli, of all things. The severe winter has severely hit production and less volume = higher prices.

Bananas... the biggest volume fruit purchased, started last year at around 89-99p/kilo... dropped to around 59p/kilo last summer (to the horror of producers) and are now retailing at 77p/kilo. There is far more to the cost of a typical UK shopping basket than maize, rice and cocoa...

Thanks for the links, LadyBlablah. Steep learning curve for me here.

Yes, you are right. It's good that you brought the issue up.

Who will change things?

No we don't. But will anything change?

Yes, it's not just banks, there are all sorts of players. What it needs is regulation, something that Labour failed to do adequately in the financial markets.

Instead of worrying about the problem, they were stoking price rises even more with their green policy of using crops for biofuel instead of feeding people. They were warned that it could lead to mass starvation by people such as Monbiot and many others. But it didn't have much effect on them. They preferred to continue their green global warming policies at their Kyoto summits. We had only '50 days to save the planet' they told us.