17 February 2018

Consider: The global consequences of commodity speculation.

Have you ever felt hungry? Before you rush to answer this question, take a moment to really think about it. I am sure we can all say we have been a little peckish. Certainly, by the time dinner is ready, we experience a few rumbles in our stomach. But have you ever really experienced hunger? The kind of gnawing, deep down, gut wrenching hunger where the body is literally crying out for food? Praise God if you, like me, can heave a sigh of relief and say a resounding, “No!” to this question. Yet, an estimated 925 million people woke up this morning feeling just like that.  This is an enormous number, and somehow, in its enormity it can lose its impact. Better to think about the individual – one who is created by God, just like you and I, one who has hopes and dreams, just like you and I, one who deserves his daily bread, just like you and I. For the “rich and poor have this in common: The Lord is the Maker of them all.” (Proverbs 22:2). In our modern world, where global travel is simple and where information can be shared with anyone, anywhere, at the touch of a button, how do we still have so many individuals living in such extreme poverty? Why, after the harvest, does it seem there is not enough food to go round? We can certainly point towards extreme weather conditions in recent years as one factor contributing to the food shortages. Floods and droughts adversely affect the harvest, especially when these hit Developing countries. Conflict situations also hamper agricultural production and distribution of food in areas where war is ongoing. These are well-known, well-documented reasons for a continually growing number of people living in poverty. However, one man-made, and increasingly concerning contributing factor is that of commodity speculation, and ultimately, capitalist greed.

 Consider this with me…

Commodity markets are not a new invention. As far back as the 1800s contracts were created for agricultural products traded in the United States. These contracts simply allowed farmers to agree a guaranteed price for their next harvest in advance, giving them greater certainty of income when planting their crops. However, in the early 1900s these contracts began to be traded by financial speculators who had nothing to do with the physical production, processing or retailing of food. This began to affect the actual price of food. Recognising this, the US government introduced regulations in order to stabilise the increasingly volatile state of food prices.

Over the last few years, as a result of the global economic downturn, investors have largely pulled their money out of property and placed it in commodity speculation during these tough and turbulent economic times. Due to increased pressure and intense lobbying by the financial investment industry, the US government has relaxed their restrictions on commodity speculation, in some cases deregulating to such a degree that they are exempt from any restrictions.

What is the result of this increase in investment, and decrease in regulation? The sudden increases in fuel and food prices we all witnessed in 2008. During this time there was an 80% increase in the price of wheat on world markets. Some blame the failure of the wheat crop in Russia, yet, at the time, the UN Food and Agricultural Organisation pointed out that despite these events in Russia there was still plenty of wheat in the world with the US producing a bumper wheat harvest that year. The real reason for the large and rapid increases in wheat prices lay in the financial markets. Money was pouring into the wheat markets as speculators bet on an increase in prices.

Some financial institutions are making a lot of money from price speculation on commodities. It was estimated that Goldman Sachs made $1 billion profit in 2009 from speculating on food alone. However, the effects on the rest of the world are appalling. Yes, we have all seen an increase in the price of our weekly shopping, and we can only reminisce about days when you could get a loaf of bread for less than 50p, but we in the Western world will not go hungry as a result. In Developing countries, the outcome of commodity speculation is much more sinister. The increases in food prices mean that more families go hungry. High food prices simply mean that people cannot afford to eat. It is not a case of there not being enough food as a result of the harvest, rather, the food is there, but it is too expensive for those living in poverty to be able to purchase it. What a sin…to allow men, women and little children to starve, literally starve, in order to pay the big wages to the already wealthy in the West. The rich really do get richer, while the poor get poorer in this investment game.

So, while we consider the hunger of our fellow man, we must be moved to act on their behalf. We all have an ability to turn our eyes from injustice and focus on our own comfortable existence, trusting that someone else will take up the cause. However, God’s word is unequivocal about how we should respond. Proverbs 22:13 states, “Whoever shuts their ears to the cry of the poor will also cry out and not be answered.” In order to remain in a right standing with our Father, we must raise our voices on behalf of the weak and poor. It cannot be right that the fat cats of Wall Street and the City of London earn million pound bonuses based on their performance in food trading whilst in another country a father worries about the fact that he cannot afford to feed his family. This has the potential to be a human catastrophe unfolding before our very eyes and it must be stopped, through tighter regulation and public pressure. Pray for God’s intervention, lobby your local politician, for it is only through a collective calling for justice that the political will emerges to change legislation.

The Lord desires that His people take a stand for the poor, the lowest, the most deprived. As He asks in the book of Jeremiah, “…Is that not what it means to know me?” (Jer. 22:16).

Christine Cordner