FOOD CRISIS
India mulls ban on food futures
Tuesday 06 May 2008
India is considering a ban on all trade in food futures, its finance minister Palaniappan Chidambaram said on Monday, as concern grows in Asia that speculation by investors could be responsible for the recent surge in food prices.
India mulls ban on food futures
Reuben EaseyTuesday 06 May 2008
Several countries have responded to the global food crisis with measures such as export bans. However, although the aim is the same - keeping prices under control – India’s move is different in that it specifically points the finger at speculators.
The food crisis has hit hard in India, with many millions of people at the sharp end of high food prices. The idea that hedge funds and traders on the financial markets could be responsible, by seeking to make a fast buck from rice, butter, milk, meat and other agricultural products, causes understandable anger.
Some, however, believe the proposal is counterproductive, and one official from the Asian Development Bank labeled it a “political gimmick.” The main reason for rocketing food prices, which the World Bank says have put 100 million people at risk of sever hunger, is simply a lack of supply. There are several reasons for this, including poor harvests and the use of agricultural land for production of biofuels.
Nonetheless, financial speculation could still be playing a role. The US Commodity Futures Trading Commission discussed the issue in April, and will soon make its findings public.
