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Act on food speculators and ethanol conversion now study warns governments

by Colin Ricketts 22 Sep 2011
Act on food speculators and ethanol conversion now study warns governments

Food prices around the world are going up and it's time to act according to an American group who warn that the world's poor face very serious consequences from the actions of commodity speculators and the switch to growing corn for ethanol for biofuels.

The research was partly paid for by the American army and is published by the New England Complex Systems Institute who say finding the reasons why prices are shooting up is key to taking the right policy action.

Food prices operate in a complex market, and suggested reasons for spikes in prices have been many: including the weather, speculators and the development of previously agrarian economies.

This study, authored by Marco Lagi, Karla Bertrand, Yavni Bar-Yam, and Yaneer Bar-Yam has little doubt as to why prices have shot up, blaming speculators directly for the peaks in 2007-8 and 2010-11 and the move towards converting corn to ethanol for a more general upward trend.

And, they call for changes in government policies to reign in these pressures, writing: "Both causes of price increase, speculative investment and ethanol conversion, are promoted by recent regulatory changes--deregulation of the commodity markets, and policies promoting the conversion of corn to ethanol. Rapid action is needed to reduce the impacts of the price increases on global hunger."

Top Image credit: Ethanol production plant © jimsphotos


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