Speculation affects global food prices but resistance is an option, says UTM researcher

Regulation changes made in 2000 to allow greater financial speculation on agricultural commodities such as wheat have had a major impact on global food prices, says Sean Field, a sessional lecturer in geography at the University of Toronto Mississauga.

However, as Field told an audience Dec. 4 at the Mississauga Central Library, there are avenues for citizens to combat speculation, a practice that often leads to food insecurity. Field’s talk was part of the popular Lecture Me series, a collaboration between the library and UTM’s Experiential Education Office that offers monthly talks delivered in an approachable manner by leading faculty members.

“It has been highly controversial, until recently, to even suggest that speculation causes food price spikes,” says Field, who has statistical evidence to demonstrate the truth of this statement. “However, investors really started getting into food commodity financial speculation around 2008; it went hand-in-hand with the United States financial crisis. Money started flowing into these commodities and food prices spiked like never before.”

Increasingly, food commodities are produced by major corporations such as Monsanto and Cargill as smaller family farmers find it challenging to compete with large-scale operations, so perhaps it isn’t a surprise that speculation has attracted major investment firms such as Goldman Sachs and JP Morgan and customers that include large pension funds and retailers such as Weston Foods and Maple Leaf Foods.

“The size of the speculation has grown exponentially, especially in the futures market,” Field says. “In futures, you only have to put down 10 per cent for each contract so investors can multiply investments and maximize returns.”

Since the demise of the Canadian Wheat Board, there is no price protection; prices are set by the international market, and the Chicago Commodities Exchange is the hub of this activity worldwide.

In order to make sure everyone has access to quality food at reasonable prices, Field says individual consumers need to become involved on the micro level, the macro level or both.

Micro-level solutions include individual production of food for home use, community-supported agriculture and food access initiatives for low-income individuals, as well as working to change food policies at the municipal level.

“I’m currently looking at a number of municipal policies that undermine food security,” Field says. “For instance, in Peterborough, Ontario, council recently banned people from raising chickens. Chickens don’t take up much space, and the eggs they produce can be a valuable source of protein for families on a tight budget. We need access to affordable food across all income brackets.”

At the macro level, people can work to change regional and federal policies toward food, commodity pricing and speculation.

Field says that in examining global food prices and the financial speculation that help drives them, there are three key points to keep in mind:

• Although there are strong connections between global finance and food prices, there are strategies for resistance.
• The world food system now produces enough food to feed everyone worldwide, but we don’t.
• Policy changes could allow us to produce more food.

“We could change things now,” he says, “so let’s do it.”