Observations On the Contrary

Thought for food

BMJ 2011; 342 doi: https://doi.org/10.1136/bmj.d2926 (Published 11 May 2011) Cite this as: BMJ 2011;342:d2926
  1. Tony Delamothe, deputy editor, BMJ
  1. tdelamothe{at}bmj.com

Commodity speculation, not micronutrient deficiency, is today’s most pressing problem

I can easily visualise what the minimum recommended daily intake of food looks like: a few bowls of rice with side helping of greens and cabbage, an egg, a couple of handfuls of peanuts, a glass or two of milk. It doesn’t add up to much. Yet one billion of the world’s seven billion inhabitants can’t afford to buy this food—or cheaper equivalent amounts of protein, fats, and carbohydrates—each day.

Nevertheless, I’m having problems with the attention given to the “hidden hunger” of micronutrient deficiency, which afflicts an estimated two billion people (BMJ 2011;342:d1086, doi:10.1136/bmj.d1086). The micronutrients in question—iron, iodine, and vitamin A—make up about 0.0005% by weight of the daily ration described above.

It’s not that I don’t believe in micronutrient deficiency—or in efforts to rectify it—it’s just that I think we should be concentrating on food you can see, and the absence thereof. In other words: take care of the big stuff and the small stuff will take care of itself. (And if the problem is, say, iron deficiency anaemia secondary to hookworm or schistosomiasis, then concentrate on the underlying cause, not the symptom.)

What is it about medical scientists’ preference for the invisible over the visible? In the decade and a half from 1929 four Nobel prizes in physiology or medicine were awarded for research on vitamins. Over the same period more than 10 million people starved to death. To labour my point: what the hungry lacked was food visible to the naked eye, not minerals and vitamins that would have left hardly a smudge on the plate.

It turns out that there is a powerful invisible force we should be paying attention to—and urgently. A BMJ editorial first alerted me to its existence 18 months ago: “[In 1998] the world’s markets were in the throes of one of the greatest food commodity bubbles of all times, a deeply unreasonable surge of speculation that had already doubled the costs of wheat, rice, corn, cooking oil, and numerous other staples and sparked food riots in 39 countries across the globe,” wrote Frederick Kaufman. “Such price spikes in world food markets had little basis in rationality—the wheat harvest of 2008 eventually proved larger than any wheat harvest in human history” (BMJ 2009;339:b5209, doi:10.1136/bmj.b5209).

Well, we’re back there again, so soon. This year the prices of grains and pulses eclipsed even their 2008 peaks. As Joachim von Braun points out in his editorial (BMJ 2011;342;d2474, doi:10.1136/bmj.d2474), the price of wheat and maize has doubled in the year to March 2011. Food shortages have once again shown their potential for sparking social unrest, with protests over food prices a factor in the popular uprisings in Tunisia and Egypt.

Of course, speculation isn’t the only cause of rising food prices. An article published by Science on 5 May calculates that global warming may have driven up food prices by 20% in recent years (doi:10.1126/science.1204531), while the recent diversion of grain into the production of biofuels isn’t helping. But there is something new about the scale of speculation in food, enabled by a new range of financial products created over the past decade. The result is that index funds’ investments in agricultural commodity markets rose from an estimated $3bn in 2003 to $55bn (£34bn; €38bn) in 2008 (Guardian, 26 Apr, “Barclays faces protests over role in food crisis,” www.guardian.co.uk/business/2011/apr/25/barclays-faces-commodity-protests). Some of this influx resulted from the smart money abandoning the subprime mortgage market.

Some 70-80% of trading in some foods is now thought to be speculative. But markets can be risky places. As befits the world’s largest commodity trader, Glencore did its best to minimise the risks during Russia’s drought last summer: it bet on rising wheat and corn prices as its senior traders were publicly urging Russia to impose an export ban on grain (which is what Russia did a few days later) (Financial Times, 25 Apr, “Glencore reveals bet on grain price rise,” www.ft.com/cms/s/0/aea76c56-6ea5-11e0-a13b-00144feabdc0.html#axzz1Lqn9BGf6).

In his BMJ podcast David Nabarro, the United Nations’ special representative of the secretary general on food security and nutrition, discusses the attractions of investing in such markets—and the consequences (http://podcasts.bmj.com/bmj/2011/04/28/food-for-thought). “If prices are rising because people who are nothing to do with food are betting on which direction prices are going in,” he says, “it’s wrong because it means that people are paying more money for food simply because they’re fuelling somebody else’s way of making cash, some pension fund somewhere.” Or, in the words of Unilever’s chief executive, food inflation “has attracted speculators for short term profit at the expense of people living a dignified life.”

The widespread acknowledgment that speculation is contributing to high food prices has come late and grudgingly. In late February the Economist was still pooh-poohing the idea (Economist, 24 Feb, “The future of food: crisis prevention,” www.economist.com/node/18229412?story_id=18229412). (However, this may be partly explained by the magazine’s disdain for Nicolas Sarkozy, who, as head of the G20 group of developed nations, is targeting speculation in agricultural markets.)

But now even the World Bank has called for a clampdown on speculators who have brought excessive volatility to commodity markets, with the bank’s president last month admitting a role for speculation in exacerbating shifts in prices.

Last week there were hints that the great commodities correction of 2011 may have begun (Financial Times, 6 May, “Nervy investors dump commodities,” www.ft.com/cms/s/0/d36efa5a-7809-11e0-b90e-00144feabdc0,s01=1.html#axzz1LqoMIp81). Prices fell, as investors rushed for the exit, realising that they had all made the same bet. Let’s hope they don’t all starve.


Cite this as: BMJ 2011;342:d2926

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