FAO warns about negative impact of food speculation

(July 09, 2012) The world needs to take a hard look at speculation on the financial markets and its potential impact on food price volatility, the head of the United Nations Food and Agriculture Organization (FAO) said last week. “Excessive food price volatility, especially at the speed at which price swings have been occurring since 2007, has negative impacts on poor consumers and poor producers alike all over the world,” FAO’s Director-General, José Graziano da Silva, said on Friday at the opening of a high-level debate on the issue at the agency’s headquarters in Rome, Italy. “While there has been much analysis of food price volatility, including at FAO, more understanding is still needed, especially concerning the impacts of speculation,” he added. The high-level debate on the theme ‘Food Price Volatility and the Role of Speculation’ drew a panel of international experts on commodities, trade and agriculture, and featured as its keynote speaker the President of the Dominican Republic, Leonel Fernández Reyna. He said that financial speculation was exacerbating market fluctuations and this exacerbation was generating uncertainty and provoking a dramatic impact on countries that are net food importers. He noted that financial speculation is not an abstract concept, but one which has devastating, dramatic and brutal impact on the lives of people and also puts governments at risk of destabilization.