20.01.2012

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Price volatility is increasing on the global agricultural commodity markets.

There are a number of reasons for this: the political deregulation of these markets is just as significant as the volatile interplay of severe crop failures or huge record harvests. As well as climate disasters, political crises and trade policy measures such as export bans and subsidies have a considerable influence. Severe price fluctuations hit developing countries hardest. Images like those from East Africa at the moment make it clear that, as industrial nations, we have a responsibility to the people of those countries. Where emotionally charged issues are concerned, our public media are soon on the trail of “the culprits”. This time the image of evil speculators is being conjured up, blaming them for hunger and poverty; but this scapegoat rhetoric is no help to anyone. In fact, the media are pillorying a market mechanism that helps the traditional players in the agricultural commodity market to hedge their risks.

Take a quick look back: before the Argus eye of public opinion was drawn to speculation on the agricultural markets, it was biofuels which took the blame for high food prices and increasing price volatility. A wave of emotional outrage was unleashed and led to a hasty policy U-turn. Installations that only a short time before had been given political support and funding were abandoned. When respected studies eventually proved that the influence of biofuels on price development and the price spikes of 2007/2008 was in fact minimal, the economic and political damage had already been done. This spiral is threatening to repeat itself. 

The fact that commodity futures markets have an indispensable role is now undisputed; both politicians and NGOs have realised that they create a safety net in the market, precisely in order to prevent reckless dealings with the raw materials for our food.

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