A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
Focus on issues

YES for the initiative to “Stop speculation”

The Young Socialits, Switzerland

Excessive speculation in agricultural markets and linked to market financialization, is increasingly criticized both by NGOs and by international institutions and has even been abandoned by some banks.

In Switzerland, home to many commodity traders and financial players, the Young Socialists have launched the initiative “No speculation on foodstuffs” which will be voted on 28th February by the people and the cantons. They will then decide if the companies with headquarters or a subsidiary in Switzerland should be allowed to invest in financial instruments related to agricultural commodities and foodstuffs.

Below we have reproduced
1 the arguments put forward by this alliance against speculation on food, which includes humanitarian organizations, farmers' associations, religious organizations and political parties.

According to this text, there is a real link between speculation and food insecurity. Indeed, speculation, as useful as it is when moderate in covering market risks, is becoming a destabilizing factor if excessive. The amounts involved are several tens of times higher than annual agricultural production. Under these conditions, speculation only increases highly volatile prices, and has no stabilizing role.

Finally, it is up to politicians both in Switzerland and internationally to implement the appropriate regulatory measures necessary to limiting its distorting, harmful effects.

momagri Editorial Board

Speculation on food is an irresponsible way of generating profit. With their gambling, speculators are driving prices up and consequently share responsibility for world hunger. The initiative puts a stop to this development and now only allows the trading of derivatives related to food for a guaranteed fixed price contract with producers and agricultural traders. It thus reduces the risk of price bubbles in this fragile sector. Even when it is only a small percentage - a price increase of 1% on basic foodstuffs such as rice or wheat condemns another 16 million people to hunger!

Speculation distorts prices and generates hunger

The years 2007 and 2008 were marked by a global food crisis and soaring food prices. In the context of the financial crisis and the sudden collapse of the stock and bond markets, investors sought alternative investment opportunities that were deemed safe. They fell back on raw materials and basic food products. As shown by a UN study, population growth and below average crops alone cannot explain the price increases of that time. Rather, it was the financialization of agricultural commodity markets that increased the risk of a price bubble. A price bubble of this nature occurred in 2007-08, another in 2011. The result: people living in developing countries cannot afford basic food, even though price spikes are often short-lived.

Speculation narrows the scope for reasonable price guarantees (hedging)

A survey of traders in agricultural commodities revealed that the function of guaranteed fixed prices was seriously hampered by the huge financial mass put into play on the markets. Yet this price guarantee was the initial idea for trading derivatives on commodities markets and is still legitimate even today. This function must be protected and restored.

Some groups lead by example

It is gratifying to see that some companies have understood their critical role on the commodity derivatives market. They act responsibly and knowingly reject speculation on foodstuffs. Examples include AVS funds and Credit Suisse.

One should not play with food

Agricultural commodities are not goods in the usual sense of the term. For food, tougher rules must be applied because it is the very foundation of our lives. We must refuse running the risk of speculation distorting prices and generating hunger. After all, we have always been taught not to play with our food.

1 The entire article is available from

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Paris, 11 December 2018