Gambling on Hunger – who would?

Maybe you. Do you know where your money is? If it’s lying in certain ETF’s or indices, you may be gambling on hunger.

I started looking into this issue at work, when I was working on financial reform. Soon, it became clear that some of my colleagues could be inadvertently invested in such vehicles.

After deregulation in the 1990s and 2000’s, large investors could purchase futures and other contracts in the agricultural market. So what? Well, these investors have no direct connection to the agricultural market, and are looking to hedge only to make a profit,  which effects the price.  When prices violently change, those living in and near the poverty line (less than $1.25/day) loose access to food because of how much their nourishment now costs. In 2008, there were worldwide food riots demonstrating the severity of the issue. When we have a child dying every 6 seconds from undernourishment related problems and  with 1 in every 6 persons lacking access to food, the volatility of food prices is crucial to understanding hunger.

In fact, 18 US Economists expressed to Congress that the“deregulation that began in 2000 … encouraged hyper-speculative activities by market players who had no interest in the underlying physical commodities being traded. This produced severe price swings for both oil and food in 2008-09 that destabilized business and household budgets in the US and throughout the world”. Even Gary Gensler, Chairman of the U.S. Commodity Futures Trading Commission said, “I believe that increased speculation in energy and agricultural products has hurt farmers and consumers.”

Hedging itself is not ‘wrong’ or illegal, but when it’s manipulated and moved away from its primary purpose of protecting farmers, we have an issue. I am passionate in taking a stand against hunger. I don’t want my investments or actions to impede access to food.  What about you?

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For more info, check out this vid.

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One response

  1. I love how passionate you are about this issue. It’s not an issue I would naturally have landed on, but as you get deeper in it, I am too. Thank you.

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