By Collin Kee, 99GetSmart
With the heat wave that has spread across the mid-west and southern U.S. food prices have jumped in the past month, especially those of cereals and sugars. This rise in prices is sure to affect consumer expenditure everywhere as cereals and sugars are such common food sources and are found in so many products that people, (especially low-income people) purchase. Without a doubt, this is seen as a detriment to our society and nothing good could possibly come from such a situation of global turmoil….right?
Well, not if you happen to be in the commodities trading business it isn’t. The biggest traders in the commodities industry have all received some scrutiny for speculating on food prices which as we have said are on the rise. The firm that is receiving the most criticism is Barclays which was recently in the news for its role in the LIBOR scandal.
According to an article on the UK news site Independent, Barclays has been making billions of dollars off of their speculation and are leading many to question the ethics of the ability to profit from the potential starvation of others.
See the article for more detailed information here: http://www.independent.co.uk/news/business/ news/barclays-makes-500m-betting-on-food-crisis-8100011.html
In addition to the ethical dilemma associated with profiting from high food prices, it is important to mention that the last time food prices climbed, the impact was felt even greater in the developing world and even spilled over into the politics of these regions. The main example here being Egypt and it’s subsequent uprising which occurred amid a time when Egyptians were spending 40% of their income on food.
If food prices have the potential to turn over the political framework of a nation, it would be wise to keep a close watch on the political landscape as the effect of the high cost of food in 2012 becomes more evident.