UK pensions fuelling hunger
3rd December 2013
UK pension funds are betting an estimated £1.5 billion on global food prices - £180 per average UK pension saver - according to a report released today by the World Development Movement. And the speculation is increasing food costs for the world's poorest people ...
This trend needs to be nipped in the bud to prevent increasingly volatile food prices exacerbating the global hunger crisis.
The report, Dangerous futures: How our pensions fuel hunger, reveals how pension funds and other institutional investors have poured vast sums of money into the commodity markets in recent years, pushing global prices upwards and fuelling global hunger and poverty.
High on the list of the big speculators are the BT and Railways pension schemes. The top eight funds have collectively invested over £400 billion in food speculation.
Pension funds' involvement in commodities has been facilitated by investment banks including Goldman Sachs and Barclays. Barclays announced in February this year that it was pulling out of food speculation. It is true that Barclays no longer invests in food speculation hedge funds, however it continues to facilitate speculation by investors such as pension funds.
The report states: "It is clear that this type of speculation can and does distort food and other commodity prices. The view that 'investments' in commodity derivatives are a wise choice for institutional investors to hedge their portfolio risk is increasingly being brought into doubt.
"But unfortunately these products continue to be marketed to pension funds. This trend needs to be nipped in the bud to prevent increasingly volatile food prices exacerbating the global hunger crisis."
The campaign group is calling for tough regulation to stop food speculation contributing to the global hunger crisis by driving prices up. WDM campaigner Christine Haigh said:
"Our research shows how ordinary people's pensions are being used without their knowledge to bet on food prices, contributing to a global hunger crisis. Legislation to prevent food speculation driving up food prices is long overdue, but the UK government continues to block it."
Negotiations on the EU's Markets in Financial Instruments Directive (MiFID), which contain proposals to regulate food speculation, resume tomorrow - Wednesday 4 December.
Download the World Development Movement's report 'Dangerous futures: How our pensions fuel hunger'.
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