The Swiss will vote on a proposal to ban speculation on agricultural commodities and food, the government said Wednesday, announcing that organisers had gathered enough signatures to put the issue to a referendum.
The Swiss Socialist Party’s youth wing gathered nearly 116,000 valid signatures — well beyond the 100,000 needed to organise a popular vote in Switzerland, one of the world’s main trading hubs for commodities.
The initiative, entitled “No speculation in food commodities”, will likely come up for a vote within the next two or three years, giving voters the possibility to put a stop to all trading in financial instruments linked to agricultural products.
Referenda on a wide range of issues are held every few months in Switzerland, making up the backbone of the wealthy Alpine nation’s direct democratic system.
“You shouldn’t play with your food,” insisted Swiss Socialist Youth chief Fabien Molina.
The organisation maintains that a third of the world’s commodities trading passes through Switzerland.
“This stock exchange casino leads to massive fluctuations and price spikes that have already saddled millions of people with hunger,” it says on its site.
A disastrous surge in prices for many staple foods in 2007 and 2008, which triggered riots in a number of countries, has been widely blamed on speculation on commodity markets.
The price of both wheat and rice rose by about 130 percent between 2006 and 2008. Other grains and meat also shot up at the time.
Similar food price spikes in 2011 were seen as contributing factors in the Arab Spring uprisings.
The ban requested by the Socialist Youth would affect all commodities traders with any presence in Switzerland, and breaches would lead to criminal prosecution.
Only direct contracts with food producers and wholesalers carrying price and delivery-time guarantees would be permitted.
A recent study by Swiss activist group Alliance Sud found that global speculation in food commodities has ballooned 33-fold in the past decade, soaring from $13 billion to $430 billion from 2003 to 2013.
The Socialist Youth have previously put one other initiative to a popular vote, the so-called “1:12″ initiative aimed at capping executive pay.
That text, which would have made it illegal for the top earner in a company to make more in one month than the lowest earner made in a year, failed miserably at the polls last November, with 65.3 percent of voters rejecting it.
Deutsche Bank clashes with NGOs over food speculation
And in another European contry NGOs and investors are at odds over the effects of food speculation, causing the European Parliament to propose limiting direct stakeholder purchases, and Deutsche Bank to cover its tracks amid “a flood of accusations.” EurActiv Germany reports.
Deutsche Bank is being stubborn: It does not want to draw any conclusions regarding the correlation between its business policy, and the risk of food price speculation. But this is precisely the accusation coming from numerous NGOs, after a meeting with representatives on Wednesday (16 April) in Frankfurt.
“Neither could Deutsche Bank weaken the argument that their financial products contribute to price increases in food products, nor could it finally rule out connections to hunger,” criticised the NGO Foodwatch, which was invited to the meeting.
Similar to Oxfam and the German aid organisation Welthungerhilfe, Foodwatch believes that bets on changing prices for corn, soy or wheat are responsible for global hunger. Speculation drives prices for food products up, Foodwatch said, to the detriment of the poorest consumers.
But the details of the accusations cannot be analysed, as the conference of experts took place behind closed doors and the content of the debate is confidential.
European Parliament stops ‘immoral roulette’
Markus Ferber, top candidate for the Bavarian Christian Social Union (CSU), agrees that speculation with raw materials is not bad per se, “as long as they offer the necessary liquidity for concluding forward transactions and there is a real interest in the product”.
Still, the CSU politician is happy with the Parliament’s decision on Tuesday (15 April). Last week, MEPs also assumed a position in the ideologically charged conflict, endorsing the EU’s new Markets in Financial Instruments Directive (MiFID).
The directive will put an end to “betting on food”, said Ferber, providing for strict upper limits in stock exchange dealings with raw materials and foods. In this way, it hopes to prevent actors who cannot prove any direct use of the product from buying up unlimited quantities.
“A chocolate producer has a real interest in cocoa and should therefore be able to secure the price of the harvest on the stock market. A financial actor who only wants to speculate on the price of cocoa never plans on actually acquiring the good”, explained Ferber.
“The rules that have been passed are a big breakthrough in stopping immoral roulette being played on the food, agricultural and raw materials markets”, said Udo Bullmann, chairman of the SPD in the European Parliament.
The Greens are also happy with the measure: Already in January, Sven Giegold, finance expert and spokesman for the Greens in the European Parliament, called the impending agreement a “magnificent victory for civic involvement in Europe”. Hard boundaries have been set for speculation on foods and raw materials in the future, he said, lauding the Parliament’s effort.