FRANKFURT Jan 21 Food campaigners criticised
Deutsche Bank for abandoning a moratorium on trading
new commodities products, arguing that financial speculators
continue to cause price rises for vital foods.
"The biggest losers will be the poorest people on low
income. They will be facing even more volatile and higher food
prices", said Heidi Chow, campaigner with London-based
anti-poverty group the World Development Movement (WDM).
"Anecdotal and statistical evidence that we see shows price
volatility is driven by financial speculation," she said on
Deutsche Bank - which responded to controversy over the
issue by declaring its moratorium in March 2012 - had said on
Saturday it would keep dealing in financial derivatives linked
to commodities, arguing there was no conclusive evidence to
prove speculators were responsible for rising prices of
The bank reiterated that a review of numerous studies showed
no convincing evidence that the growth of agricultural-based
financial products has led to higher prices.
Thilo Hoppe, a politician with Germany's green party, said
it was nonetheless irresponsible to push ahead.
"So long as Deutsche Bank cannot prove that financial
instruments based on commodities don't cause a rise in food
prices, they should refrain from using them," Hoppe said.
Thilo Bode, executive director of Berlin-based consumer
group Foodwatch, said there were plenty of studies which
concluded speculators do amplify price rises.
"Deutsche Bank did not address our concerns, and this
amounts to irresponsible management," Bode said on Monday.
Deutsche Bank said it would review new products to ensure
these did do not provoke price spikes.
"After a period of intense consultation and reflection, we
have lifted our temporary halt on launching new exchange-traded
products based on agricultural staples," the Frankfurt-based
It argued that price surges were due to growing demand
triggered by population and income growth in developing
countries, while supply was limited by water scarcity, climate
change, lack of infrastructure and harvest waste.
Proponents of commodity-linked derivatives also argue they
help farmers gauge prices and allow food producers and
processors to hedge against fluctuating prices.
Yet the WDM rejected the argument that more financial
players were better for the market.
"They are not making decisions based on the underlying
supply and demand of food, but may be using commodities to hedge
other assets in their portfolio," Chow said. "Smaller farmers in
developing markets don't have access to these markets."
She points to her organisation's own research which it says
shows how financial speculation has boomed in recent years,
turning commodity derivatives into "just another asset class for
investors, distorting and undermining the effective
functioning of agricultural markets".
The WDM argues the total assets of financial speculators in
commodity markets nearly doubled from $65 billion in 2006 to
$126 billion in 2011, a speculative inflow which it says
resulted in inflated prices which pushed 44 million people
into extreme poverty in the six months of 2010 alone.
In August, Germany's Commerzbank removed
agricultural products from a commodity index fund after
accusations that speculation had pushed up food prices and
fuelled unrest in some poor countries.
Yet Deutsche Bank's decision to carry on with the products
chimes with the approach of Europe's biggest insurer, Allianz
, which earlier this year said derivatives were being
unfairly blamed for price rises.
It said price increases were due more to real economic
factors like rising food demand in emerging markets and
subsidies paid for the production of biofuels.
"Politics needs to examine the evidence, and with the help
of science, needs to have a neutral debate to understand the
issues. Otherwise we may run the danger of taking decisions
which are bad for humanity," Allianz said.
A spokeswoman for German agriculture minister Ilse Aigner
declined to comment on Deutsche Bank's move but said politicians
were keeping an eye on the issue at G20 level.
Non-profit groups Oxfam and Foodwatch blame speculators for
pushing up international food prices, leading to famine in poor
Oxfam has also identified real economy factors but says
there are serious questions about the impact of big
institutional investors that have been involved in food price