The threat of rising food prices

This is as much a part of what’s wrong with our financial sector as the Greek and Irish debt crises.

While inertia continues to define the coalition government's approach to banking regulation, the bankers are happily enjoying yet another free-for-all spending splurge – and fears are emerging of a new bubble. This time, it's a commodity bubble, similar to the one that led to food riots around the world in 2007 and 2008.

In case you hadn't noticed, food prices are at an all-time high: the latest figures show food price inflation at 5.5 per cent, outpacing the overall inflation figure of 3.3 per cent. You'll be paying as much as 25 per cent more for your regular cuppa as tea prices rise; and we already saw the cost of our Christmas turkey go up by more than £3 before Christmas, due to the doubling in feed costs in 2010.

The Food and Agriculture Organisation's Food Price Index, released last week, shows that a range of basic food prices are actually higher than they were when food riots broke out in places like Mozambique, Egypt and Haiti just two years ago. In the first week of December, the benchmarked US wheat price reached $327 per tonne, which is a staggering 70 per cent higher than that for July 2010, just six months earlier.

Some market analysts would have us believe that it's a simple case of time-honoured supply and demand. But aren't these the same analysts who also said that mortgage derivatives were a good bet for investors? Market fetishists often fail to ignore the evidence as it suits them.

Although the long-term trends do point to a gradual rise in prices, due to a range of reasons from climate change and biofuel production to increasing consumption, basic supply and demand alone doesn't account for the high price volatility and huge changes being seen in recent months.

Price spikes of upwards of 70 per cent are being led by hedge funds, investment bankers and pension funds that have poured over $200bn into food markets since the financial crisis, betting on prices going ever higher. With few options to place your bets these days, and especially with the ready-made cash available through quantitative easing, food isn't a bad place to start – for the bankers, anyway.

A few extra pence for a loaf of bread doesn't seem like a lot to most of us, but the story is rather different if you're in a developing country, relying on imported staple foods just to get by.

Meanwhile, the replay of food riots began last week, with three people killed and 300 injured in disturbances that broke out in Algeria. For some of the poorest people in the world, as prices rise, education falls by the wayside; basic assets such as farm animals get sold, and a short-term crisis can lead to long-term chronic malnourishment for a generation.

Food isn't an asset like any other – it's fundamental to human life. Commodity markets exist to enable people to buy and sell food, but are now the best place for speculators to make a quick buck through murky "over-the-counter" trades and a self-fulfilling prophecy of ever-rising prices.

The story of food prices is as much a part of the picture of what's wrong with our financial sector as the Greek and Irish debt crises, or the obscene level of bankers' bonuses. The reality is that the same speculators who caused the global economic meltdown through their illustrious trade in sub-prime mortgages are now betting on our food system, too.

The issue has prompted the French president, Nicolas Sarkozy, to plan to raise the matter with Barack Obama later this week in Washington, as part of France's duties as leader of the G20.

So when the coalition government decides to ignore the evidence and turn a blind eye to regulating the banking sector, the result is inflation and ongoing volatility in financial markets, failing people far beyond our borders.

These markets need to be brought back under control, limiting excessive speculation, ensuring that markets are fully transparent, and not holding the rest of us to ransom through unnecessary and unscrupulous price rises.

Deborah Doane is director of the World Development Movement.

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Chuka Umunna: Why tolerance is not enough

Against the Trumpification of politics.

It’s still spring, yet 2016 already stands out as one of the ugliest years in modern British political history. It was fantastic to see Londoners choosing hope over fear in May, electing Sadiq Khan as our first Muslim mayor. But David Cameron, having shamelessly endorsed Zac Goldsmith’s dog-whistle campaign tactics, owes those young Muslims who have been put off politics by the slurs hurled at Khan an explanation. How does racial profiling and sectarian scaremongering fit into his One Nation vision for Britain?

Meanwhile, Boris Johnson, one of the best bets to succeed Cameron as our next prime minister, embarrassed Britain on the world stage with a racially charged allusion to Barack Obama’s Kenyan heritage. And my own party has been grappling with a swath of deeply disturbing revelations regarding the attitudes held by some on the left towards Israel and Jewish people. Sowing discord by stigmatising or scapegoating a single faith group or community is profoundly at odds with the British tradition of “tolerance”, but we can’t ignore that this year’s events are part of a rising trend of friction and factionalism.

Last year’s general election should have been a wake-up call. The political and cultural divides between people living in the north and south and urban and rural areas – as well as between working-class and metropolitan sensibilities – appear starker than ever. In May’s devolved elections, Scottish, Welsh and Northern Irish politics became yet more distinct – giving the impression of a kingdom coming apart at the seams. All the while, more and more voices in our national politics seek to pin the blame for the challenges facing our country on a single section of society, whether immigrants, Muslims or another group.

This trend stretches beyond our borders. From Ukip, the French Front National and Austria’s Freedom Party to Podemos in Spain and Italy’s Five Star Movement, new populist parties of the right and left are on the rise across Europe. In the United States, Bernie Sanders is tapping into the energy of Occupy Wall Street, while Donald Trump has emerged as the heir to the Tea Party: a poster boy for division and recrimination.

Trump’s rise should be a warning for us Brits. The New York Times commentator David Brooks has described his success as less indicative of the emergence of a new school of thought, or movement, and more of dissatisfaction with the status quo. Trump’s campaign has tapped into a complex cocktail of grievances, from the loss of manufacturing jobs in a globalised economy to rising inequality and raw anger felt by many white working-class Americans at demographic and cultural changes.

In the run-up to last year’s general election, as I travelled around the country, I was confronted time and time again with the reality that in the UK – just like in the US – people are afraid and angry because the world is changing in ways they fear are beyond their control. Where once they had believed that, if they worked hard, they would get ahead, too many Britons now feel that the system is rigged in favour of those born into opportunity and that those in power have abandoned them to a broken future. What it means to be British seems to have shifted around them, triggering a crisis of solidarity.

We are at a crossroads and may face nothing less than the Trumpification of British politics. In an uncertain and changing world, it is all too easy to imagine that our problems are caused by those who are different from us.

If we wish to follow the fine example set by Londoners on 5 May and choose unity and empathy over division and blame, we must accept that simply “tolerating” one another will no longer do. There is an accusation built into the very word: what you are doing is “other” or “wrong”. As Britain has become more diverse, we have come to know each other less. This makes it harder to understand how people from different walks of life feel about the big issues.

I am a Labour member because I believe, as it says on our membership cards, that, by the strength of our common endeavour, we achieve more together than we do alone. In order to develop the bonds of trust required for this to become a reality, and for our communities to flourish and our democracy to deliver for everyone, we must build a society in which people from all backgrounds actually get to know one another and lead interconnected lives. In this sense, “One Nation” – the land over which all parties seek purchase – should become more than a platitude. It should become a way of life.

Chuka Umunna is Labour MP for Streatham.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad