European Parliament heeds citizens’ call, yet food price volatility still hangs over millions
Members of the European Parliament from all political groups voted for tightening proposed rules against food speculation, but fell short of the votes needed to force the Commission to amend them. National regulators now have a responsibility to put an end to excessive speculation which threatens millions.
Marc-Olivier Herman, Oxfam EU food policy expert said: “MEPs heeded the call of tens of thousands of Europeans demanding tighter rules to curb speculation on food prices, but fell short of the votes needed to force the European Commission to go back to the drawing board.
“National regulators should now be aware that citizens across Europe are watching them. They must introduce adequate limits to prevent speculators from exerting an excessive influence on food prices. Food prices are a matter of life and death to millions in the developing world, who can spend up to 75 per cent of their income on food. Stable prices are also essential for food producers.”
Out of 690 Members of the European Parliament, 339 rejected the European Commission’s proposed rules implementing the provisions of the Markets in Financial Instruments Directive of 2014 (MiFID II), while 339 voted in favour and 12 abstained.
If passed, resolutions tabled in the European Parliament by the Socialists & Democrats (S&D), the United European Left/ Nordic Green Left (GUE/NGL) and the Greens–European Free Alliance (Greens/EFA) would have forced the Commission to amend rules limiting speculation on food commodities before their entry into force in January 2018.
The rules implementing the provisions of the Markets in Financial Instruments Directive of 2014 (MiFID II) were adopted by the European Commission in December 2016. They introduce so-called position limits, which cap the number of contracts a trader or group of traders can hold for a particular commodity. The aim is to prevent a concentration by individuals or groups which would allow them to exert an excessive influence on food prices.
The rules allow speculators to control up to 35% of the deliverable supply of food commodities linked to financial derivatives. At the time, Oxfam argued the regulation was ineffective, leaving member States free to set loose limits, and traders able to circumvent them due to a too narrow definition of the contracts concerned.
Oxfam joined an NGO appeal calling for the European Parliament to back tighter limits on food speculation.
Deregulated and secretive agricultural commodity derivatives markets have attracted huge sums of speculative money prices. See Oxfam’s briefing ‘Not a Game: Speculation vs Food Security - Regulating financial markets to grow a better future’.
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