Speculators should continue to be allowed to place bets on food prices. The Federal Council has recommended that the speculation stop initiative be rejected. Alliance Sud criticizes the decision of the Federal Council and its arguments. The Franconian shock just experienced makes the problem obvious.
High price fluctuations in the prices of basic foodstuffs create enormous uncertainty and hardship in developing countries. Speculative financial transactions with agricultural products increase this uncertainty. Nevertheless, in its message published today the Federal Council recommends that the popular initiative "No speculation with food" be rejected.
Price increase as a spurious argument
Alliance Sud considers this decision to be highly questionable. The Federal Council justifies its rejection primarily on the grounds that the initiative is inappropriate: there is a lack of scientific evidence that speculative transactions contribute significantly to food price increases. For Alliance Sud, this is a dummy argument. "The problem for developing countries is not high food prices, but massive price fluctuations," stresses Mark Herkenrath, financial expert at Alliance Sud.
The franc shock makes harmful effects evident
Numerous scientific studies show that excessive financial speculation further exacerbates price volatility and also disrupts the beneficial effects of an orderly financial market. "The Federal Council is failing to take these important findings seriously, despite the fact that Switzerland itself is now realising the drastic effects that rapid price changes can have after the Swiss franc shock," Herkenrath said.
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