Food Security and Famine Prevention (Africa)

Debate between Roger Williams and Alison McGovern

Thursday 15th September 2011 Commons Chamber

[Alison McGovern (Wirral South) (Lab)]

I pay tribute to the hon. Member for Hastings and Rye (Amber Rudd) and my hon. Friend the Member for Lewisham East (Heidi Alexander) for securing the debate, and to the hon. Member for South Thanet (Laura Sandys) for her excellent speech. My reasons for speaking in the debate are twofold. First, I want to raise awareness of this issue and thank those who have given, and to appeal for continued backing for that support. Secondly, I want to discuss some of the causes of the problem and some of the strategic issues involved.

Other hon. Members have mentioned the British support for famine relief. There are some in the House and elsewhere who argue that charity begins at home. Looking into the eyes of a starving child gives the lie to that argument, however. In this debate, we have acknowledged our moral responsibility to uphold the dignity of the people affected by the famine. Let the message from the debate be that Britain will continue to offer support to those who need it, wherever in the world they live. I thank from the bottom of my heart all those in my constituency and around the country who have given through the Disasters Emergency Committee, and we call on Governments around the world to do likewise and to stand up for the needs of the most vulnerable people in the world. The famine might no longer be on our TV screens, but that does not mean that it is not happening and that people no longer need our support. We have a moral duty to show our support for the people who are affected.

Other Members have given a good account of some of the causes of the problem, especially those relating to agriculture. There are interesting questions about the role of agriculture in development, and about whether the Department for International Development might do more work in that area.

I want to talk specifically about food speculation, although many other factors are involved. It has already been pointed out that famine is neither an accident nor a natural disaster; it is the result of human failure. The hon. Member for Hastings and Rye mentioned the comments of the Nobel laureate, Amartya Sen, about the causes of famine and their link to democracy. That point was well made, and needs to be listened to. People in the poorest countries do not have a voice, and that is part of the problem.

I want to ask the Minister some specific questions about food speculation, although I understand that he might not be able to respond to them as he will not be summing up the debate. If he wishes to intervene on me, or if he can answer them in any other way, that would be welcome. The evidence on food speculation is inconclusive, but that does not mean that there is no evidence; quite the opposite. Part of the reason for its being inconclusive is the way in which the speculation is happening. I shall come to that in a moment.

Let us be clear: famine involves political as well as economic failure. The food market is not serving the people of the world, as the hon. Member for South Thanet said. Mike Masters, a fund manager at Masters Capital Management, has done a great deal of research into this issue. He testified to the US Senate in 2008 that food speculation was certainly driving up food prices. He said:

“Most of the business is now speculation—I would say 70-80%.”

He went on:

“Let’s say news comes about bad crops and rain somewhere. Normally the price would rise about $1 a bushel. But when you have a 70-80% speculative market it goes up $2-$3 to account for the extra costs. It adds to the volatility. It will end badly as all Wall Street fads do. It’s going to blow up.”

[Roger Williams]

The hon. Lady is making an important point. High food prices and increased volatility seem to coincide with reduced world stocks of food, because that makes the trade more excitable. Would it not be a good idea for Governments to hold strategic stocks of food, so that they could intervene directly in these markets?

[Alison McGovern]

We need an effective market that encourages trade between poor countries and richer countries, because increased flows will help people in both. The threat implied by the hon. Gentleman’s question is protectionism, but in the end, if countries close their borders and try to stockpile, that will help none of us. However, that is a detailed question.

As a member of the International Development Committee, I have spoken to DFID about food speculation. I am told informally that the Treasury is leading on the issue and that it is not certain that there is any evidence. However, as the issue is clearly a development matter, I would be grateful if the Minister said at some point what role the Treasury has been asked to play in spotting and dealing with food speculation bubbles, specifically in relation to the G20. What action will be taken about over-the-counter trading? We need transparency and clarity on this matter—the reason the evidence is so inconclusive is that a lot of trading does not take place in regulated commodity exchanges—and the G20 is the way to get it. Will the UK support limits on speculation, either at the G20 or in other forums? Will we question the need for high-volume or high-frequency trading? Will the UK support the regulation of commodity trading alongside the regulation of financial products? If we go from having sub-prime market speculation undermining our global economy to having food speculation undermining it, we will have made the same mistake twice. I hope that at some point the Minister will comment on that regulation.