David Prosser: Another chance to bash the bankers

Click to follow
The Independent Online

Outlook For anyone with even a hint of antipathy for the banking sector – most of the population, in other words – the idea that the likes of Barclays might be responsible for causing hunger or even starvation in the developing world looks to be an open goal. You can certainly expect a noisy protest from the World Development Movement on this topic at Barclays' annual general meeting today.

Barclays is getting it in the neck because it is a big player in food commodity trading – Goldman Sachs has copped flak for the same reason. The WDM says the growing sums invested in food commodities for speculative reasons is one cause of food prices spiking this year to an all-time high, as measured by the United Nations' Food and Agriculture Organisation.

Still, while anyone with a heart is going to side with, say, hungry African children rather than Barclays' well-paid traders – or the billionaires at Glencore, also in the firing line in recent days – where is the proof that investments in food commodities have caused the latest price spike? It is certainly true this is a rapidly-growing investment market, but while that will have added to food price volatility, in both directions, why should it automatically lead to inflation?

Not unsurprisingly, the UN's FAO has done some work of its own on this topic. A few months ago, its chief economist, Abdolreza Abbassian said that while speculation might indeed have exaggerated price movements, he could find no evidence that the banks had driven up prices.

If not the dastardly influence of the banks, what does explain rampant food price inflation? Well, on the one hand, you have rapidlyrising demand, driven by the increasing wealth in countries such as India and China (especially for meat). On the other, a series of unusual weather events, such as last year's wheat-destroying drought in Russia, which are probably part of a pattern of climate change, have damaged supply.

In this era of banker-bashing, the opportunity to give Barclays and Goldman Sachs a bloody nose over food prices might seem too good to pass up. But there's scant evidence to support the case against them. And it would be more productive to spend time addressing the more intractable issues of supply and demand.