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Over the past two years, Barclays has made half a billion pounds by placing bets on food issues during the global food crisis. Barclays is a bank from the United Kingdom that holds the largest involvement in trading of food commodity.
Rob Nash, a private sector adviser for Oxfam said, “The food market is becoming a playground for investors rather than a market place for farmers. The trend of big investors betting on food prices is transforming food into a financial asset while exacerbating the risk of price spikes that hit the poor hardest.”
It has been estimated by the World Development Movement that Barclays pulled in no more than £529m from the company’s “food speculative activities” in 2010 and 2011. In 2010, Barclays made £340m and in 2011 the bank made £189m.
The bank makes the majority of its money from speculating on food by creating commodity funds that take money and invest it. The money is taken from pension funds, wealthy individuals and insurance companies in return for commissions and fees. Barclays has said that it does not invest its own money. According to the US Commodity Futures Trading Commission, since 2000, Barclays has been able to make $200 billion when investing cash in agricultural commodities.
One of the researchers for World Development Movement, Christine Haigh, said, “No doubt the UK’s biggest player in the commodities markets is hoping it will do better this year by cashing in on rising food prices. Its behaviour risks fuelling a speculative bubble and contributing to hunger and poverty for millions of the world’s poorest people.”
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Barclays has defended what it is doing, saying that trading in futures contracts has helped farmers hedge against risks or rising or falling prices. “Our clients include investment companies, food producers and consumers who, among other things, seek our help to manage risks.” A spokesman for Barclays said, “We recognise there is a perception held by some stakeholders that participation in agricultural futures markets by some participants can unduly influence the prices of commodities. As a result, we continue to carefully monitor market trends and any research produced on this subject.”
