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Belgian Law To Outlaw Food Speculation Blames WTO and Unbridled Liberalization

PARIS, June 16, 2008 (Nouvelle Solidarité) — On May 23, 2008, three Belgian Socialist MPs introduced draft legislation "aimed at outlawing in Belgian financial speculation on the rise of food prices." Here is a quick translation of the full text (Doc 52-1196/001), which will be of interest to others fighting speculation, in food and otherwise, around the world. The Belgian effort intersects both the Rocard-Rasmussen elder statesmen's letter and the efforts of UN's Special Rapporteur on Food Olivier de Schutter. They are now following the overall campaign of Lyn and Helga uniting the New Bretton Woods fight and the global food crisis. (kav)

PROPOSED LAW to outlaw financial speculation of the rise of prices of food


Ladies and gentlemen,

1) General Framework

Hunger in the world is unfortunately a reality of our world for too long.

According to the association SOS Famine, 852 million human beings suffer from famine, especially women and children.

According to the UN World Food Program, 25,000 people in the world die each day of malnutrition. Among them, between 11,000 and 18,000 children see their lives terminate for lack of sufficient food!

The causes for this drama are known: North-South inequalities, disinvestment in developing countries, very often under the impulse of international institutions, in food crops, natural catastrophes, drought, bad governance, bad choices in investment tied to development cooperation, etc.

Over the last years, the increase in prices of foodstuffs has accentuated the crisis and has caused the expansion of the food crisis.

Contrary to the developed countries, where the share of household income for food varies between 10 and 20%, in developing countries, that share varies between 60 and 90%.

Food riots have broken out in every corner of the planet: notably Egypt, Haiti, Indonesia and Sub-Saharan Africa.

2) Principal Causes of Famine

The causes identified to explain the explosion of prices for basic materials can be subdivided in three categories:

2-1. The main cause for the food crisis is the propagation on a world scale of unbridled liberalization.

The liberalization of commercial trade, under the impulse of the World Trade Organization (WTO), the World Bank and the International Monetary Fund (IMF) have led to a deep destabilization of agriculture production of the South. The development of cash crops for the North has led to a massive disinvestment in local production and dependence on imports coming from countries whose production is subsidized. The developing countries are incapable either of satisfying their own food needs, or of growing more and more [to satisfy] important demand from emerging nations confronting ultra-rapid urbanization. Insufficient inventory has led, ipso facto, by the law of supply and demand, to an increase of agricultural prices.

2-2. Climate change

Climate change is intensifying drought and flooding and provoking, de facto, the destruction of harvests.

2-3. The financial crisis

The financial crisis is encouraging investment funds to invest their speculative capital into "markets of refuge" of basic agricultural goods.

2-4. The problem of agro-fuels

Certain analysts point also to the impact of the uncontrolled development of agro-fuels, which, they argue, causes the reduction of useful farmland for food, and incites even more speculation on the cereal markets, while the price rise in oil products accentuates the cost of energy.

3) Consequences For the Developed Countries

The developed countries do not escape the consequences.

In the developed countries, such as Belgium, low-income households are also affected fully by the price increase of food products. In Belgium, the Center for Research and Information of Consumer Organizations (CRIOC) observed the following increases over the last two years:

Flour: +39%; Dark bread: +13%; Creamed milk: +36%; Potatoes: +13%; Eggs: +33%; Steak: +10%; Factory butter: +25%; Tomatoes: +22%; Oranges: +17%; Yogurt: +14%.

A recent study indicates that low-income households have lost in the short term an average of 400 euros of buying power.

In this context, and while the highest international authorities are calling for action to help the poorest, speculators do not hesitate to profiteer from the crisis to enrich themselves!

It appeared that on the Belgian market there exist investment products (of the type of Branch 23 — type 3) whose yield is indexed to the price evolutions of a basket of agricultural basic goods (cacao, coffee, sugar, wheat, maize and soy).

In short, the more the price of these agricultural commodities rises, the more profitable the investment. Even worse, the publicity for these investment products states clearly the possibility to rake in profits from the price increase of foodstuffs. In a publicity sheet, it is even said that climate change, water scarcity, and the lack of farmland are an opportunity!

In reality, they propose that Belgian investors enrich themselves by starving even more the poorest of the planet.

This situation is simply intolerable.

Consequently, this proposed law aims to outlaw the distribution and sale of such investment products.

The lawmakers introducing this bill bring to mind the fact that the right to adequate food is part of the International Treaty for Economic, Social and Cultural Rights (article 11) which was ratified by Belgium (on May 15, 1981). In 2002, the Special Rapporteur of the United Nations defined the right to adequate food as follows:

"Right to adequate food is a human right, inherent in all people, to have regular, permanent and unrestricted access, either directly or by means of financial purchases, to quantitatively and qualitatively adequate and sufficient food corresponding to the cultural traditions of people to which the consumer belongs, and which ensures a physical and mental, individual and collective fulfilling and dignified life free of fear."

This definition contains all the normative components which are defined in detail in the General Comment 12 concerning the international treaty concerning economic, social and cultural rights:

"The right to adequate food is realized when every man, woman and child, alone or in community with others, has the physical and economic access at all times to adequate food or means for its procurement."

In 2004, after two years of debates and negotiations, the Council of the FAO adopted by consensus the "Voluntary Guidelines To Support the Progressive Realization of the Right to Adequate Food in the Context of National Food Security." The "Voluntary Guidelines" are non-binding, are based on international law and give guidelines concerning the applications of current duties. They apply to those states which underwrote the International Treaty for Economic, Social and Cultural Rights and to those states that will ratify the treaty in the future. But they also apply to those individuals or organizations that are committed to realizing a better application of the right to food on a world scale.

Among these directives, one can note in particular those relative to the markets:

"4.1 States should, in accordance with their national law and priorities, as well as their international commitments, improve the functioning of their markets, in particular their agricultural and food markets, in order to promote both economic growth and sustainable development, inter allia, by mobilizing domestic savings, both public and private, by developing appropriate credit policies, by generating sustainable adequate levels of national productive investment through credits in concessional terms and by increasing human capacity....

"4.3 States should encourage the development of corporate social responsibility and the commitment of all market players and civil society towards the progressive realization of the right of individuals to adequate food in the context of national food security."

This proposed law is directly inspired by these international FAO guidelines....


Article 1.

This law deals with a question as aimed in article 78 of the Belgian Constitution

Article 2.

The offer, spreading, or the promotion in Belgium of financial instruments in the sense of Article 2 of the Law of August 2, 2002 Concerning the Surveillance of the Financial Sector, is forbidden, whatever their nature and inclusively the saving insurance and by name those insurances which are indexed to investment funds whose profit yield is partially or entirely coupled to speculation on the increase of prices of basic food commodities.

Article 3.

Any violation of this law will be punished by those penalties defined by Article 41 of the Law of August 2, 2002 Concerning the Regulation of the Financial Sector and Financial Services.