Chicken isn’t the only thing that way more expensive than it used to be. Global food prices are more than double what they were in 2003, according to the Food and Agriculture Organisation of the United Nation’s latest release.
Take a look at this chart:
Notice how this chart gets especially crazy right around 2007. According to research from anti-poverty advocacy group World Development Movement (WDM), this doubling of food prices could be be because big banks and hedge funds have been betting on food prices by the way of futures contracts.
One of the biggest food speculators in the market is Goldman Sachs, which made an estimated $400 million from speculating on food, according to a report by WDM.
“Goldman Sachs is the global leader in a trade that is driving food prices up while nearly a billion people are hungry,”said WDM’s Christine Haigh.
From the report:
“The US has passed legislation to limit speculation, but the controls have not been implemented due to a legal challenge from Wall Street spearheaded by the International Swaps and Derivatives Association, of which Goldman Sachs is a leading member. Similar legislation is on the table at the EU, but the UK government has so far opposed effective controls. Goldman Sachs has lobbied against controls in both the US and the EU.”
However, Nobel-prize winning economist Paul Krugman thinks this is all bunk. At least he did, in 2011, when global food prices hit an all time high. In a column he wrote for the New York Times on the subject in early 2011, he said that soaring food prices were more likely due to harvest failures than because of food speculators.
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