Dear Editor,
People are getting hungry, mad and out of control amidst rising food prices. But many leaders in industrialised countries are toeing the line even while
trying to make sense of the ongoing global food crisis. Many individuals are now pointing to biofuels and droughts brought on by climate change as the possible culprits. But while these factors may be part of the story, the current spiralling food prices call for more serious finger-pointing.

Unfortunately, many developing countries have not come to terms with how global financial markets really work. And when we hear about a knee-jerk "cassava plan" reaction, we also know that the usually updated Jamaica has totally missed the mark on this issue.

Without even knowing it, governments are playing a game against impersonal speculators, including hedge funds, index funds, investment banks and pension funds. You need not look any further than the Chicago Futures Exchange to see the ongoing bets being waged about the direction of food prices.

The futures market was primarily designed to help producers of various commodities to secure prices for their harvests ahead of time. And make no mistake, we need speculators to provide sufficient liquidity in order to keep the futures market working, but the current level of speculation on the futures exchange is unprecedented, and has exaggerated the instability in the underlying markets for rice and wheat. However, with the kind of high-profile institutional investors involved in this game, don't expect the spotlight to turn on this phenomenon any time soon.

Risk management ought not to be something that matters only to businesses and financial institutions. The government and the Bank of Jamaica need to be working much more closely with the minister of agriculture to devise a far more sophisticated plan for food-risk management. In doing so, we may be better able to stem the effects of the current food shortage, and mitigate the risk of food shortages in the future. But if such an effort must pay dividends, we have to team up with experts who really know how the global financial system works!

Horatio Morgan
Simon Fraser University
8888 University Drive
Burnaby, BC V5A 1S6
Canada
hmorgan@sfu.ca

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