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January 18, 2011

EU: MEPs demand reforms to food commodity trading

The EU's laws on financial instruments should be reformed to ensure food commodity derivatives are only bought and sold by traders committed to avoiding speculation and generating sharp price swings, a European Parliament motion has said.

The EU’s laws on financial instruments should be reformed to ensure food commodity derivatives are only bought and sold by traders committed to avoiding speculation and generating sharp price swings, a European Parliament motion has said. 

Approved today (18 January) by MEPs, the non-binding resolution said such derivatives should be traded only by those “who have legitimate interests in protecting agricultural merchandise against risks”. 

The motion argues that making trading systems more transparent would head off anxiety in markets that can provoke major price hikes or collapses. 

MEPs claimed that commodity market speculation was responsible for up to 50% of recent food price hikes, giving an example of wheat contract prices rising 70% in only two months this summer. 

The call followed a parliament debate on reforming the Common Agricultural Policy (CAP) – the motion also called for the CAP to continue in its key roles of ensuring food production and distribution in Europe and promoting rural development. MEPs also called for a “targeted global system of food stocks” to deal with possible food shortages and prices increases worldwide.

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