Committee for the Abolition of Illegitimate Debt

In an interview given to La Jornada, the main left-wing daily paper in Mexico, he claims that, at first, the increase in international prices of cereals was “mere speculation since the production and supply by Ukraine and Russia did not stop overnight”, stocks do not run out overnight, but prices on futures Futures A futures contract is a standardized advance commitment, negotiated on an organized futures market, to deliver a specified quantity of a precisely defined underlying asset at a specified time – the ‘delivery date’ – and place. Futures contracts are the most widely traded financial instruments in the world. markets have risen immediately.

In February and March 2022, the increase in international prices of cereals was the result of speculation since the production and supply by Ukraine and Russia did not stop overnight

“The production of cereals is seasonal, crops had not been destroyed, it was mere speculation, but now surely after months of war and sanctions, there is going to be a real problem of supply for countries that depend on Russia and Ukraine”, as well as a risk of defaulting on debt payment for economies that do not export commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. , he adds.

According to Bloomberg’s data, net speculative positions in maize on the US futures market Futures market A market on which a product (financial instrument, currency, merchandise) is purchased or sold with payment and delivery postponed until a later date than the initial transaction which determined the price. began to rise in November last year. In the past month alone, the price of maize on the Chicago Board of Trade, now the CME Group, has risen by 8.61%, wheat by 4.87% and soybeans by 4.12%.

Toussaint explains that part of the increase in global food prices was triggered by investors who buy stocks of foodstuff and store them for a few weeks or months, won’t supply them on the market and sell them only when higher prices provide an opportunity for profits.

“Some have already won” from the increase in food prices, but this does not mean that food shortage and the increase in the cost of foodstuff for low-income households are mere speculations, “they are very real”, the CADTM spokesperson says.

The neoliberal model encouraged some countries of the South and tropical countries not to produce cereals anymore but to specialize in the production of tropical export commodities

Countries that produce commodities such as oil, gas, minerals, cereals or other farm products are in a better position to stand up to the economic recession and avoid the risk of default. For instance, “Venezuela, which experienced a partial default in debt payment, is now in a better position than three years ago because of the price of oil.”

In Argentina on the other hand – a country that is not only bound by the financial constraints imposed by the International Monetary Funds (IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org ) but does not have much to rely on - “the situation may become harder”; Toussaint explains that only in the first weeks of March, the first wave of speculation on the price of flour could be noted.

Beyond the war in Ukraine, which triggered the increase in cereal prices, the spokesperson underlined that the problem was the “neoliberal model that results in countries being brutally hit by the increase in food prices” since it favours the fragmentation and specialization of production.

"The neoliberal model encouraged some countries of the South and tropical countries not to produce cereals anymore, to specialize in the production of tropical export commodities and to import allegedly low-cost cereals from North America, Russia or Ukraine.”

Translated by the CADTM