Why The Huge Spike in Oil Prices? “Peak Oil” or Wall Street Speculation?

March 19, 2012 2 Comments

By F. WILLIAM ENGDAHL | GLOBAL RESEARCH | MARCH 19, 2012

Since around October last year, the price of crude oil on world futures markets has exploded. Different people have different explanations. The most common one is the belief in financial markets that a war between either Israel and Iran or the USA and Iran or all three is imminent. Another camp argues that the price is rising unavoidably because the world has passed what they call “Peak Oil”—the point on an imaginary Gaussian Bell Curve (see graph above) at which half of all world known oil reserves have been depleted and the remaining oil will decline in quantity at an accelerating pace with rising price.

 Both the war danger and peak oil explanations are off base. As in the astronomic price run-up in the Summer of 2008 when oil in futures markets briefly hit $147 a barrel, oil today is rising because of the speculative pressure on oil futures markets from hedge funds and major banks such as Citigroup, JP Morgan Chase and most notably, Goldman Sachs, the bank always present when there are big bucks to be won for little effort betting on a sure thing. They’re getting a generous assist from the US Government agency entrusted with regulating financial derivatives, the Commodity Futures Trading Corporation (CFTC).

Source: oilnergy.com

Since the beginning of October 2011, some six months ago, the price of Brent Crude Oil Futures on the ICE Futures exchange has risen from just below $100 a barrel to over $126 per barrel, a rise of more than 25%. Back in 2009 oil was $30.

 Yet demand for crude oil worldwide is not rising, but rather is declining in the same period. The International Energy Agency (IEA) reports that the world oil supply rose by 1.3 million barrels a day in the last three months of 2011 while world demand increased by just over half that during that same time period.Gasoline usage is down in the US by 8%, Europe by 22% and even in China. Recession across much of the European Union, a deepening recession/depression in the United States and slowdown in Japan have reduced global oil demand while new discoveries are coming online daily and countries like Iraq are increasing supply after years of war. A brief spike in China’s oil purchases in January and February had to do with a decision last December to build their Strategic Petroleum Reserve and is expected to return to more normal import levels by the end of this month.

 Why then the huge spike in oil prices?

 Playing with ‘paper oil’

 A brief look at how today’s “paper oil” markets function is useful. Since Goldman Sachs bought J. Aron & Co., a savvy commodities trader in the 1980’s, trading in crude oil has gone from a domain of buyers and sellers of spot or physical oil to a market where unregulated speculation in oil futures, bets on a price of a given crude on a specific future date, usually in 30 or 60 or 90 days, and not actual supply-demand of physical oil determine daily oil prices.

 In recent years, a Wall Street-friendly (and Wall Street financed) US Congress has passed several laws to help the banks that were interested in trading oil futures, among them one that allowed the bankrupt Enron to get away with a financial ponzi scheme worth billions in 2001 before it went bankrupt.

 The Commodity Futures Modernization Act of 2000 (CFMA) was drafted by the man who today is President Obama’s Treasury Secretary, Tim Geithner. The CFMA in effect gave over-the-counter (between financial institutions) derivatives trading in energy futures free reign, absent any US Government supervision, as a result of the financially influential lobbying pressure of the Wall Street banks. Oil and other energy products were exempt under what came to be called the “Enron Loophole.”

 In 2008 during a popular outrage against Wall Street banks for causing the financial crisis, Congress finally passed a law over the veto of President George Bush to “close the Enron Loophole.” And as of January 2011, under the Dodd-Frank Wall Street Reform act, the CFTC was given authority to impose position caps on oil traders beginning in January 2011.

 Curiously, these limits have not yet been implemented by the CFTC. In a recent interview Senator Bernie Sanders of Vermont stated that the CFTC doesn’t “have the will” to enact these limits and “needs to obey the law.” He adds, “What we need to do is…limit the amount of oil any one company can control on the oil futures market. The function of these speculators is not to use oil but to make profits from speculation, drive prices up and sell.”1 While he has made noises of trying to close the loopholes, CFTC Chairman Gary Gensler has yet to do so. Notably,Gensler is a former executive of, you guessed, Goldman Sachs. The enforcement by the CFTC remains non-existent.

 The role of key banks along with oil majors such as BP in manipulating a new oil price bubble since last Autumn, one detached from the physical reality of supply-demand calculations of real oil barrels, is being noted by a number of sources.

 A ‘gambling casino…’

 Current estimates are that speculators, that is futures traders such as banks and hedge funds who have no intent of taking physical delivery but only of turning a paper profit, today control some 80 percent of the energy futures market, up from 30 percent a decade ago. CFTC Chair Gary Gensler, perhaps to maintain a patina of credibility while his agency ignored the legal mandate of Congress, declared last year in reference to oil markets that “huge inflows of speculative money create a self-fulfilling prophecy that drives up commodity prices.” 2 In early March, Kuwaiti Oil Minister Minister Hani Hussein said in an interview broadcast on state television, “Under the supply and demand theory, oil prices today are not justified.”3

 Michael Greenberger, professor at the University of Maryland School of Law and a former CFTC regulator who has tried to draw public attention to the consequences of the US Government’s decisions to allow unbridled speculation and manipulation of energy prices by big banks and funds, recently noted, “There are 50 studies showing that speculation adds an incredible premium to the price of oil, but somehow that hasn’t seeped into the conventional wisdom,” Greenberger said. “Once you have the market dominated by speculators, what you really have is a gambling casino.” 4

 The result of a permissive US Government regulation of oil markets has created the ideal conditions whereby a handful of strategic banks and financial institutions, interestingly the same ones dominating world trade in oil derivatives and the same ones who own the shares of the major oil trading exchange in London, ICE Futures, are able to manipulate huge short-term swings in the price we pay for oil or gasoline or countless other petroleum-based products.

 We are in the midst of one of those swings now, one made worse by the Israeli saber-rattling rhetoric over Iran’s nuclear program. Let me go on record stating categorically my firm conviction that Israel will not engage in a direct war against Iran nor will Washington. But the effect of the war rhetoric is to create the ideal backdrop for a massive speculative spike in oil. Some analysts speak of oil at $150 by summer.

 Hillary Clinton just insured that the oil price will continue to ride high for months on fears of a war with Iran by delivering a new ultimatum to Iran on the nuclear issue in talks with Russian Foreign Minister Lavrov, “by year’s end or else…” 5

 Curiously, one of the real drivers of the current oil price bubble is the Obama Administration’s economic sanctions recently imposed on oil transactions of the Central Bank of Iran. By pressuring Japan, South Korea and the EU not to import Iranian oil or face punitive actions, Washington has reportedly forced a huge drop in oil supply from Iran to the world market in recent weeks, giving a turbo boost to the Wall Street derivatives play on oil. In a recent OpEd in the London Financial Times, Ian Bremmer and David Gordon of the Eurasia Group wrote, “… removing too much Iranian oil from the world’s energy supply could cause an oil price spike that would halt the recovery even as it does some financial damage to Iran. For perhaps the first time, sanctions have the potential to be ‘too successful,’ hurting the sanctioners as much as the sanctioned.”

 Iran is shipping 300,000 to 400,000 a barrels a day less than its usual 2.5 million barrels a day, according to Bloomberg. Last week, the US Energy Information Administration said in a report that much of that Iranian oil isn’t being exported because insurers won’t issue policies for the shipments.6

 The issue of unbridled and unregulated oil derivatives speculation by a handful of big banks is not a new issue. A June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices,” noted, “…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”

 The report pointed out that the Commodity Futures Trading Trading Commission had been mandated by Congress to ensure that prices on the futures market reflect the laws of supply and demand rather than manipulative practices or excessive speculation. The US Commodity Exchange Act (CEA) states, “Excessive speculation in any commodity under contracts of sale of such commodity for future delivery . . . causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity.” Further, the CEA directs the CFTC to establish such trading limits “as the Commission finds are necessary to diminish, eliminate, or prevent such burden.”7

 Where is the CFTC now that we need such limits? As Senator Sanders correctly noted, the CFTC appears to ignore the law to the benefit of Goldman Sachs and Wall Street friends who dominate the trade in oil futures.

 The moment that it becomes clear that the Obama Administration has acted to prevent any war with Iran by opening various diplomatic back-channels and that Netanyahu is merely trying to use the war threats to enhance his tactical position to horse trade with an Obama Administration he despises, the price of oil is poised to drop like a stone within days. Until then, the key oil derivatives insiders are laughing all the way to the bank. The effect of the soaring oil prices on fragile world economic growth, especially in countries like China is very negative as well.

Notes:

1 Morgan Korn, Oil Speculators Must Be Stopped and the CFTC “Needs to Obey the Law”: Sen. Bernie Sanders, Daily Ticker, March 7, 2012, accessed in
http://finance.yahoo.com/blogs/daily-ticker/oil-speculators-must-stopped-ctfc-needs-obey-law-182903332.html

2 Ibid.

3 UpstreamOnline, Kuwait’s oil minister believes current world oil prices are not justified, adding that the Gulf state’s current production rate will not affect its level of strategic reserves, 12 March 2012, accessed in
 http://www.upstreamonline.com/live/article1236944.ece

4 Peter S. Goodman, Behind Gas Price Increases, Obama’s Failure To Crack Down On Speculators, The Huffington Post, March 15, 2012, accessed in
 http://www.huffingtonpost.com/peter-s-goodman/gas-price-increase_b_1346035.html

5 Tom Parfitt, US ‘tells Russia to warn Iran of last chance’ , The Telegraph, 14 March 2012, accessed in

http://www.telegraph.co.uk/news/worldnews/middleeast/iran/9142688/US-tells-Russia-to-warn-Iran-of-last-chance.html

6 Steve Levine, Obama administration brushes off oil price impact of Iran sanctions, Foreign Policy, March 8, 2012, accessed in
 http://oilandglory.foreignpolicy.com/posts/2012/03/08/obama_administration_brushes_off_oil_price_impact_of_iran_sanctions

7 F. William Engdahl, ‘Perhaps 60% of today’s oil price is pure speculation’, Global Research, May 2, 2008, accessed in
 http://www.globalresearch.ca/index.php?context=va&aid=8878.

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Speculation Drives Up Food Prices Worldwide

October 6, 2011

The practice of betting on food prices as if it was gold or silver along with the use of some food staples for the production of fuels have helped plunge millions into hunger.

by Edward Miller
Global Research
October 6, 2011

The Commodity Futures Trading Commission (CFTC) has again delayed the introduction of position limits required under the Dodd-Frank Act. These limits are intended to prevent speculation in (among other things) agricultural commodities, speculation which, many critics argue, have driven up the price of food worldwide and plunged millions into hunger.

>In late 2006, the price of food and other commodities began rising precipitately, continuing throughout 2007 and peaking in 2008. Millions were cast below the poverty line and food riots erupted across the developing world, from Haiti to Mozambique. While analysts initially framed the crisis in terms of market fundamentals (such as rising population, increased demand for resource-intensive food, declining stockpiles, biofuel and agricultural subsidies, and crop shortfalls from natural disasters), a growing number of experts have tied the massive spikes to financial intermediation. As economist Jayati Ghosh explains:

“It is now quite widely acknowledged that financial speculation was the major factor behind the sharp price rise of many primary commodities , including agricultural items over the past year … Even recent research from the World Bank (Bafis and Haniotis 2010) recognizes the role played by the “financialisation of commodities” in the price surges and declines, and notes that price variability has overwhelmed price trends for important commodities.”

Trading Regulation for Financialisation

This kind of speculation was made possible by deregulation in the US financial sector, in particular the Commodity Futures Modernization Act 2000 (CFMA), exempting commodity futures trading from regulatory oversight. Crucially for our narrative, this removed limits on the number of contracts that could be held at any one time (called position limits) from the equation. Firms like Goldman Sachs, Morgan Stanley and Barclays began developing index funds (collective investment schemes) based on these commodities, specializing in buying futures contracts in the belief that the future price will be higher than the present price. Journalist Fred Kaufman eloquently stated this in his Harpers article ‘The Food Bubble’:

“Goldman Sachs envisioned a new form of commodities investment, a product for investors who had no taste for the complexities of corn or soy or wheat, no interest in weather and weevils, and no desire for getting into and out of shorts and longs – investors who wanted nothing more than to park a great deal of money somewhere, then sit back and watch that pile grow.”

All manner of institutional investors began dumping capital into these funds, driving prices, and profits, through the roof:

“As the global financial system became fragile with the continuing implosion of the US housing finance market, large investor, especially institutional investors such as hedge funds and pension funds and even banks, searched for other avenues of investment to find new sources for profit. Commodity speculation increasingly emerged as an important area for such financial investment.”

Traditionally, futures contracts play an important role in price discovery, reducing the price risk of the commodity itself. However without a limit to the number of commodity futures contracts that could be held, investors were able to withhold huge amounts of food from entering the market. When combined with the real supply and demand factors mentioned above, this spelt volatile price spikes; between 2005 and 2008 the price of maize nearly tripled, wheat prices increased by 127%, and rice by 170%. Throughout the crisis, at least 40 million people went driven into hunger, and the number of people driven into extreme poverty rose from 130 to 150 million.

And worse, this speculation wasn’t limited to the 2007-2008 period. While commodity prices fell again in 2009, the latter half of 2010 saw them again skyrocket, reaching an all-time high at the end of that year, and remaining high into this year. Today, over a billion people remain hungry, while wealthy investors continue to reap huge profits by gambling on the stomachs of the world’s most vulnerable.

Dodd-Frank Reform

Following the global financial crisis, Representative Barney Frank and the Chairman of the Senate Banking Committee Chris Dodd proposed legislation to boost US financial stability. The Dodd-Frank Act provided sweeping financial reforms to the US financial sector, including reforms to commodity futures regulation. Section 737 (4) requires the CFTC to ‘establish limits on the amount of positions, as appropriate, other than bona fide hedge position, that may be held by any person with respect to contracts of sale for future delivery or with respect to options on the contracts or commodities traded on or subject to the rules of a designated contract market.’ These limits should, ‘to the maximum extent practicable … diminish, eliminate, or prevent excessive speculation … [and] deter and prevent market manipulation, squeezes and corners…”.

So far so good right, problem solved? Think again. The legislation provided a 270-day window in which position limits were to be put in place, meaning that by the 17th of April this year, this problem should have been solved, or, at the very least, ameliorated. However that date came and went, and the CFTC failed to reach agreement. A new date was set for the 4th of October, however that date also came and went with no further advance. CFTC Chairman Gary Gensler responded, saying “We’re not trying to do this against a clock. We’re trying to do this in a way that gets it right. So a few more weeks is a small thing for us to be concerned with if we’re going to get it thought through in a better way.” The rules have now been delayed until October 18.

The Speculators Fight Back

The CFTC isn’t so much concerned with world hunger as its reason for regulating commodity futures, and has hardly addressed the issue in public statements. However futures trading also affects other commodities such as oil, gold and silver, all of which have risen sharply over the past few years. Robert Pollin and James Heintz of the Political Economy Research Institute at the University of Massachusetts calculate that,

“…the average US consumer paid a 83-cent-per-gallon premium in May for their gasoline purchases due to the huge rise in the speculative futures market for oil. Considering the US economy as a whole, this translates into a speculation premium of over $1 billion for May alone. Of the May price were to hold for a year, that would mean that the speculative premium would total $12 billion.”

The price of oil seems to be the CFTC’s main focus regarding position limits. And its something that is hotly contested, as speculative investors recoil in horror at the idea of their profit blade being diminished. Their effect is indeed being felt, as Reuters reported in mid-September that internal strife at the CFTC had slowed the progress of the position limits rule, and they were struggling to harmonise it with other regulations required under Dodd-Frank.

Leaked documents give us a picture of what the final regulation might look like. The CFTC has proposed a limit of 25% of the deliverable supply of the underlying commodity, a pitifully weak threshold that would allow four financial entities to dominate an entire commodity market. Indeed these limits might even encourage speculation, while other proposed rules would allow companies to avoid aggregating positions in different trading accounts, provided accounts are independently controlled and firewalls are imposed between trading desks. This would be very difficult to regulate, and provides banks with a set of loopholes big enough to drive a Wall Street bailout or bonus through. Traders who exceed futures limits would also be able to use swaps (derivatives that allows parties to exchange benefits of their respective financial instruments) to reduce their net position.

Asleep at the Wheel? Let’s see who’s driving…

Still, it should come as no real surprise that the limits being toyed with by the CFTC fail to address the problem of excessive speculation. CFTC Chairman Gary Gensler himself spent 18 years at Goldman Sachs, had made partner by the time he was 30, and eventually became the company’s co-head of finance. He subsequently worked as the undersecretary for domestic finance at the Treasury Department during the Clinton era, during which time he advocated the passage of the CFMA mentioned above. Commissioner Jill E Sommers also worked closely with congressional staff on the drafting of the CFMA, while another Comissioner, Scott D O’Malia, lobbied for the repeal of the Public Utility Holding Company Act, legislation that was directed at curbing speculation by energy and water utilities.

These viewpoints dominate the CFTC, and they represent the extent of regulatory capture that the finance industry holds over Washington. In light of this, it is little wonder that the proposed limits leaked from the CFTC do little to rein in excessive speculation. Added to this is the fact that the CFTC’s funding hangs in the balance. While the Senate Appropriations Committee recently approved a bill raising the CFTC budget (from $202 million to $240 million for 2012), it is unclear how this will be reconciled with a House bill that cuts the CFTC’s funding to $171.9 million.

Still, all is not lost. Within the CFTC, the other camp is headed by Commissioner Bart Chilton, a vocal supporter of position limits, who has spoken out strongly against speculation in commodity markets, especially the silver market (in late 2010 he revealed that a single trader controlled 40% of the market).

Anti-Excessive Speculation Act 2011

More promising is the Anti-Excessive Speculation Act of 2011, intended to “prevent excessive speculation in commodity markets and excessive speculative position limits on energy contracts…” Democratic Senator Bill Nelson of Florida and Representative Peter Welch introduced matching bills in late September 2011 to cap position limits at a level that reflects market fundamentals of supply and demand.

Section 5(7) of that Act defines an excessive speculative position as a position that affects “more than 5 percent of the estimated deliverable supply of the same commodity,” a drastic reduction on the amount of a commodity than can be gambled on than under either the present scenario or the leaked regulations from the CFTC. While a number of Democrats support the initiative, the massive support the Democratic Party has received from the finance industry would likely mitigate its passage in the Senate, or in the Republican-led House of Representatives for that matter. Indeed, it is would be unlikely that Congress would bother intervening while the CFTC, a supposedly expert, non-partisan body, is still busy delaying in this area.

And all the while as Washington and Wall Street bounce back and forth on this issue, commodity prices hover just below their all-time high and over a billion people continue to starve.

While the zombie bankers and blood-sucking speculators mightn’t realize it, food is a human right, and we need to recognize that the rights of humanity are far too important to be left to the market.

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Alimentos Modificados Genéticamente – ¿Envenenando Nuestra Gente?

June 9, 2011

Traducción Luis R. Miranda
allAfrica.com
Junio 9, 2011

Opinión

Uno de los más extensos experimentos no regulados en seres humanos se está llevando a cabo aquí en África del Sur. Los sudafricanos fueron los primeros en el mundo en consumir alimentos genéticamente modificados (OGM)como parte de su dieta. Según fuentes de la industria más del 75% de nuestro maíz blanco es ahora GM. Esto significa que la papilla consumida a diario en la mayoría de los hogares de Sudáfrica está compuesto de maíz genéticamente modificado.

La afirmación de la industria que nadie se ha enfermado después de ingerir alimentos modificados genéticamente es científicamente deshonesta. Se basa en el principio de “si no miras, no encuentras”. Debido a que los alimentos modificados genéticamente no están claramente identificados a través de un etiquetado claro, es muy imposible saber qué enfermedades están relacionadas con el consumo del producto.

Se dice que estos alimentos han sido probados y son seguros. Al mismo tiempo, los productores de transgénicos afirman que sus productos son “sustancialmente equivalentes” – idénticos a sus contra partes naturales. Como tales, no requieren pruebas. Cuando las pruebas se ha hecho han sido presas de las mismas trampas que han afectado las pruebas de toxicología hechas a productos químicos durante décadas. No es sorprendente que las empresas que producen OGM, sin excepción han evolucionado a partir de las empresas químicas agrícolas, infames en su abuso de los protocolos estadísticos y experimentales.

La mayoría de las pruebas se han realizado en los alimentos y presentado por las mismas compañías que buscan su aprobación. El diseño de estas pruebas ha sido opaco y engañoso. Las investigaciones han demostrado que los resultados han sido sistemáticamente manipulados y sesgados. Dice la epidemióloga Judy Carman: “Su enfoque conjunto para el análisis no sería útil para una clase de estadística básica.”

Los primeros análisis de todos los estudios de alimentación encuentran exactamente tres experimentos. Aún estas pruebas muestran tendencias preocupantes. Más reciente meta-análisis han reforzado estas preocupaciones. Un hallazgo consistente ha sido el daño al hígado y los riñones. Cabe destacar que el hígado y la enfermedad renal han aumentado desde que los cultivos transgénicos se introdujeron en los EE.UU..

Lo notable es que cuando los investigadores empleados o conectados a los desarrolladores de los alimentos GM hicieron estudios, no se reportaron problemas. Por otra parte, estudios realizados por científicos independientes siempre motivan su preocupación. Un análisis publicado recientemente puso de relieve esta tendencia. Esta relación es común en los análisis de otros productos químicos y alimentos.

Más preocupante aún es el hecho de que los estudios de alimentación fueron hechos a muy corto plazo, con no más de tres meses. Fundamentalmente, ninguno de ellos utiliza más de un tercio de los productos transgénicos en la dieta. En el sur de África, comemos maíz transgénico no identificado como un alimento básico en niveles que en muchos casos puede alcanzar el 100% de la dieta. La pregunta es: Si el daño es preocupante y está estadísticamente demostrado que los riñones, el hígado y otros órganos son destruídos cuando los animales son alimentados con un tercio de su dieta con productos modificados genéticamente, en estudios de una duración de tres meses, entonces ¿qué diablos va a pasar con aquellos de nosotros que comemos una dieta que es predominantemente a base de maíz GM, todos los días durante años?

Esto no es nada menos que un experimento masivo no regulado. Para empeorar las cosas este experimento no se lleva a cabo en una población sana, sino en una cuya salud está doblemente comprometida: en primer lugar, las personas no comen una dieta lo suficientemente variada. En segundo lugar, tenemos el mayor número de habitantes con VIH, SIDA e infecciones de tuberculosis en el mundo.

Hay muchos otros estudios que han señalado los problemas del consumo de los cultivos transgénicos, incluso a niveles reducidos de una tercera parte de la dieta total. Los estudios han demostrado menor recuento de espermatozoides y esterilidad. Los investigadores han pedido constantemente para que se siga investigando. Todo lo que la industria de los transgénicos hace es lo de siempre; intentar salirse con la suya.

Esta situación escandalosa cuenta con la asistencia de nuestra mala regulación de los alimentos modificados genéticamente que sólo se identificarán a finales de este año. En otras palabras, las personas han estado comiendo alimentos GM en la ignorancia total de los hechos. Hasta el momento, no hay una prueba independiente, llevada a cabo durante generaciones sobre como la dieta de varias de las personas se ve afectada al consumir alimentos GM. Esto equivale a poco menos que negligencia criminal por parte de nuestro gobierno, que siempre ha hecho caso omiso de estas preocupaciones, y en lugar ha tomado el lado de una industria con una trayectoria muy defectuosa.

Por supuesto esta industria insiste en que la Unión Europea y otros han producido informes que demuestran que los cultivos transgénicos no tienen ningún riesgo para la salud. El hecho es que los reguladores de la UE se han basado en exactamente las mismas pruebas producidas por la propia industria. En segundo lugar, la influencia de la industria en el régimen normativo es significativo. Esta industria tiene no sólo los reguladores habitualmente mal informados, a través de pruebas con el suministro de datos estadísticos sesgados, pero siempre ha interferido en el régimen de reglamentación.
Por ejemplo, la normativa que regula los cultivos transgénicos en los EE.UU. fue redactada por el ex jefe de asuntos reguladores de Monsanto, Michael Taylor, quien dejó la empresa Monsanto para trabajar en el gobierno con el fin de elaborar una legislación favorable a la industria. Luego regresó a Monsanto. Desde entonces, ha vuelto al gobierno, en lo que se conoce como “la puerta giratoria”. Esto no es en absoluto un caso aislado y una situación similar existe en el sur de África.

Esta es sólo la punta del iceberg. Hay casos documentados de como la industria restringe y prohíbe las pruebas independientes de sus productos. Esto es posible debido a que estos productos están patentados se necesita permiso de las empresas para accesar diversos aspectos cruciales de e información en las pruebas científicas, el cual es siempre negado.

No se trata sólo de los peligros inherentes de los cultivos transgénicos. El producto GM más cultivado en el mundo, la soja resistente a los herbicidas, se ha relacionado con niveles altos del herbicida Roundup, fabricado por Monsanto, que también es propietaria de las patentes en más del 90% de todos los cultivos transgénicos a nivel mundial. Monsanto también introdujo el maíz resistentes a los herbicidas, que se cultivan en el sur de África. Pese a las afirmaciones de que los cultivos transgénicos reducen el uso de productos químicos, hemos visto exactamente que lo contrario ocurre en todo el mundo.

Por ejemplo, en Argentina, el uso de herbicidas ha aumentado 180 veces en 13 años. En los EE.UU., 174 000 toneladas más se usan cada año. En Brasil es de hasta un 95%. La responsabilidad del impacto ambiental y en la salud de las personas no es la preocupación de los agricultores, sino que simplemente es pasada a los consumidores, que no son los más sabios. Y los riesgos que estos productos químicos crean son cada vez más y más preocupantes que los cultivos transgénicos en sí.

Cuando los primeros cultivos transgénicos se introdujeron la cantidad permitida legalmente de residuos de herbicidas en los alimentos se aumento en 200 veces en el caso de la Unión Europea, con incrementos similares en otros lugares, todo para acomodar las peticiones de las corporaciones. Roundup está vinculado a graves impactos en la salud humana, incluidos los daños al crecimiento del embrión y el feto (impactos tetragénicos), así como el daño celular, entre muchos otros impactos sobre los mamíferos. Hay literalmente docenas de estudios publicados que indican las preocupaciones acerca de este producto químico. También afecta a los anfibios, insectos, lombrices y bacterias del suelo que liberan nutrientes para las plantas.

Además de estas preocupaciones, hay una inconsistencia evidente en el argumento de que los cultivos transgénicos son necesarios para alimentar al mundo: El hecho de que el producto GM más cultivado en el mundo, la soja, siempre ha sido demostrado que rinden menos que la soja convencional y natural. A pesar de años de promesas de que los cultivos GM son más resistentes a la sequía estas promesas siguen sin cumplirse.

Oxfam Internacional publicó recientemente un informe que indica que los precios de los alimentos se duplicaran, desde sus ya altos niveles en las próximas dos décadas. ¿Cómo podemos solucionar este problema? Somos constantemente informados por los partidarios de los cultivos transgénicos que debemos adoptar la tecnología para alimentar al mundo. La realidad es que los programas de mejoramiento convencional de plantas han logrado mucho más, a un costo mucho más bajo, mejorando el rendimiento, la resistencia viral, la mejora nutricional y resistencia a la sequía.

Quince años de cultivos genéticamente modificados en África del Sur han demostrado que la rápida adopción de cultivos transgénicos no ha tenido impacto alguno sobre la cantidad de alimentos que llegan a la boca de los más necesitados. La única conclusión que puede ser obtenida es que los cultivos transgénicos no son la solución. Más importante es que estamos jugando un peligroso juego de la ruleta rusa genética con la salud de nuestro pueblo.

La Evaluación Internacional del Papel del Conocimiento, Ciencia y Tecnología para el Desarrollo (IAASTD), en su informe titulado “Agricultura en la encrucijada”, señaló que los cultivos transgénicos en el mejor de los casos desempeñará un papel limitado en la lucha contra el hambre mundial. El enfoque en la agricultura de altos insumos industriales y los OGM han marginado las prácticas agrícolas más eficaces. El estudio de la IAASTD fue financiado por el Banco Mundial y varios organismos de la ONU, e involucró a más de 400 expertos en agricultura de todo el mundo.

El enfoque perjudicial en los cultivos transgénicos en las últimas dos décadas ha contribuido a retrasar el desarrollo de la investigación que se necesita con urgencia. En lugar de centrarse en el clima y los aspectos relacionados en los sistemas de producción de las comunidades que necesitamos para fomentar la seguridad alimentaria y la verdadera independencia, el enfoque político-institucional sobre los cultivos transgénicos nos ha dirigido hacia la confianza en el modelo de dependencia personificado por la agricultura industrial, en cuanto erosiona nuestra salud y la ya precaria situación.
Se mire como se mire, los cultivos transgénicos personifican el problema, no la solución.

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GM Food – Poisoning Our People?

June 9, 2011 1 Comment

Glenn Ashton
allAfrica.com
June 8, 2011

One of the most massive unregulated experiments on humans ever is being carried out right here in South Africa. South Africans are the first people in the world to consume a genetically modified (GM) food as a staple. According to industry sources more than 75% of our white maize is now GM. This means that the pap and samp consumed daily in the majority of South African households is now mainly comprised of genetically modified maize.

The industry claim that nobody has become ill from GM foods is scientifically dishonest. It is based on the principle of “don’t look – don’t find.” Because GM foods are not clearly identified through clear labelling, it is impossible to know what sicknesses are related to the consumption of the product.

We are repeatedly told these are the most widely tested foods ever. However, GM producers claim their products to be ‘substantially equivalent’ – identical to their natural counterparts. As such they do not require testing. Where testing has been done it has fallen prey to the same pitfalls that have dogged chemical and toxicological testing for decades. This is unsurprising as the GM companies have without exception evolved from agricultural chemical companies, infamous in their abuse of statistical and experimental protocols.

Most food tests have been undertaken and submitted by the very companies seeking approval. The design of these tests has been opaque and misleading. Research has shown results to have been routinely manipulated and skewed to the extent that epidemiologist Judy Carman said, “Their whole approach to the analysis would fail a basic statistics class.”

The earliest analysis of all feeding studies found exactly three experiments. Even these indicated worrying trends. More recent meta-analyses have reinforced these concerns. A consistent finding has been damage to the liver and kidneys. It is notable that liver and kidney disease has increased since GM crops were introduced in the US.

What is remarkable is that when researchers employed or connected to the developers of GM foods did studies, no problems were reported. On the other hand, studies undertaken by independent scientists consistently raised concerns. A recently published analysis highlighted this trend. This relationship is common in analyses of other chemicals and foodstuff.

Of even more concern is the fact that feeding studies were extremely short term, with most lasting three months. Crucially, none of them used more than one-third of GM product in the diet. In South Africa we eat unidentified GM white maize as a staple food at levels that may in many cases reach 100% of the diet. The question is: If statistically worrying damage is shown to kidney, liver and other organs when animals are fed one third of their diet as GM products, in studies lasting three months, then what on earth will happen to those of us who eat a diet that is predominantly based on GM maize, every day for years on end?

This is nothing less than a massive, unregulated experiment. To make matters worse this experiment is not being undertaken on a healthy population but one that is doubly compromised: First through most people not eating a sufficient or varied enough diet and secondly because we have the highest burden of HIV, AIDS and TB infections in the world.

There are numerous other studies that have indicated problems from consuming GM crops, even at reduced levels of a third of the total diet. Studies have shown reduced sperm count and even sterility. Researchers have consistently called for further work to be done. All the GM industry does is consistently try to spin itself out of trouble.

This outrageous situation is assisted by our poor regulation of GM food that will only need to be labelled later this year. In other words we have been eating the world’s first GM staple food in total ignorance of the fact. So far not one independent, multi-generational dietary test has been undertaken locally by independent scientists. This amounts to little less than criminal negligence by our government, which has consistently ignored all of these concerns, instead taking the side of an industry with a seriously blemished track record.

Of course this industry insists that the EU and others have produced reports clearing GM crops of any health risk. The fact remains that EU regulators have relied upon exactly the same compromised tests consistently produced by the industry itself. Secondly, the influence of industry within the regulatory regime is significant. This industry has not only routinely misinformed regulators, through supplying tests with skewed statistical data, but it has consistently interfered in the regulatory regime itself.

For instance, the regulations governing GM crops in the US were drafted by the ex-Monsanto head of regulatory affairs, Michael Taylor, who left Monsanto to work in government in order to draft industry friendly legislation. He then returned to Monsanto. He has since returned to government, in what is known as ‘the revolving door’. This is not by any means an isolated case and a similar situation exists in South Africa.

This is just the tip of the iceberg. There are repeated documented cases of this industry restricting and prohibiting independent testing of its products. This is possible because these products are patented and owned by the companies and permission must be granted for access to various crucial aspects of information in scientific testing, which is consistently refused.

It is not only the inherent dangers associated with GM crops themselves. The most widely grown GM crop in the world, herbicide resistant soy, has been linked to sharply increased levels of the herbicide Roundup, made by Monsanto, which also owns the patents on over 90% of all GM crops grown globally. Monsanto is also rapidly introducing herbicide resistant maize, now being grown in South Africa. Despite claims that GM crops reduce chemical use, we have seen exactly the opposite occurring around the world.

For instance, in Argentina, herbicide use has increased 180 fold in 13 years. In the USA, 174 000 tonnes more are used per year. In Brazil it is up by 95%. Responsibility for the downstream health impacts is not the farmers’ concern but is simply passed onto consumers who are none the wiser. And the risks of these chemicals are increasingly been proven to be as worrying, if not more so, than the concerns about the GM crops themselves.

When the first GM crops were introduced the amount of herbicide residue on food was permitted to be increased by 200 times in the case of the European Union, with similar increases elsewhere. Roundup is linked to serious human health impacts, including damage to embryo and fetus growth (tetragenic impacts) as well as cellular damage, amongst many other impacts on mammals. There are literally dozens of published studies indicating concerns about this chemical. It also affects amphibians, insects, earthworms and soil bacteria that liberate plant nutrients.

Besides these serious concerns, there is a final, glaring inconsistency in the argument that GM crops are required to feed the world. This is the fact that the most widely grown GM crop in the world, GM soy, has consistently been shown to yield less than conventional, natural soy. Despite years of promises of more nutritional or drought resistant GM crops, these promises remain unmet.

Oxfam recently released a report stating that food prices will more than double, from already high levels, over the next two decades. How do we address this problem? We are constantly informed by supporters of GM crops that we must adopt their technology to feed the world. The reality is that conventional plant breeding programmes have achieved far more, at far lower cost, enhancing yield, viral resistance, nutritional improvement and drought resistance.

Fifteen years of growing GM crops in South Africa has demonstrated that the rapid uptake of GM crops has had no impact at all on the amount of food reaching the mouths of the most needy. The only conclusion can be that GM crops are not the solution. More importantly we are playing a dangerous game of genetic roulette with the health of our people.

The four year International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD), in its report entitled “Agriculture at a Crossroads” indicated that GM crops would at best play a limited role in tackling global hunger. The focus on high-input industrial farming and GMOs has marginalised far more effective agricultural practices. The IAASTD study was funded by the World Bank and several leading UN organisations, and involved over 400 agricultural experts from around the world.

The perverse focus on GM crops over the past two decades has been instrumental in retarding development of urgently needed research. Instead of focussing on the proven, climate resilient and community based food production systems we require to encourage true food security and independence, the political-corporate focus on GM crops has steered us towards reliance on the dependency model epitomised by industrial agriculture, while simultaneously eroding our already tenuous health status.

Every way you look at it, GM crops epitomise the problem, not the solution.

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Playing with Food: The Scalpers of our Daily Bread

June 3, 2011

As food prices reach record highs, how much is the speculation in agricultural commodities to blame?

Felicity Lawrence
UK Guardian
June 3, 2011

With food prices reaching record highs again this year, what goes on inside a 650ft Chicago skyscraper topped by a statue of the goddess Ceres is coming under intense scrutiny.

It is here that the world’s oldest futures and options exchange, the Chicago Board of Trade (CBOT), was established in 1848 to serve the great grain belt that had opened up in the American midwest. And it is here that the international price of agricultural commodities is set to this day.

“There’s a lot of weather in the market, the northern growing season has been traumatic, with drought in Europe and China and tornadoes and floods in the US. No one is panicked yet, but any additional crop loss, say in Russia, will quickly bring new worry to the market and that could quickly turn to panic. We may be one more event away from panic,” Dan Basse, president of AgResource, one of Chicago’s most respected commodity analyst companies, warned as we watched the opening of a day’s trading last month.

G20 agriculture ministers will meet in Paris on 22 June to discuss food security and prices. Speculative activity and how to contain it is high on their agenda.

Debate has been raging since 2008, when price rises provoked riots around the world, about whether or not the new money that has flooded into the commodities markets since 2003 is the cause of the problem – and if so, how to regulate it.

In Chicago, before the financial day begins, teams of traders pump themselves up outside on chain-smoked cigarettes and outsize McDonald’s coffees. The coloured blazers they use to make themselves easily identifiable on the trading floor have been reduced to bright jackets with string-vest backs to counter the heat generated by a day’s speculation. They keep on their toes in training shoes.

Inside, when the bell announces the start, there is a frenzy of noise. Traders yell at one another and wave their arms in violent gesticulation, palms out to signal sell, palms in to signal buy. There are “scalpers” who buy and sell within seconds, “floor brokers” hedging for corporate accounts, and hundreds of runners rushing orders to the recorders.

At the end of May, the price of corn was up again – most traders and analysts expected it to continue rising along with other commodities.

Basse is one of those who thinks underlying fundamentals – a serious mismatch between supply and rapidly growing global demand – are behind this year’s price rises.

“Speculation is the easy thing to point the finger at and it’s easy to fix. Back in 2008, when prices were up and there was lots of money pouring in, that may have pushed prices up, but today we don’t see that as having a significant effect,” Basse said.

“Look at growth in world livestock demand and in biofuels demand, and you can see what’s been driving the agricultural bull market.”

He painted a troubling picture of what is likely to come. He estimates the world needs to bring around 10.3m hectares of new land a year into food production “just to keep stocks steady”, but he says that will be increasingly hard to do as the land that remains available is reduced to what is environmentally fragile.

A “weekend” farmer of GM crops himself, Basse admits the promise that biotech seeds would deliver big increases in yields has turned out to be illusory. He also fears that “superweeds are coming on so fast with GM that US farmers are going to have to go back to more traditional cultivation methods [as opposed to the practice with GM seeds of not tilling the soil and simply spraying to control pests] – but they don’t have the capacity to do that.”

Europe, Basse said, will soon have no choice but to lift its ban on imports of GM crops for animal feed. With its own crops suffering drought, it will have to turn to Brazil, the only major supplier of non-GM imports. However, the Chinese have already bought up large chunks of the Brazilian crop. The policies in the US and the EU of promoting biofuels will be unsustainable.

The company that owns CBOT, the Chicago Mercantile Exchange group (CME), also rejects the notion that the enormous rise in speculation in agricultural commodities in recent years has caused food price rises.

Farmers and processors of physical goods have long used commodities exchanges such as Chicago’s to hedge against risks such as bad harvests. Speculators willing to take the risk perform a useful role in providing liquidity. But much of the recent growth in speculation has been through new “structured” products invented by banks and sold to investors.

After intense lobbying, banks won deregulation of commodities markets in the US in 2000, allowing them to develop these new products. Goldman Sachs pioneered commodity index funds, which offer investors a chance to track changes in a spread of commodity prices including key agricultural commodities.

Between 2003 and 2008, investment in commodity index funds rose from $13bn to $317bn (£193bn). But the CME’s head of product development, Fred Seamon, said: “There is no credible evidence that suggests index funds or any group of traders are a cause for high prices or increased volatility. There may be a correlation, but that’s a completely different thing.”

CME argues that the volume of speculation is not a problem, because the overall composition of the agricultural commodities market has not changed; the increase in activity by index funds has been matched by an increase in trading by those who are commercial participants, that is those who have a direct interest in the physical goods.

“That’s an indefensible position,” Chicago–based hedge fund manager Mark Newell of Quiddity retorted. He and another hedge fund manager, Mike Masters, prepared testimony to the US Senate when it was looking into the effect of speculation on food prices in 2008.

“When billions of dollars of capital is put to work in small markets like agricultural commodities, it inevitably increases volatility and amplifies prices – and if financial flows amplify prices of food stuffs and energy, it’s not like real estate and stocks. When food prices double, people starve ,” Masters said.

The UN rapporteur on the Right to Food, Olivier de Schutter, added his weight to Masters’ side of the debate at the end of last year when he concluded a speculative bubble was responsible for a significant part of the food price rises.

An OECD study, however, did not find a link. Aid agencies such as Oxfam and Christian Aid are calling for reregulation.

In the US, the regulator – the Commodities Futures Trading Commission – has until July to produce a new framework for the commodities markets for Congress. It has been looking at imposing limits on the size of positions that traders can take, and at regulating the commodity index fund trades that are currently unregulated because they take place “over the counter”; that is, between investors and banks. But the financial industry has proved resistant to reforms. G20 ministers will have to decide their own position soon, too.

Newell, meanwhile, remains convinced that without action prices will continue to go up, partly because of underlying fundamentals, but also because, just like in 2008, “the game’s afoot again”.

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