Swiss Say Crop Traders Are Not to Blame for Food Price Rises

(Bloomberg) — Traders betting on crop futures aren’t to blame for driving up food prices, and speculation can rather help dampen market fluctuations, the Swiss government said. 

Strong price fluctuations are due to fundamentals like extreme weather, stockpile levels, trade restrictions and geopolitical events, such as the war in Ukraine, according to a report published by Switzerland’s Federal Council, which cited analysis of “scientific literature.” Transparency in international agricultural commodity markets has increased in recent years, improving their “functionality,” it said. 

“The Federal Council advises against unilateral measures by Switzerland to further increase transparency on international markets,” it said Wednesday. “Such measures would have practically no effect on international pricing, partly due to Switzerland’s size, and therefore have a poor cost-benefit ratio.”

The report’s conclusions ease pressure on the large number of agricultural trading companies that have made their home in Switzerland. Russia’s invasion of Ukraine sent crop prices soaring, fueling food inflation and threatening hunger in parts of Africa and the Middle East. The conflict also sparked volatility, allowing commodity traders to reap bumper profits and drawing criticism from non-governmental organizations. 

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