Biodiversity, ecosystem (services), agriculture and prospecting food Flashcards

1
Q

What is Glyphosate and its impact on health?

A

Glyphosate is an active herbicide ingredient commercialised mainly by Monsanto
The impact of glyphosate on the planet and health are:
Carcinogenic
Endocrine dropping effect
Cytotoxic effects
The results of current analytical surveys on surface water are particularly worrisome.
genotoxic for humans and animals(fish, worms, snails, rats…)
even plant cells(inducing algal bloom, oxidative stress…),
phytoplanktons
Pollutant in surface water, can disturb aquatic ecosystems, soil contamination, affecting disease resistance of plants
Residue in food
Correlation with shorter pregnancy, teratogenicity
Biodiversity loss

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2
Q

What is the Glyphosate Debate?

A

years different studies showed the danger or not of glyphosate from different instances such as the EU (EFSA’s) or the WHO (IARC). The IARC looked at both aspects of the active ingredient and the PPP . At the opposite of the EU which only looked at the active ingredient
IARC showed the carcinogenic aspect of glyphosate when looking at the whole product .
IARC evaluation is hazard-based, while EFSA’s (EU)is risk-based assessment(likeliness of risk’s occurrence under realistic scenarios)
EFSA’s showed that the active ingredient was harmless

The glyphosate debate is a debate between environmental/health lobbies and agronome/chemical industries lobbies around the world but really intensely in European countries .
Glyphosate is a widely used herbicide that controls broadleaf weeds and grasses. It has been registered as a pesticide in the U.S. since 1974.

  • 2017: EU citizens initiative to ban glyphosate
  • evidence that glyphosate is carcinogenic
  • glyphosate is bad for the environment
  • EU institutions did not approve citizens proposal
  • This article argues that the glyphosate saga epitomizes a patent failure by the EU institutions to strike a fair balance among scientific evidence and precautionary health and environmental protection, science and public perception of risk, technical expertise and democratic legitimacy. It thus exemplifies a further shift towards evidence-based risk regulation, and an utter disregard of what EU-wide public opinion clearly held to be the threshold of acceptable risk and the intended level of protection.
  • EU relied on narrow evidence by specific scientists who said that glyphosate has no risk to human and environment health
  • while many others said there is a risk
  • glyphosate is used so much in agriculture → agriculture relies on glyphosate
  • EU maybe approved glyphosate for money reasons
  • market driven scientific bias
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3
Q

What is the Precautionary Principle?

A

The precautionary principle enables decision-makers to adopt precautionary measures when scientific evidence about an environmental or human health hazard is uncertain and the stakes are high.
Or : Anticipatory action of the risk manager in response to uncertainty that regulates the decision-making process and allows us to make a decision but does not determine the outcome
The precautionary principle is incorporated into various international conventions on the protection of the environmentRio Declaration on Environment and Development: “In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.”
Mainly Used in regulating GMOs
Ethical foundation; GMO regulation justified in treating biotechnology as risky because it can affect the environment Issues of bioethics and environmental law; roots in culture and religious practicesNeed to incorporate ethical values and socio-economic considerations in GMO regulation
Social wise The public does not favour genetic engineering without legal control
On an other side the principle is not necessarily about banning a product but also sometimes limiting some part of it

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4
Q

What is Parma Declaration?

A

Governments from northern, western, central, southern and eastern Europe adopted a declaration today pledging to reduce the adverse health impact of environmental threats in the next decade. The text was endorsed by 53 Member States attending the Fifth Ministerial Conference on Environment and Health in Parma, Italy on 10-12 March 2010.
Through the Declaration and Commitment to Act, participating governments agreed to implement national programmes to provide equal opportunities to each child by 2020 by ensuring access to safe water and sanitation, opportunities for physical activity and a healthy diet, improved air quality and an environment free of toxic chemicals.

In 2010 the actors of the declaration ( represent from EU countries and From the WHO about Health and environment and economic )
Key environment and health challenges of our time:
a) the health and environmental impacts of climate change and related policies,
b) the health risks to children and other vulnerable groups posed by poor environmental, working and living conditions (especially the lack of water and sanitation),
c) socioeconomic and gender inequalities in the human environment and health, amplified by the financial crisis,
d) the burden of noncommunicable diseases, to the extent that it can be reduced through adequate policies in areas such as urban development, transport, food safety and nutrition, and living and working environments,
e) concerns raised by persistent, endocrine-disrupting and bio-accumulating harmful chemicals and (nano)particles, and by novel and emerging issues, and
f) insufficient resources in parts of the WHO European Region.

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5
Q

What is 7th EAP?

A

Have a 2050 view by saying that we should live well within the planet’s ecological limits, with an innovative, circular economy, resources are managed sustainably, biodiversity protected, valued and restored

  • This programme is intended to help guide EU action on the environment and climate change up to and beyond 2020
  • Overall environmental legislation that reduced air, water and soil pollution
  • It identifies three key objectives:
  • to protect, conserve and enhance the Union’s natural capital
  • to turn the Union into a resource-efficient, green, and competitive low-carbon economy
  • to safeguard the Union’s citizens from environment-related pressures and risks to health and wellbeing
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6
Q

What is 8h EAP?

A

accelerate the transition to a climate-neutral, resource-efficient and regenerative economy, which gives back to the planet more than it takes
recognises that human wellbeing and prosperity depend on the healthy ecosystems within which we operate.
Building on the European Green Deal, it has the following six priority objectives
achieving the 2030 greenhouse gas emission reduction target and climate neutrality by 2050
enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change
advancing towards a regenerative growth model, decoupling economic growth from resource use and environmental degradation, and accelerating the transition to a circular economy
pursuing a zero-pollution ambition, including for air, water and soil and protecting the health and well-being of Europeans
protecting, preserving and restoring biodiversity, and enhancing natural capital (notably air, water, soil, and forest, freshwater, wetland and marine ecosystems)
reducing environmental and climate pressures related to production and consumption (particularly in the areas of energy, industrial development, buildings and infrastructure, mobility and the food system)

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7
Q

What is the Role of Civil Society, science, business?

A

Parma Declaration
The role of Civil society is: ensuring youth participation by providing assistance and training, increasing cooperation with authorities, organisations, business community and scientific community to draw on their experience and knowledge to achieve results
- Civil society needed to strengthen the political concern for environment and health, mobilising joints efforts for action
- Partnerships with local authorities
- Business community needs to address challenges posed in the Commitment to Act
- Building capacity of health professionals and caretakers of children
need for participation of the public and stakeholders in tackling environment and health issues
Scientific do peer review to avoid any problems such as with Monsanto in 1985 and their article about glyphosate
EAP
​​
- Feb 2017; European citizens’ initiative (ECI) was launched with the aim of requesting the Commission to;
o “ban glyphosate and protect people and the environment from toxic pesticides”
- Article 11(4) of TEU; >1 mil EU citizens from a great number of EU members may request the commission to submit a legislative proposal to the member states (within their scope of action)
- “on matters where citizens consider that a legal act of the Union is required for the purpose of implementing the Treaties”
- Union institutions and MSs are responsible for taking appropriate actions
- Public authorities shall work with businesses and social partners, civil society and individual citizens to implement the EAP
Ensuring the public has access to information and to increase compliance with specific environment legislation
​​this didn’t go through as believed by the organiser

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8
Q

How are sustainability and health reflected in the frameworks?

A

Sustainability and health are reflected by:
Parma Declaration
- Committed to act on key environment and health challenges
- Advocating for sustainable and environmentally-friendly technologies
- Protecting the environment from climate change
-Advocating for health equity
EAP
- Objectives on preserving the environment and biodiversity(natural capital)
- Protecting human health well-being from pollution(air and noise), chemical hazards, water and sanitation
- need to better understand the potential risks to the environment and human health associated with new technologies
- improve ecological resilience and maximise the benefits environment policy can deliver for the economy and society, while respecting the planet’s ecological limits
- Ecosystem-based approaches

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9
Q

Environmental health priorities in the EU

HiAP

A

In the EU health priorities are :
Save citizens from danger such as heavy metals (lead intoxication…)
Air pollution
Noise pollution
Human biomonitoring: measuring human and environmental exposure to hazardous chemicals(through food, water and other products, e.g. medicinal, veterinary, as well as agriculture and pest control)
Health in all policies is one of the main actions of the European Union, indeed by considering the health of their citizens for every decision . They put health first.
“clarifying for decision-makers the links between policies and interventions, health determinants & consequent health outcomes” (Ollila et al., 2006)
Approach to policy making (policy tool, not a ‘policy end’)
Very difficult to enforce as obligation and monitor effectiveness of use of HiAP tools
Legally unsatisfactory; rule of law is that all binding obligations require mechanisms enabling their effectiveness
Democratically unsatisfactory; lack of judicial oversight of soft law instruments can result in their use becoming disconnected from core constitutional values such as transparency and legitimacy

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10
Q

The history of the Precautionary Principle

A
  • ORIGIN IN ENVIRONMENTAL LAW
    • Principle 15 of the 1992 UN RIO Declaration!!!!
    • Already used in MS, e.g 1960s Scandinavian MS, 1970s German environmental policy
    • SEA 1987: Prevention principle: Certain and qualifiable risks
    • Precautionary principle introduced with the Maastricht Treaty in 1992 into what is now Art 191(2) TFEU
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11
Q

The role of the precautionary principle in EU agri food LAW

Cricism

A

MS:
• Restrictions to free movement (Art 36 TFEU, Art 114(4) and (5) TFEU)
EU:
• Precautionary measures for single risk case decisions
• Underpinning the legislative framework: shifting burden of proof by means of authorization

Some criticism

1. Hindrance to innovation
2. Varying interpretations - legal uncertainty
3. What threshold for scientific uncertainty?
4. Wide discretion afforded to decision maker
5. Only possibility to lift precautionary measure is to end scientific uncertainty or to show manifest error - Near impossible level of proof to be met by plaintiff
6. Limited judicial review: ultra vires and manifest error
7. Judges that assess scientific evience?
8. Courts do not enforce a cosnistent approach
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12
Q

Precautionary Principle on Glyphosate

A

the EU contested the existence of scientific uncertainty - measure taken on the basis of the principle: in the case of glyphosate, after scientific risk assessment bt EFSA, the commission as risk manager
the perceived scientific uncertainty is mostly fuelled by normative and interpretive ambiguity: the reliability of industry studies and weight of evidence approach
however, the renewal was only granted for 5 years, not 15
the regulatory framework applicable to glyphosate does incorporate is an expression of the precautionary principle

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13
Q

What is Biodiversity?

A

The rich variety of species, indispensable to the maintenance of human health and well-being
The variability among living organisms from all sources incl. Inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part: this includes diversity within and between species and of ecosystems
WHO: “Biodiversity underpins all life on Earth, and refers to biological variety in all its forms, from the genetic make-up of plants and animals to cultural diversity.”

Biodiversity underpins all life on Earth, and refers to biological variety in all its forms, from the genetic make up of plants and animals to cultural diversity (WHO)

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14
Q

How to maintain biodiversity?

A

Governments and local stakeholders need to come together
To safeguard indigenous communities, protect biodiversity, and sustainably pursue drug discovery for the benefit of everyone, it is of paramount importance to strengthen the international implementation of the following practices:
● Investigate and standardise natural products: therapeutic potential, chemistry, ecology, availability and potential to cultivate, traditional use, in situ and ex situ conservation, sustainable trade, and impacts by climate change, with special focus on indigenous medicinal species with potential therapeutic properties.
● Implement ethical and governance models to engage with diverse indigenous communities to collect existing knowledge on species of interest, and create online databases for easy access, dissemination, and equitable distribution of benefits.
● Promote open inter-disciplinary domestic and international dialogue and information sharing among academics, physicians, patients, policy-makers, commercial bodies, and local and indigenous community stakeholders in the areas of medicine, health and wellbeing, with special focus on understanding different cultural norms and language needed to describe traditional medicine.
● Establish best practices for sustainable natural product collection, production, storage, and preparation–with special attention to safeguard traditional family preparations and assurance that value is returned to local communities, and standardise high capacity bio-molecular and cell-based assays in testing these natural products.
● Raise awareness of the long-term economic benefits of protecting biodiversity over the short-term benefits of habitat destruction and unsustainable resource extraction.
Promote best practices in sustainable commercialisation of natural products that consider the balance of ecosystems and population needs and the implementation of a fair and equitable share of benefits among current and future stakeholders

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15
Q

Biodiversity Loss Causes?

A

Deforestation, destruction of habitats(e.g. urbanisation), introduction of invasive species, exploitation of species for human interest, hunting, pollution, global warming(sea levels and temperature rising…)
urbanisation(leading to loss of natural environment), diet change
Epidemics
Population growth - increased urbanisation, deforestation, hunting, rise in epidemics, global warming increase
ocean acidification, plants are dying its getting to hot for them
killing and hunting animals for different causes.
Overfishing
destruction of natural habitat; mining, agriculture and construction (urban areas)
Pollution
collection of species for zoos or sciences
introduction of exotic species
climate change
natural disaster
range of species distribution (ex. mosquitoes and bees)
loss of beneficial microbes, driven by us trying to be hygienic.
increased use of agrichemicals,
genetic modification organisms
human beings are being relentless, we want to grow and be as healthy as possible
which leads to loss of biodiversity which leads to poorer health for humans.

  • On the other hand, the expansion of agriculture around the world – especially through monocultural methods – can contribute to the reduction of the resilience of ecosystems through the loss of often very rich forest biodiversity and by increasing contacts between humans, domestic animals and wildlife, with the increased risk of pathogen transfer as a result (WHO, 2011).
    -Genetically modified (GM) species introduced for food security or for human health reasons may, just as other invasive alien species have, become invasive over time and add to the decrease of biodiversity and ecosystem resilience.
    -Rising human population→ people need more resources
    “Land use change, pollution, poor water quality, chemical and waste contamination, climate change and other causes of ecosystem degradation all contribute to biodiversity loss and, can pose considerable threats to human health” (Answer for LG 2 and LG 5)
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16
Q

How can Biodiversity support Human Health?

A

Dietary intake has a strong influence on gut microbial composition
More contact with microbiomes in soil and less hygienic environments can help build the immune system
the intake of diverse food rich in fibres and secondary plant metabolites, with living microbiota, from a diverse soil environment may positively influence the gut
The soil rhizosphere and human gut microbiome can be considered as functional ecosystems which interact with each other
Food security-wise, rise in wheat are 60% of humankind food supply
Wild crops are the reserve for humankind, pesticides and GMOs will not be enough
Discovery of medicines, e.g. penicillin, aspirin…
Biological diversity of microorganisms provides benefits for health - extinction of species can bring out a specific disease and can limit discovery of new medicines
Biodiversity is a reserve for potential cures like antibiotics and antimicrobials
Urinary catheters are at risk for fouling - using texture from nature (shark skin) to invent new medical products (=biomimicry design)
Using parasite worms to cure Crohn’s disease etc.
Poisons produced by animals can be repurposed for medical use
Heparin, insulin, pituitary hormones were some of the earliest
Diabetes, heart diseases, CVDs, thrombosis (leeches)
Pollination: production of fruit
Loss of certain insects (like bees) will mean that plants will be unable to procreate naturally, which will mean the loss of certain plants (sometimes edible plants). This can cause more animals to die and ecosystems to collapse, which will affect human health in the end
Relationship between biodiversity and well-being; natural environments provide benefits for human health → Martens & Beumer (2015): “biodiversity - the rich variety of species - is in every way essential, indeed, indispensable, to the maintenance of human health and well-being.”
Biodiversity helps to purify ecosystems such as soil
Biodiversity loss is a threat to SDGs, impacts economy

17
Q

Biodiversity loss consequences on Human Health

A
  • People with a smaller microbiome are more vulnerable for diseases and infections and therefore have worse health.
  • Deforestation & extinctions make pandemics more likely
    When some species are going extinct, those that tend to survive and thrive — rats and bats, for instance — are more likely to host potentially dangerous pathogens that can make the jump to humans
  • Biodiversity decline or tempering with biodiversity in other ways can increase the spread of infectious diseases by reducing ecosystemic resilience and the capacity of ecosystems to buffer pests and diseases.
  • Indirectly, changes in ecosystem services affect livelihoods, income, local migration and, on occasion, may even cause or exacerbate political conflict
    -While the loss of biological biodiversity appears to affect significantly human health, it is also a significant threat to the attainment of sustainable development goals which is the blueprint for achieving a better and more sustainable future for all. Currently it threatens the goal 1; to reduce poverty, Goal 2; zero hunger, Goal 3; good health & well-being and goal 6; clean water and sanitation, Goal 11; sustainable cities and communities, Goal 13; Climate Action, Goal 14; Life Below Water and Goal 15; life on land
18
Q

What are Ecosystem Services?

A

Benefits people obtain from ecosystems,
Conditions and processes for which natural ecosystems and species that make them up sustain humans
Example: pollination, clean air, river basins, freshwater purification, carbon removal from the land and global climate…
Nature provides these services for free, but not everyone has equal access

They highlight key primary/basic ecosystem services, such as healthy food, clean water and air, as well as a range of others. “A healthy ecosystem supplies these ‘ecosystem services’ free of charge (Costanza et al., 1997; TEEB, 2009)”… Box 27.1 (pg. 479) provides some examples of ecosystem services (pollination, clean air, river basins, freshwater purification, management of potential infestations and disease-causing organisms, stabilising the countryside, protecting against erosion, carbon removal on the land and from the global climate, social and cultural services, genetic databank and inspiration).

19
Q

What are European frameworks connecting health and biodiversity?
Biodiversity Strategy Aims
Ecosystem Approach
SDGs
The Strategic Plan for Biodiversity 2011–2020
Launching an EU nature restoration plan

A
  1. Biodiversity Strategy Aims

building society’s resilience to future threats like climate change, deforestation, forest fires…
Establishing a larger EU - wide network of protected areas on land and at sea
Launching an EU nature restoration plan
Introducing measures to enable the necessary transformative change
Introducing measures to tackle the global biodiversity challenge

  1. Ecosystem Approach:

strategy for integrated management of land, water
that promotes conservation and sustainable use in an equitable way
three objectives of the Convention: conservation; sustainable use; and the fair and equitable sharing of the benefits arising out of the utilisation of genetic resources.
based on the application of appropriate scientific methodologies focused on levels of biological organisation, which encompass the essential structure, processes, functions and interactions among organisms and their environment.
It recognizes that humans, with their cultural diversity, are an integral component of many ecosystems.

  1. SDGs
    Human health, biodiversity and ecosystems were all prominently featured in the outcome document which devoted numerous paragraphs to calls for a comprehensive framework for a healthy, sustainable and more equitable future
    intended to build upon the Millennium Development Goals (MDGs), which were an expression of the international community’s commitment to global development, bringing social dimensions such as environment, poverty, hunger, disease, education, and gender equity to the forefront of the global policy agenda
  2. The Strategic Plan for Biodiversity 2011–2020

includes a vision for 2050, five strategic goals and twenty Aichi Biodiversity Targets, mostly to be achieved by 2020. The 2050 Vision stresses the role of biodiversity for human well-being: “biodiversity to be valued, conserved, restored and wisely used, maintaining ecosystem services, sustaining a healthy planet and delivering benefits essential for all people”

  1. Launching an EU nature restoration plan

Through concrete commitments and actions, the EU aims to restore degraded ecosystems by 2030 and manage them sustainably, addressing the key drivers of biodiversity loss.
As part of this plan, the Commission will propose binding nature restoration targets
•••by the end of 2021.

20
Q

What is Dengue Control (ecological perspective)?

A

mosquito-borne flavivirus with Aedes aegypti and Aedes albopictus as main vectors
one of the most important mosquito-borne infectious disease risk over the last decades- due to dramatic growth in geographic range and incidence
associated with rapid urbanization, associated to threats to biodiversity and climate change (loss of habitats for mosquitos, increased mosquitoes breeding sites)
approximately 100-390 million cases per year globally
not longer considered tropical disease but represents a concern globally
recent efforts in terms of vaccines and wolbachia infected mosquitoes
focus n latter stages of the transmission cycle
need to address the upstream drivers and build resilience more broadly and in long term

21
Q

What are the Growing pandemic risks?

A

human ecological disruption and unsustainable consumption drive pandemic risk
reducing anthropogenic global environmental change may reduce pandemic risk
land-us change, agricultural expansion and urbanization → cause more than 30% of emerging disease events
the trade consumption of wildlife is globally important risk for future pandemics
escape from the pandemic era requires policy options that foster transformative change towards preventing pandemics

22
Q

What are some nature-based solutions?

A

(defined by IUCN as:)
“actions to protect, sustainably manage, and restore natural or modified ecosystems that address societal challenges effectively and adaptively simultaneously providing human well-being and biodiversity benefits”.

seek to align biodiversity and human health and well-being objectives
emphasized in global and european policies and research agendas
not simple because we have to consider the distribution of costs, risks and benefits, as well as different priorities and trade-offs

23
Q

What is the Food Crisis of 2007-2008? and its consequences?

A

Food prices increased dramatically
rice; 224% (jan 2004 – may 2008)
wheat; 108% (jan 2004 – may 2008)
corn; 89% (jan 2004 – may 2008)

consequences:

  • food insecurity worldwide
  • civil unrest
  • appeals for food aid from 36 countries
  • people in poverty rose from 130 – 150 million

while the food price crisis may have been sparked off the above mentioned developments affecting demand and supply, its effects were exacerbated by excessive and insufficiently regulated speculation in commodity derivatives
Momentum-based speculation may have been the cause

The food price crisis=the increases in prices of basic food commodities and oil in 2007-2008 => the number of people in extreme poverty rose by 130 to 150 million (according to the world bank).
Beginning around 2005, markets for numerous agricultural commodities started to witness price increases and higher levels of volatility (by 83% between 2005 and 2006 and by 165% between 2007 and 2008
Possible reasons: factors adversely affecting food supply (climate change, water depletion, growth of biofuels which made stocks of wheat maize and rice low), excessive speculation. An amount of speculation is however necessary and useful in the market-> it facilitates commercial hedging against risk, allows for price discovery etc but it can also affect prices without adding anything to the economic value.
Factors such as a decline in the rate of growth of food production, climate change and water depletion, and the growth of biofuels have an impact on price spikes.
It is important to note that different kinds of speculation in different markets combined to create the food price crisis, and that no one category of market conduct was singly responsible.

24
Q

What are

  1. Food Spikes
  2. Volatility
A

Food spikes:when current food prices rise above the price that would be expected based on seasonal trends alone.
Volatility: rapid and unpredictable changes in food prices on markets, politics and social stability, rather than long-term structural trends in food prices that we can prepare for and adjust to

We argue that a food crisis is more closely related to extreme price spikes, while long-term volatility is more strongly connected to general price risks.

25
Q
  1. What are the driving factors for food spikes and volatility? What roles do climate change and sustainability play?
A
Exogenous shocks (root causes)
-   	extreme weather events, oil price shocks, production shocks, demand shocks à generate food price spikes and volatility (magnitude depends on political and economical environment of country)

conditional causes
- high concentration of production, low transparency in commodity markets à specific economic and political conditions can dampen or intensify exogenous shocks

internal drivers
discretionary trade policies, speculative activities and declines in world food stocks à endogenous shock-amplifiers (factors triggered by the same price dynamics)
production shocks (unexpected event changes supply of a products or commodity, resulting in a sudden change in price)
speculation (driven by changes in fundamentals – commodity demand and supply) oil prices
Oil price spikes have had increasing effects on food price spikes over time. They are linked to food prices through demand (biofuels), supply channels (cost of production), and to increased index-fund activities. Increasing demand for biofuel affects prices not only through a direct conversion of food crops to feedstock, but also through the reallocation of production resources, such as land and water, to the production of biofuel commodities
Environmental shocks and direct CC impacts may influence food price spikes and volatility
CC can alter temperatures and rainfall, leading to a decline in harvest and stocks
Financial crisis puts the food market in a state of crisis too

26
Q

What is Perfect Maret Hypothesis?

A

sometimes referred to as ‘‘traditional speculation’’ hypothesis, argues that speculation helps to stabilise prices by facilitating increased liquidity and improved price discovery in the market

27
Q

What is the speculative bubble hypothesis?

A

Claims that speculation tends to generate spikes and instabilities because of a herd mentality in the commodity exchanges
Besides policies to reduce volatility and extreme price spikes, governments can increase the resilience of producers and consumers to deal with price changes. This can be done by supporting contract farming and price insurance mechanisms on the production side and by enhancing safety nets and access to financial services on the consumer side.

28
Q
What is Food Speculation?
Traditional speculation
Momentum-based speculation
Herding
Speculation
Food price speculation
A
  • Traditional speculation is based on market fundamentals - on the demand and supply for any particular commodity(hedging against risk - reducing the risk of loss caused by price fluctuation)
    ​​- facilitates commercial hedging against risk, and it allows for price discovery, assisting farmers and buyers in discovering the reasonable price for a particular commodity in individual trades and on spot markets
  • Momentum-based speculation is based simply on market momentum; herding behaviour in times of strong(usually upward) price trends, which in developed in easily accessible markets can result in the emergence of speculative bubbles
  • Herding is when traders act following the actions of a larger group rather than acting independently and rationally based on the information available to them
  • Tends to increase price volatility
    Speculation: when investors bet on fluctuations in prices of land and food
    could potentially lead to excessive food prices and serious social problems, as poorer groups of the population with a very limited household budget may not be able to afford to buy the food they need
    Food price speculation: farmers fix a price ahead of time by signing future contracts → hedgers (people actually buying/selling the food) limit the high risk of price changes which are made through bets by speculators → economist have conflicting hypotheses
29
Q
  1. Which actors play a role in food speculation? Which parties’ benefit/lose?
A
Hedgers (high risk high return investments)
Speculators
Economists
The farmers
States (countries)

index funds
- replicating physical market by purchasing enormous quantities of futures (drives prices upwards because they buy futures which gamble on rising prices)
hedge funds
- speculate through various means on financial market and employ diverse strategies which allow them to reap profits even when the market falls

Farmers → benefit first, lose later (food prices were high so that benefited them, but this did not stay this way)
The banks → they lost because of the speculators asking for money and the banks investing continuously
The people → they were unequally affected- low income category people lost more (unemployment, hunger) while the rich benefitted
Food speculators (people in Wall Street) → they walked away with no severe punishments (they lost money, but did not go to prison). These investors kept asking the banks for money to speculate, however, after losing all the money from the banks, the investors needed a bailout. So, they also declared bankruptcy. Meaning: in the end they didn’t pay back the money they lost.

30
Q

What kind of legislation exists on this issue? And on an EU-level? (Food Speculation)

A

Proposed legislation at EU level on September 15th 2010- imposes mandatory reporting and clearing (where possible) of OTC derivatives, and stipulates that “nonfinancial actors” will be subject to the same rules as “financial actors” if they meet certain thresholds. More specifically, an information threshold is proposed, which will allow financial authorities to identify non-financial actors that have accumulated significant positions in OTC derivatives, and a clearing threshold, which, if exceeded, will render a nonfinancial actor subject to the clearing obligation.

On 23 June 2011, G20 Agriculture Ministers met to tackle the issue of food price volatility, with the ultimate objective to improve food security. They agreed on an “Action Plan on food price volatility and agriculture” that will be submitted to the G20 Leaders at their summit in November 2011.
five objectives of this Action Plan: (i) improving agricultural production and productivity, (ii) increasing market information and transparency, (iii) reducing the effects of price volatility for the most vulnerable, (iv) strengthening international policy coordination and (v) improving the functioning of agricultural commodity derivatives’ markets.

  1. EU common agricultural policy
    Aims;
    - To support farmers and improve agricultural productivity (ensuring a stable supply of affordable food)
    - To safeguard EU farmers to make a responsible living
    - To help tackle climate change and the sustainable management of natural resources
    - To maintain rural areas and landscapes across the EU
    - To keep the rural economy alive by promoting jobs in farming, agri-food industries and associated sectors
    Challenges for farmers;
    - Lower incomes
    - Dependence on an increasingly unpredictable and challenged weather and climate
    - Time gap; consumers demand and farmers being able to supply
    Actions;
    - Income support (ex: direct payments)
    - Market measures to deal with difficult market situations (ex: sudden drop in demand or fall in prices)
    - Rural development measures
    Financing;
    - European agricultural guarantee fund (EAGF)
    - European agricultural fund for rural development (EAFRD)
  2. US Dodd-frank act
    requires a limit on the number of agricultural commodities that can be held by one trader, and requires the CTFC to establish limits on the aggregate number of positions in certain contracts held by one person(hasn’t brought structural changes)
    a speculator can hold up to 25% of the market in global wheat or corn
31
Q

What are direct and indirect consequences on health? (Food Speculation)

A

● extreme poverty and hunger by rising food price
● force people to eat less fruit, vegetables, dairy and meat in order to afford staple food
● reduce any savings, sell assets or take out loans;
● and reduce spending on ‘luxuries’ such as healthcare, education or family planning

Less fruit, vegetable, dairy and meat consumption to afford staple foods (grains, etc.)

  • Reduce savings, sell assets, take out loans
  • Reduce spending on healthcare, education or family planning
32
Q

Possible Solutions (Food Speculation) to prevent a food crisis

A

Comprehensive reform of all derivatives trading necessary
Regulatory bodies should carefully study and acquire expertise in commodity markets
Access to commodities futures markets should be restricted
Spot markets should be strengthened
Physical grain reserves should be established .

TO PREVENT FOOD CRISIS

  1. Given the numerous linkages between agriculture, oil, and other financial markets demonstrated above, comprehensive reform of all derivatives trading is necessary. The first step would be to require registration and clearing to the maximum extent possible of OTC derivatives, so that there is real-time reporting of all transactions made, without information privileges for OTC traders, and to allow for effective supervision. The small minority of derivatives that cannot be cleared must nevertheless be reported without a time lag.
  2. Regulatory bodies should carefully study and acquire expertise in commodity markets, instead of regulating commodity derivatives and financial derivatives as if they were the same class of assets. It may be appropriate to assign the task of regulating commodity derivatives to a specific institution staffed with experts in commodity regulation, rather than have a single body regulating both financial and commodity derivatives.
  3. Access to commodities futures markets should be restricted as far as possible to qualified and knowledgeable investors and traders who are genuinely concerned about the underlying agricultural commodities. A significant contributory cause of the price spike was speculation by institutional investors who did not have any expertise or interest in agricultural commodities, and who invested in commodities index funds because other financial markets had dried up, or to hedge speculative bets made on those markets.
  4. Spot markets should be strengthened to reduce the uncertainty about future prices that creates the need for speculation. However, these markets must also be regulated to prevent hoarding. Spot markets must be transparent, and holdings should be subject to strict limits to prevent market manipulation.
  5. Physical grain reserves should be established to counter extreme fluctuations in food price, manage risk in agricultural derivatives contracts, discourage excess speculation, as well as meet emergency needs. Such measures and the abovementioned reform of commodity derivatives markets should be seen as complementary.