Is Allianz playing hunger games?
Campaign group Oxfam Germany has accused German companies Allianz insurance group and Deutsche Bank, of contributing to extreme price fluctuations through speculating on food commodities.
Oxfam accused the companies of running a game of what it called 'hunger roulette'. It stated that both institutions increased the fluctuations of the price of food through financial speculation.
Food speculation is a billion dollar business. Oxfam estimate roughly 11 billion Euros in the German market had been invested in speculations related to food - with 6.2 billion Euros coming through Allianz alone.
David Hachfeld a trade expert at Oxfam said 'from our point of view there are many findings that point to speculation being another factor in these waves of long term price fluctuations. It gives the curve higher peaks and lower valleys'.
However, Allianz strongly denied that it was responsible for extreme price fluctuations linked to food speculation. On the contrary, Nicolai Tewes, Senior Vice President Corporate Affairs at Allianz stated 'we advise our customers to invest anti-cyclical. And looking at our clients' investment behaviour, you can see that they buy when prices fall and sell when prices rise'.
According to Tewes this had a 'regulatory effect on prices' in the free market. 'On the derivatives market, traders speculate on the risk of future price changes and not on commodities', Tewes added 'that is how farmers guard against too low prices and buyers against too higher ones'.
Allianz's claims were supported by economic ethicist Ingo Pies, who had evaluated 30 studies on the topic from 2010 to 2012. The tenor of his research: the main responsibility for the rise in prices depended on other factors, like higher demand for meat or bio-fuels.
However the head economist of the United Nations Conference on Trade and Development (UNCTAD), the head of Foodwatch and charities Oxfam and German Misereor accused Pies of being wrong, branding his study one-sided and delivering so-called 'myths of innocence'. Misereor director argued that 'when an existential issue, like hunger, is on the table, financial institutions should have to prove their investment options aren’t harmful'.
Read more about food speculation in our feature 'Betting on hunger' - part of of sector report on the food industry and supermarkets.
Read more about Allianz in our report on the insurance industry.
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