Heiner Flassbeck, Director of UNCTAD’s Division on Globalization and Development Strategies, will represent the UNCTAD Secretary-General at an 11 April high-level thematic debate on recent pronounced shifts in the prices of staple foods and other commodities – a subject that the Organization has researched extensively in recent years.
The debate, to be held at the United Nations General Assembly in New York, is titled “Addressing excessive price volatility in food and related financial and commodity markets”. It is being convened by the President of the General Assembly in accordance with a General Assembly resolution adopted in December 2011. UNCTAD was selected as substantive partner for the initiative by the President.
Mr. Flassbeck is the principal author of UNCTAD’s annual Trade and Development Report. The 2011 report devoted a chapter to the possible role played by extensive financial investment in commodities futures markets for speculative purposes – that is, investment in financial contracts not for the purposes of acquiring physical commodities, but simply as vehicles for financial gain. Research by the UNCTAD secretariat has indicated that sustained large-scale financial flows into commodities futures markets can distort price signals, by driving commodities prices away from levels warranted by economic fundamentals. The issue was further explored in an UNCTAD report (A/66/207) prepared for the General Assembly in 2011. Current research by UNCTAD economists focusing on the impact of “high-frequency” trading in commodities has been widely reported recently in financial and online media.
Meanwhile, UNCTAD is contributing to a joint report with the International Monetary Fund and the World Bank at the invitation of the Group of 20, focusing on the macroeconomic effects of excessive commodity price volatility on economic growth and on the well-being of vulnerable populations.
The resolution calling for the high-level debate at the General Assembly comes at the initiative of Leonel Fernández Reyna, President of the Dominican Republic. In his remarks to the General Assembly in September 2011, and in a special event hosted by the Permanent Mission of the Dominican Republic, President Fernández drew attention to the effects on the poor of sharply rising prices for staple foods and other commodities. He observed that the vast majority of the world’s poor live in developing countries that are dependent on food imports to meet basic needs. Among other effects, he noted that the rapid increase in food prices had caused the number of persons suffering from hunger worldwide to exceed 1 billion.
Mr. Flassbeck will speak at the first of the day’s panel discussions, focusing on the topic of “Financial investment in commodity markets: motivations, mechanisms and impacts”. A second panel will address the topic of “Policy options to address excessive price volatility in food and related financial commodity markets”.
Among the other panellists and participants at the 11 April debate will be President Fernández; Nassir Abdulaziz Al-Nasser, President of the United Nations General Assembly; Jomo Kwame Sundaram, Assistant Secretary-General for Economic Development at the United Nations Department of Economic and Social Affairs; Ngozi Okonjo-Iweala, Minister of Finance, Nigeria; Keiichi Miyata, Director and Head of the Financial Infrastructure Studies Division, Institute for Monetary and Economic Studies, Bank of Japan; Professor Wei Xiong, Princeton University; Professor Frederick Kaufman, Graduate School of Journalism, City University of New York; Professor José Antonio Ocampo, Columbia University; David Hallam, Deputy Director, Trade and Markets Division, Food and Agriculture Organization of the United Nations; Professor Michael Greenberger, University of Maryland School of Law; and Peter Kerstens, Financial Attaché, European Commission.