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Leftwing initiative

Bid to end financial speculation on foodstuffs

Access to basic foodstuffs is a difficult problem for developing countries  (Keystone)

Access to basic foodstuffs is a difficult problem for developing countries 


A proposal put forward by the Young Socialists aims to curb dramatic price rises on foodstuffs by restricting financial institutions from speculating on food and agricultural commodities.

The initiative “No speculation on foodstuffs” will be put to a nationwide vote on February 28. Opponents of the initiative say it is unrealistic and if passed, would be damaging to the Swiss economy.

Food markets are susceptible to wild fluctuations, with prices sometimes skyrocketing to the detriment of the poorest people who then let their anger spill over. In recent years, this kind of crisis has occurred twice: in 2007-08 and in 2010.

For the Young Socialists - the youth chapter of the Social Democratic Party - the problem of excessive price rises is largely explained by financial speculation on food markets.

The text of their initiative calls for financial institutions such as banks, insurers, institutional investors, or investment funds that have head offices or branches in Switzerland to no longer be allowed to “invest, neither for themselves nor for their clients directly or indirectly in financial instruments relating to agricultural commodities and foodstuffs”.


Following the relative success of their initiative to limit top salaries (it won 34.7% of a nationwide vote in 2013) the Young Socialists are keen to stay on the front foot.

“We opted for this issue of speculation on foodstuffs because it is our role as Young Socialists to raise awareness of problems that the political world prefers to avoid because they are complex and international and require digging one’s head out of the sand,” says parliamentarian Mathias Reynard.

February 28 vote

The initiative was launched by the leftwing Young Socialists in 2012.

Both the cabinet as well as parliament have recommended voters reject the proposal at the ballot box.

The initiative is one of four issues to come to a nationwide vote on February 28. Other issues include a proposal for family tax breaks, plans to renovate the Gotthard road tunnel and a proposal to enforce the automatic deportation of convicted foreigners, thereby curbing the powers of parliament.

“We’ve also done it because Switzerland plays a central part in this issue. People like Jean Ziegler [a renowned former professor of sociology, UN expert and Social Democratic parliamentarian], have well and truly revealed the role of Switzerland in speculation.”

Key factors

The initiative is supported by the political parties on the left as well as humanitarian and development aid organisations. For them, it is clear that speculation is a key factor in rising prices.

“Famine and malnutrition are not fatalities. They are created by mechanisms, by speculation. Now you can speculate on many things, but not on food,” says Reynard.

His opinion is not shared by the right or by economic organisations, which argue that other factors are to blame for rising food prices.

“The weather, insecurity in production areas, changing eating habits, the considerable increase in the populations to feed in emerging countries and not forgetting the increasing scarcity of cultivatable land, are the essential causes of price fluctuations,” said Guy Parmelin.

He is a former parliamentarian for the conservative right Swiss People’s Party before he was elected to the cabinet, taking over the defence ministry.

“Certainly there are many factors,” says Reynard. “These are elements that count. But it is also proven that speculation amplifies these factors and inequalities.”


The two sides both use research to back their claims. Those in favour of the initiative point to international reports showing the influence of speculation on price rises.

In one study, Olivier de Schutter, United Nations Special Rapporteur on the Right to Food from 2008 to 2014, recognised the influence of climate and the markets. “However, a significant part of the price increase and volatility of food commodities can only be explained by the emergence of a speculative bubble,” he wrote.

The 2008 financial crisis only served to worsen the situation.

“We also observed a significant increase in investments from non-traditional origins in markets for agricultural products, whether for purposes of portfolio diversification or speculation.

“It is probable that this phenomenon has contributed to rising prices in short term markets and fed the current surge in prices on the cash markets,” said a report by the Organisation for Economic Co-operation and Development (OECD).

But opponents of the initiative also put forward scientific arguments, including a joint study by the Lucerne University of Applied Sciences and the University of Basel which collated information from their own observations and the results from 100 other studies conducted between 2009 and 2015.

The statistics collected by the universities showed that speculation was responsible for just 8% of the rise in prices. Of those studies examined, 47% concluded that speculation in fact had a tendency to stabilise the market, 37% found that it had no effect, and 16% that it had forced prices to rise.

Difficult then, for citizens to know which way to turn.

But supporters and opponents of the initiative agree on one thing: the issue must be looked at with a critical mind.

“It is desirable for people to look at the sources of these studies. Certainly, to get a general idea, multiply the sources and be critical,” says Aurélie Haenni, spokeswoman for the centre-right Radical Party.

Foreign pressure

Opponents argue that food shortages are not linked to financial operations and say the initiative serves no purpose whatsoever. It is “a new Socialist recipe that is completely ineffective”, says Parmelin.

“As usual, the Young Socialists have proposed an inadequate bureaucratic response that is out of touch,” says Haenni, who adds that it is naïve to think that unilateral action by Switzerland will solve the problem.

“Even if businesses active in the negotiations of food stuffs are present in Switzerland, they conduct their operations via the stock exchanges of Chicago or London,” she says, pointing to the risks of businesses delocalisation.

“They respect the rules in place on the exchanges. If Switzerland enacted additional rules, these businesses would be disadvantaged and would suffer the consequences.”

For Parmelin as well, such an initiative would be like shooting oneself in the foot.

“It would have big consequences for our country because it directly attacks those operating international agricultural commodities businesses established in Switzerland,” he wrote in a People’s Party newsletter.

“As well, it would increase uncertainty around our country’s economic environment and send a negative signal to the whole of the Swiss economy.”

Argument rejected

Reynard is scathing of such arguments.

“It’s an argument that never ceases to come around whenever we want to correct problems in the financial environment, clean it up, make respect ethical rules,” he says.

“We cannot justify commerce that causes death because there are jobs at stake, it just doesn’t wash.

“The trend is for more regulation, whether in Europe or the United States. Switzerland, where a lot of these kinds of organisations are based, should set the example so that in a few years’ time it is not again forced to submit to something imposed by the outside, after all the others have already done it.”

For her part, Haenni says: “We live in a global world so we need a common solution. For Switzerland to be a lone knight is neither desirable nor adequate.”

Translated from French by Sophie Douez, swissinfo.ch



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