Tuesday, 28 June 2011
Department of Agriculture, Marine and Food
Question 440: To ask the Minister for Agriculture; Fisheries and Food the initiative envisaged at EU level to clamp down on excessive speculation in commodities derivatives; and if he will make a statement on the matter. [17656/11]
The European Commission has been working on the functioning of commodity and commodity derivatives markets for several years. In the 2009 Communication on a better functioning supply chain, the Commission announced measures to improve oversight and the overall transparency of EU agricultural commodity derivatives. In its Communication of 2 June 2010 on "Regulating Financial Services for Sustainable Growth", the Commission announced that it is preparing a comprehensive, balanced and ambitious set of policy initiatives which will touch upon commodity derivatives markets. As part of this ongoing process, the EU is cooperating with the OECD and the FAO to ensure a global response to a global issue.
The EU is also seeking stronger controls on export bans and trade restrictions as these can lead to supply shortages. In conjunction with the FAO the EU intends to provide more detailed information on agriculture resources and markets. The European Commission will make publicly available its short term forecasts of the main EU agricultural markets covering the current and next marketing years. In addition it will seek to make information with respect to European private stocks more complete.
A sound functioning of agricultural futures markets and their convergence with physical markets for agricultural commodities is of primary importance for the European agricultural sector, to manage risk and hedge positions. Improving transparency of and oversight over agricultural futures markets will benefit farmers, co-operatives and agricultural industries that rely on these reformed markets. Looking ahead, there is a need to revisit this issue within the WTO and to come forward with new draft provisions, which could place more constraint on consistent "net-exporters" of essential commodities like grains (mainly wheat and rice) in the future. Provisions should not only be limited to emergency/humanitarian situations, where broad agreement appears in sight, but also ensure through appropriate criteria that recourse to export bans and restrictions will remain limited to situations of genuine critical foodstuff shortages in the exporting WTO Member.
The Commission will propose changes to the existing framework governing the integrity, efficiency and transparency of financial markets. The review of the Market Abuse Directive will, inter alia, clarify what kind of trading in commodity markets could constitute abuse and ensure that all venues and transactions where abuse may occur are appropriately covered by common EU rules.