United Nations Calls for Increased Oversight of Agricultural Commodity Traders

by Ella

The United Nations is advocating for stricter regulations targeting the world’s largest agricultural commodity traders, citing a lack of oversight that has allowed these merchants to reap substantial profits while consumers grapple with a cost of living crisis.

Rising food prices, coupled with surging energy costs, are contributing significantly to the most severe wave of inflation seen in a generation. The conflict in Ukraine has also raised concerns about food security for some of the world’s most vulnerable populations.


In a report released on Wednesday, the United Nations Conference on Trade and Development (Unctad) highlighted the stark disparity between the financial gains of commodity trading giants and the challenges faced by ordinary citizens. The report underscored what it referred to as a “troubling reality.”


Unctad further noted that a lack of regulation in the sector has allowed traders to conduct transactions without the requirement for transparent recording. This opacity may be exacerbating instability and price hikes by enabling financial speculation, corporate arbitrage, and profiteering, according to the report. The report, however, acknowledged the need for more research to definitively establish these links, as costs are also influenced by political and climate-related risks.


Since the onset of the Covid-19 pandemic lockdowns in 2020, food prices have been on a steady rise, with a significant surge occurring after Russia’s full-scale invasion in February, which led to disruptions in grain and fertilizer exports. The war in Ukraine further exacerbated food security crises in poorer countries that relied on Ukraine and Russia for grain, resulting in global increases in consumer costs for essentials like milk and eggs. Some governments even imposed price controls in response.


During roughly the same period in 2021 and 2022, the world’s four largest crop merchants—Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus—reported a substantial increase in profits, as highlighted by Unctad. These four companies collectively control an estimated 70 percent of the global grain trade, according to the UN report, which has called for increased competition in the sector.

While the latest financial statements from these agricultural trading groups show a slight decline in profits, with Louis Dreyfus reporting a net income of $568 million for the first half of 2023, down from $662 million for the same period last year, their profits remain significantly above historical levels.

A significant portion of transactions in the industry occurs privately between two counterparties.

Unctad is advocating for the imposition of more transparent centralized exchanges within the agricultural commodities trading sector, a move that has proven effective in enhancing monitoring in other areas of the derivatives trading industry following the global financial crisis in 2008.

Unctad stressed the importance of developing tools to enhance transparency and accountability in this opaque yet globally vital industry and called for a fundamental revision of the current regulatory approach.

Kona Haque, Head of Research at ED&F Man, an agricultural trading house, emphasized the industry’s ability to navigate recent geopolitical challenges and ensure the global movement of grains. She raised concerns about the potential consequences if the sector faces stricter regulations, asking, “If this sector is clamped down upon, who would move all of that stuff?”



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