AUDIE CORNISH, HOST:

Today is World Food Day. It's an annual event that marks the 1945 launch of the United Nations' effort to track global hunger. Progress has been made in fighting hunger over the past decade, but still, nearly a billion people don't have enough to eat, mostly in South Asia and Africa. And some economists say financial speculation in food commodities is part of the reason. Here to discuss the debate is NPR senior business editor Marilyn Geewax. Marilyn, welcome.

MARILYN GEEWAX, BYLINE: Good morning.

CORNISH: So, how does trading in commodities, this sort of thing happening off on Wall Street, affect our prices at the grocery store?

GEEWAX: Well, at least in theory, commodities markets should help make food cheaper for all of us. And here's how it's supposed to work. Say a company needs corn to make Corn Flakes. You can go to a commodities exchange and agree to buy the corn at a particular price and it's all spelled out in a contract. And you can go forward with your plans to make your Corn Flakes. You took a risk. Maybe if you're waited a little longer, the prices would have gone down but really on balance, the deal made sense.

CORNISH: So, what's the problem?

GEEWAX: The concern now is that there are just too many big investors that are betting on food solely to make a profit. They don't grow corn, they don't make Corn Flakes, they really never even want to take possession of any of these grains. They're looking for a profit. Now, critics say that these financial investors are the same people that, you know, back in the 1990s drove up tech stocks and we got a tech bubble out of that. And then 10 years ago, they started in on residential real estate. In both cases, we ended up with a tech bubble, a housing bubble, and it hurt the economy. So, critics are saying these same kinds of investors are now creating commodities bubbles that could burst and hurt us as well.

CORNISH: Now, how much of the increase in food prices is actually tied into this kind of speculation? I mean, I read reports about things like the cost of peanut butter going up. But, you know, with there, that deals with crops and the weather, so how do we know it's speculation?

GEEWAX: Right. I mean, peanut butter is a good example. That's pretty much just a weather story, for the most part. There was a terrible Southern drought and that hurt the peanut crop. Some critics say that there's other things like ethanol policy that encourages farmers to turn too much of their corn into fuel, and that helps drive up food prices. And most of all there's just this simple law of supply and demand. There are a lot of people in China and other parts of the world. They're making more money now, so they're hungry. They want to buy food. And that means demand has been outstripping the supplies. So, we've got a lot of factors that contribute to rising food prices. But this speculation issue, people say that's exacerbating all the underlying issues. There's a U.N. report that just came out that said that money that was invested in food commodities shot from $13 billion in 2003 up to $260 billion in 2008.

CORNISH: So, Marilyn, is anyone actually trying to curb speculation?

GEEWAX: This past week, a group of about 500 economists from 40 different countries signed a letter urging U.S. commodity regulators to try to tamp down on this speculation. And there are new rules that are being considered right now under that Dodd-Frank Wall Street Reform Act. They haven't been finalized yet but they're working on it. And next month, the leaders of the G-20 - that's the group of the 20 biggest economies - they're going to take up this issue when they meet. But, you know, some people say that markets should be left alone, that speculators' money doesn't really hurt consumers, that in the long run prices are set by supply and demand. So, if farmers plant more corn than people want to eat, the prices are going to go down and that's really what we've seen in recent trading.

CORNISH: NPR senior business editor Marilyn Geewax. Marilyn, thank you so much.

GEEWAX: Oh, you're welcome.

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