In the 2008 food price spike consumers all over the world saw prices rise dramatically. In the UK, for example, some items increased by more than 40%. In the 12 month period before the price spike, wheat increased by 130% and rice by 74%. In other countries around the world, such as Yemen, Senegal, Pakistan, Somalia, Indonesia, India, Egypt and Bangladesh there were mass riots regarding the price of food. Since 2008 there have been more price spikes, such as in 2011. These price spikes harm people, in particular the poor who can not afford large increases in food costs.
There are many reasons why the price of food spikes. One major factor of price spikes is the role of speculation, which is predicting, buying and selling food that does not exist. In other words future harvests are bought and sold, while their actual harvest has not taken place. This process is forbidden in Islam, and is demonstrated in the following narrations:
Jabir ibn Abdullah (may Allah be pleased with him) narrated that the Prophet (peace and blessings be upon him) forbade Muhaqala (reported by four different narration collections. Muhaqala is selling unharvested grain for a harvested grain. In this case, something unknown (unharvested wheat) is being sold for something known (harvested wheat). Anas (may Allah be pleased with him) narrates that Allah’s Messenger (may Allah honour his mention and protect him from all evil) forbade Muhaqala, reported by al Bukhari.
Ibn Mas’ud (may Allah be pleased with him) narrated that Allah’s Messenger (peace and blessings be upon him) said: “Do not buy the fish in the water, for it involved uncertainty.” Reported by Ahmed, although he states this is a saying of a Companion, not the Prophet. Ibn Abbas (may Allah be pleased with him) narrated that Allah’s Messenger forbade selling fruit until it becomes ripe, or the selling of fur which is on the back, or milk which is in the udder. Reported by Tabarani, it too may be the saying of a Companion.
All of these narrations indicate that buying and selling processes that are based upon uncertainty and/or unknown future gains, are not allowed. In contemporary terminology we call this speculative trading, and it is this which is one of the major causes of food price spikes. Islam has forbidden this type of transaction.
A second reason for price spikes, is that of hoarding goods for the sake of seeking higher prices. In this case, a person knows that during a certain time the market price of a good is low so they hide the goods they have, keeping them until there is a shortage and selling for a high price. Due note, this is different from planning and ensuring that supplies will last over the long-term. An example of this long-term planning can be found in amongst the Prophets of the past. This case is different in that the intention is to hide needed goods to secure high prices, whereas the intention of the other is to ensure that the people have sufficient goods. The hiding and boarding of goods is not permitted, as is shown in this narration:
Ma’mar ibn Abdullah (may Allah be pleased with him) narrated: Allah’s Messenger (peace and blessings be upon him) said: “None withholds goods till the price rises but a sinner.” Recorded by Muslim.
Living ethically means that we also seek to prevent harm from happening, in the moment and in the future. In this case, certain business practices are harming global populations both in the present and their action are harming others in the future. Islam does not allow for this kind of action and seeks to prevent harm before is comes, a harm prevention model. Let us take this example and ensure that we seek to prevent harm from occurring in all other spheres of life.