A/HRC/12/31* page 20 food producers and consumers, stimulate food production and provide access to food to food-insecure families. The Government, through the National Supply Company CONAB, buys food from family farmers, as long as the prices are not higher than those found on regional markets. This programme guarantees an income to family farmers, and has an annual limit of 3,500 reais.28 36. Another option is to conclude long-term supply arrangements, by which importing countries agree to buy a minimum amount of grain or other food crop each year in exchange for a commitment by the exporting country to meet larger imports when needed. Such arrangements make net food-importing countries less subject to the volatility of market prices for the crops they import, although there is a risk that the counterpart reneges on the arrangements, pleading altered circumstances. A viable alternative if food shortages do not arise simultaneously in a large number of countries is for Governments, fearing shortages, to resort to contingent option contracts, by buying options on future imports which, if exercised, would be realized by physical delivery (that is, in the event that harvests are as poor as initially feared). This is in essence the course of action taken by Malawi, with assistance from the World Bank and the Government of Great Britain, in 2005/06, using call options from the South African futures exchange to help cap the cost of managing an anticipated “hungry season” shortage of 60,000 tons of white maize valued at $17 million. Since the spot price of maize rose significantly in late 2005, ex post the option contract proved to be an efficient way to procure food and meet the needs of the population.29 37. All the above-mentioned options are means by which countries shield themselves from the impact of volatile prices on international markets. But volatility itself may be combated more effectively. Many observers of the global food crisis now agree that speculation by commodity index funds on the futures markets of agricultural commodities was a significant factor in the peak of 2007/08. In the period 2006-2008, the abundance of international liquidity coupled with a slowdown on financial markets drew a large amount of investment capital into agricultural commodities exchanges. Investors not active in the underlying commodity markets (such as farmers and producers) are not present on the futures markets for price discovery or hedging. Instead, they bet that prices will either rise or fall as part of an investment strategy, rather than as a way to manage risk related to the sale or purchase of commodities. The sale or purchase of futures is a mere portfolio decision, without any relation to the “fundamentals” of the economy the underlying economic reality. This has been, in particular, the strategy of commodity index funds, which arrived massively on the futures markets of agricultural commodities in the period 2006-2008. Such funds speculate on a basket of 20 or more commodities, agricultural commodities accounting for 10 to 20 per cent of the total. It has been reported that, at the end of March 2008, investors worldwide held an estimated $400 billion in commodity futures contracts - about $70 billion more than at the beginning of the year, and twice as much as in 28 “Soberania e seguranca alimentar e nutricional no Brasil: politicas publicas inovadoras”, Governo Federal, Brasilía, 26 January 2009. 29 J. Dana, C. Gilbert, and E. Shim, “Hedging grain price risk in the SADC: case studies of Malawi and Zambia”, Food Policy 31 (2006), pp. 357-71.