Protest over hedge funds betting on food items
Financial speculators have come under renewed fire from anti-poverty campaigners for their bets on food prices, blamed for raising the costs of goods such as coffee and chocolate and threatening the livelihoods of farmers in developing countries.india Updated: Jul 20, 2010 22:40 IST
Financial speculators have come under renewed fire from anti-poverty campaigners for their bets on food prices, blamed for raising the costs of goods such as coffee and chocolate and threatening the livelihoods of farmers in developing countries.
A report by the World Development Movement (WDM) on the growing role of hedge funds and banks in the commodities markets says that in recent years, cocoa prices have more than doubled, energy prices have soared and coffee has fluctuated dramatically.
The charity's demands for the British financial watchdog to follow the US in cracking down on such speculation comes as cocoa prices jumped to a 33-year high after a London hedge fund snapped up a large part of the world's stock of beans.
On Friday, traders say, Armajaro took delivery of 240,100 tonnes of cocoa — the biggest from London's Liffe exchange in 14 years and equal to about 7 per cent of annual global production, according to the Financial Times.
A 150-per cent rise in cocoa prices over the last 18 months has forced many chocolate-makers to raise their prices and often to use less cocoa.
The WDM's Great Hunger Lottery report says "risky and secretive" financial bets on food prices have exacerbated the effect of recent poor harvests.
Deborah Doane, WDM director, said: "Investment banks, like Goldman Sachs, are making huge profits by gambling on the price of everyday foods. But this is leaving people in the UK out of pocket, and risks the poorest people in the world starving.
"Nobody benefits from this kind of reckless gambling except a few wheeler-dealers. The poorest people suffer because basic foods become unaffordable."
Goldman Sachs dismissed the WDM report as "horribly misinformed on a number of fronts".
A bank spokesman, Michael DuVally, said: "Research by respected international bodies, like the OECD, demonstrates clearly that long-term trends, including increased meat consumption by the growing middle class in the emerging markets and the increased use of biofuels, have created a backdrop for global food shortages."
The investment bank also denied it was lobbying against changes to market rules.
First Published: Jul 20, 2010 22:37 IST