'City wheeler dealers' cause chocolate prices to soar
By Rebecca Burns
Bankers face further anger after speculating on food prices was blamed for a rise in the cost of everyday goods.
The practice, common in investment banks and hedge funds, caused the price of cocoa to reach its highest level for 33 years and the price of coffee to jump 20% in just three days, according to a report by the World Development Movement.
Commodities such as wheat, maize, coffee and cocoa are all speculated on, causing the price of basics like bread and coffee to fluctuate.
Deborah Doane, director of the World Development Movement said:
"Investment banks, like Goldman Sachs are making huge profits by gambling on the price of every day foods. But this is leaving people in the UK out of pocket and the poorest people in the world are starving."
Ms Doane said the the EU should "crack down on banks' reckless gambling".
"Nobody benefits from this kind of reckless gambling except a few City wheeler dealers", she said.
The USA took action to ban food speculation by introducing a financial reform law at the end of last week.
Ms Doane called on the British government to follow America's lead and ban the practice in the UK.
Her comments come as David Cameron relaunches his idea of the 'big society', calling on people to take personal responsibility for their actions.
The report, published today and titled The Great Hunger Lottery, called the practice "dangerous, immoral and indefensible" and claims that Goldman Sachs made profits of £650m through speculating on food last year.
But Goldman Sachs called the report "horribly misinformed" and pointed to other factors responsible for the food price increase.
A spokesman for the company, Michael DuVally, told the Guardian newspaper: "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 in the developed markets, have created a backdrop for global food shortages."
Goldman Sachs added: "We have repeatedly said that we support effective reform. Our lobbying effort is designed to achieve reform that will continue to allow producers to hedge their risks so that consumers get the benefit of greater price stability. To suggest otherwise is disingenuous and downright misleading."
