European cocoa traders threaten to quit the London market over 'manipulation'
By Sanna Chu
Sunday, 11 July 2010
First they ruined the property market, and then they fouled up the banks and building societies, before wrecking the high street. Now hedge funds and other financial speculators are threatening the good order of the chocolate market.
Cocoa prices have reached their highest levels for 33 years, increasing 150 per cent in the last 18 months, and financial speculators are being accused of inflating prices to make a financial profit. Cocoa crop failure in the Ivory Coast, the world's top grower, is partly the cause, but some experts are blaming the London commodity market where cocoa is traded.
Speculation is now so rife that a group of European cocoa trading companies have taken the rare step of making public a complaint about the extent of the speculation on the London cocoa market and demanding tighter regulations. In a letter seen by The Independent on Sunday, leading cocoa industry figures claim there is clear "manipulation... which is bringing the London market into disrepute". They accuse the market of lacking "transparency and control". They warn that unless action is taken to stop "big players from cornering the market" they will quit London.
Fair-trade activists and anti-poverty pressure groups are calling for government action to curb financial speculators from inflating food prices. They warn that unless urgent moves are taken to clamp down on the hedge funds and other financial groups behind the speculation there could be shortages, death through starvation and outbreaks of civil unrest in poorer countries.
Barbara Crowther, of the Fairtrade foundation said: "Fairtrade's experience is that people are willing to pay a little more for chocolate, if this supports cocoa farmers in poor countries to improve their own standard of living. But consumers would be very angry if this is simply helping rich and powerful financial speculators to line their own pockets."
http://www.independent.co.uk/life-style/food-and-drink/news/speculators-new-craze-for-chocolate-leaves-a-bitter-taste-2023800.html
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