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Goldman Sachs accused of profiting from food crisis

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Goldman Sachs accused of profiting from food crisis
Goldman Sachs is accused of profiting from the global food crisis.

Speculating on food prices saw investment banking firm Goldman Sachs pocket more than one billion pounds in 2012, reigniting the controversy surrounding banks profiting from the global food crisis.

The bank is being accused of contributing to rising food costs, making about 251m pounds in 2012 from investing in a range of commodities including wheat, maize and sugar, according to findings from the World Development Movement, for The Independent.

This then led to Goldman Sachs enjoying a 68 percent rise in profits for the year, allowing it to increase the average pay and bonus package of its bankers to 250,000 pounds.

Christine Haigh from WDM told The Independent, "While nearly a billion people go hungry, Goldman Sachs bankers are feeding their own bonuses by betting on the price of food. Financial speculation is fuelling food price spikes and Goldman Sachs is the number one culprit."

Goldman Sachs declined to comment on WDM's findings, however its reported that the bank is advising clients that corn is one of its top trading tips for 2013, following the US's worst ever drought.

While banks argue that food speculation has no real effect on food prices, there's a strong argument that the influx of cash into food has increased demand to such a degree that prices have jumped up.

The Indepedent writes, "Since deregulation allowed the creation of the commodity funds that allowed many speculators to invest in agriculture for the first time, institutions such as Goldman have channelled more than $200bn of cash into the area. This investment has coincided with a significant and sustained rise in global food prices."

 


 

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