Goldman Sachs made more than a quarter of a billion pounds last year by speculating on food by investing its clients' money in a range of "soft commodities", from wheat and maize to coffee and sugar, according to an analysis for The Independent by the World Development Movement (WDM). This contributed to the 68 per cent jump in profits for 2012 Goldman announced last week, allowing it to push up the average pay and bonus package of its bankers to £250,000.
Goldman makes its "food speculation" revenues by setting up and managing commodity funds that invest money from pension funds, insurance companies and wealthy individuals in return for fees and commissions. The firm invented these kinds of funds and continues to dominate the market, together with Barclays and Morgan Stanley. 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. Swiss trading giant Glencore hit the headlines in August when its head of agriculture proclaimed that the US drought will be "good for Glencore". Goldman Sachs is known to be advising clients that corn is one of its top trading tips for 2013, after the worst drought in US history whittled stockpiles down to their lowest level since 1974.
Global food prices in 2012 were 16 per cent higher than in 2010 and 2.3 times as expensive as a decade earlier, even after adjusting for inflation, according to the United Nations. British prices have, on average, risen by nearly 40 per cent in the past seven years.
Christine Haigh of the WDM said: "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 No 1 culprit."
Rob Nash, Oxfam's private sector adviser, said: "Oxfam is very concerned about food speculation, especially in the light of increasingly extreme weather conditions which can reduce supply suddenly and severely deplete stocks. The last thing we need is for that volatility to be exacerbated by speculation and exploited for short-term profit."
Goldman makes its "food speculation" revenues by setting up and managing commodity funds that invest money from pension funds, insurance companies and wealthy individuals in return for fees and commissions. The firm invented these kinds of funds and continues to dominate the market, together with Barclays and Morgan Stanley. 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. Swiss trading giant Glencore hit the headlines in August when its head of agriculture proclaimed that the US drought will be "good for Glencore". Goldman Sachs is known to be advising clients that corn is one of its top trading tips for 2013, after the worst drought in US history whittled stockpiles down to their lowest level since 1974.
Global food prices in 2012 were 16 per cent higher than in 2010 and 2.3 times as expensive as a decade earlier, even after adjusting for inflation, according to the United Nations. British prices have, on average, risen by nearly 40 per cent in the past seven years.
Christine Haigh of the WDM said: "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 No 1 culprit."
Rob Nash, Oxfam's private sector adviser, said: "Oxfam is very concerned about food speculation, especially in the light of increasingly extreme weather conditions which can reduce supply suddenly and severely deplete stocks. The last thing we need is for that volatility to be exacerbated by speculation and exploited for short-term profit."
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