It's used to make chocolate and sweet bedtime drinks, but a British financier's decision to buy up Europe's entire stock of cocoa beans has left a bitter taste in the mouth. Anthony Ward spent more than 750 million euros on the commodity, which will now be warehoused across the continent.

The deal, financed by Mr Ward’s company Armajaro Holdings, is the biggest cocoa purchase in 14 years and has already impacted on the European cocoa market, according to Laurent Pipitone, an analyst with the International Cocoa Foundation:

“To access cocoa in the short-term, the price has increased significantly. Due to this it has increased by £400 per ton (approx. 470 euros) so that means about 20 percent due to this event. We don’t know what will happen in the near future because the cocoa season is going to start in October, so there’s going to be plenty of cocoa available on the market soon.”

Financial incentive
Mr Pipitone says there are two main reasons for purchasing such a huge amount of cocoa: to fulfil existing contractual obligations with clients, or to make financial gains on the future market by creating a shortage of a particular product.

That practice has been strongly criticised by the World Development Movement, which has published a report saying hedge funds like Armajaro Holdings should behave more responsibly.

Consumers lose out
Deborah Doane, WDM director, said: "Nobody benefits from this kind of reckless gambling except a few wheeler-dealers [...] Consumers suffer because it pushes up inflation, because of unpredictable oil and raw material prices, and the world's poorest people suffer because basic foods become unaffordable.”

It will be some months before its possible to analyse the impact of Armajaro’s purchase on cocoa farmers in Africa, but Mr Pipitone says they’re unlikely to see any benefit from the rise in prices:

“At this time there’s not much cocoa available in producing countries. It’s not really the period where there’s a lot of cocoa harvested. So we’re talking mostly about what will happen in September or October, when cocoa will again start to be produced in Africa, Latin America [...] For the time being there’s not really an impact for farmers.”

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