Martin Vander Weyer’s Any Other Business
A London hedge fund, Armajaro, has cornered the market in cocoa, for which prices have already risen by 150 per cent over two years. Armajaro is reported to have paid £650 million to take delivery of 240,000 tonnes of beans, all the cocoa there is in Europe in fact, and no one seems to know what they plan to do with it — other than reap a huge profit. This is the sort of trade that earned hedge funds a bad name two years ago, when grain and soy prices soared — though investment banks, which regard ‘soft commodities’ as one more asset class for their traders to punt around in, also had a slice of the action. Behind the price peaks in the summer of 2008 were real supply shortages as a result of poor harvests and crop diseases, but the surge was clearly amplified by speculative activity. And when it was followed by food riots from Abidjan to Jakarta, many commentators, including me, pointed out that filthy-rich Mayfair hedgies really shouldn’t be seen using the staple diet of the world’s poor as gambling chips. Since the financial crisis kicked in, the hedgies have kept their heads down — and even been praised for behaving more sensibly than some of the banks — but Armajaro’s cocoa corner has provoked a new wave of protests on behalf of African farmers. You might think a rising price is good for them, but it’s not if it’s a temporary distortion that leads to falling demand from chocolate makers and is inevitably followed by a crash.
And there are a couple of other angles to this story. Artisan chocolate making has become a booming British cottage industry in recent years (there’s a chocolatier exercising his craft in a former farmyard a stone’s throw from my Yorkshire garden) and it would be a pity to see a thriving small business sector set back. What’s more, on behalf of western consumers generally, let me protest that chocolate is a comfort food with a scientifically proven ‘feel-good’ factor — something to do with endorphins, the ‘neurotransmitters’ that are also released by orgasm. Not surprisingly, chocolate sales tend to thrive at times of economic uncertainty: Cadbury’s worldwide sales were up 6 per cent last year. And we’re certainly going to need earth-moving doses of endorphins to take our minds off all those savage public-spending cuts and tax rises. So if Armajaro prices us out of these moments of pleasure, they can expect rioting right outside their windows in Charles Street, Mayfair, never mind in Third World capitals.
Lessons from BP
The ruptured well may have been brought under control, give or take the odd whiff of methane, but the flow of American vitriol in BP’s direction continues unstemmed, and David Cameron’s meetings in Washington this week were unlikely to cap it. The accusation that the Lockerbie bomber Abdul Baset Ali al-Megrahi was granted ‘compassionate release’ under pressure from Downing Street in order to favour BP’s prospects in Libya is especially poisonous, since it plays in such a timely way to the lingering image of amoral Labour trickery as presented in Lord Mandelson’s memoirs. A congressional hearing next week on BP’s alleged role in al- Megrahi’s release will be another opportunity for grandstanding senators to lash into the troubled oil giant.
Meanwhile, back in the safety of BP headquarters in St James’s Square, chief executive Tony Hayward and his team will be trying to draw lessons from the catastrophe that overwhelmed them when the Deepwater Horizon rig blew up on 20 April. One lesson for their industry as a whole is that, as the search for carbon fuel extends into more and more difficult territory, the risks of reputational damage and political entanglement are much higher than before, even if the technology can cope with the operational challenges. There was a flashback to an earlier era in June when a new 300-million barrel discovery, the Catcher field, was announced just 110 miles east of Aberdeen in the North Sea. But most new finds nowadays are beneath hostile states, pristine nature reserves and very deep oceans — and multinational energy companies need as many political fixers, former spooks and ‘private security consultants’ on their payrolls as geologists and men with spanners.
As for Hayward himself, the word from BP is that he has now had time to talk to most of BP’s big shareholders and none has echoed President Obama’s demand for the chief executive’s head on a plate. But everyone in the corporate world must have learned the lesson that, in today’s world of heightened public emotion, you just can’t be as unspun as the (sincerely well-intentioned) Hayward was in his public remarks at the height of the crisis. And every chief executive will also have learned the value of having a supportive chairman when you need one: that’s exactly what Hayward didn’t have in Carl-Henric Svanberg, whose sole contribution to the crisis was his crass remark at a White House press conference about BP caring for ‘the small people’. If Hayward stays and Svanberg goes, justice will have been served — though I doubt that will satisfy the American senators.
The show must go on
I’ve been down with the local rappers this week, and we’ve been giving each other a lot of respect. A teenage crew from a Scarborough hip-hop project came to take part in the Ryedale Festival Community Opera, Odyssey — I was playing Zeus — and it was fascinating to watch them become absorbed in and uplifted by a musical project that was so far removed from their own (apparently pretty troubled) life experience. If this sounds a bit like Gareth Malone’s increasingly predictable singing-can-change-your-life television format, it was. But that doesn’t diminish the potency of collective performance as a way of applying a little low-cost glue to the broken society. This kind of activity is generally funded by droplets of Arts Council money, plus local business sponsorship — but if it had been paid for solely by taxpayers of Ryedale district, Odyssey would have cost them just under a pound per household. Value for money? It’s easy to picture a chorus of disgruntled Yorkshire folk singing, ‘What? We’re paying for an assortment of kids and misfits to waft around as sea-nymphs and ancient Greek sailors in the name of social inclusion? That can bloody well go for a start.’ But my new rapper friends and I think they’d be wrong. Yo, don’t diss it, ring-fence it.
Comments