The world’s top economies aim to overcome their differences and honour pledges to crack down on food price spikes which are again hitting consumers and fuelling unrest.
French President Nicolas Sarkozy was expected to urge G20 agriculture ministers to move finally to clamp down on speculation, seen as being behind the 2007-2008 surge in food prices that triggered riots in some countries
The Group of 20 top nations pledged to contain agricultural commodity volatility in the wake of that crisis but they have failed to make progress even though it has become once again a hot issue with a fresh spike in prices seen as helping fuel the Arab Spring revolts. “It will be difficult to wring out an agreement,” French Agriculture Minister Bruno Le Maire conceded last week.
But he warned that nothing less than “avoiding the 21st century becoming a century of hunger in the world” will be at stake when G20 agriculture ministers hold their main talks on Thursday. France has made limiting speculation and reining in markets a centrepiece of its G20 presidency and said it will accept no fudges on key issues. On Thursday “it will be white smoke or black smoke, there won’t be half-measures,” vowed Le Maire. “The text should have substance, mark the first steps to the management of global agriculture … or there won’t be anything.” France would like to see limits on the participation of purely financial actors in the agricultural commodity markets and that traders be required to hold at least a portion of what they trade.
Countries such as the United States, Britain, Australia and Brazil however are concerned that such limits could crimp futures and derivatives markets, which are increasingly vital to farmers and processors. There is also disagreement over increasing transparency on agricultural commodities production and stocks. The paucity of information is widely seen as fuelling speculation but countries such as China and India are still reluctant to share information they view as important to national security, diplomats said. “If countries among the G20 continue to view their stocks, their production, their crops information as if they are nuclear weapons, we will continue to have volatility,” OECD chief Angel Gurria said last week. “We have to create transparency.” The 34-nation Organisation for Economic Cooperation and Development has led calls for greater market transparency to reduce price volatility. The draft action plan to be debated by ministers includes a proposal to create a global information network into which the G20 countries would feed agricultural data. Biofuels are another contentious issue, with poverty relief groups disappointed that the draft G20 document does not recognise that the use of food crops to produce fuels is pushing up prices and causing hunger. In a report issued last week, the OECD and FAO said that by 2020 some 13 percent of global coarse grain production, 15 percent of food oil production and 30 percent of sugar cane production may be used to make biofuels. The draft G20 action plan only calls for studies into introducing more flexibility into government biofuel production mandates, such as in the United States where corn is used to make ethanol, so as to reduce volatility.
Poverty relief groups are also disappointed that the G20 action plan only calls for a pilot programme for humanitarian food aid reserves, a prominent idea to emerge from the 2007-2008 food price crisis.
The draft action plan also includes a pledge by countries not to erect agricultural commodities export barriers, as Russia did last year for wheat when its harvest was hit by drought, but this may fail to make the final agreement. In their report last week, the OECD and FAO warned food prices will likely be high and volatile for the next decade, driven by rising incomes in emerging nations and demand for biofuel. Long-term price increases of up to 20 percent for cereals and 30 percent for meat can be expected while agricultural production will have to increase 70 percent by the middle of this century to meet expected population growth and avoid widespread hunger.
