G20 ministers agree to tame food commodity speculation
PARIS (AFP) – Farm ministers from the world’s top economies agreed on action on Thursday to tame market speculation blamed for the food price spikes that have hit consumers’ pockets and sparked unrest.
“The consensus… marks an historic union of resolve in combating the pressing challenges of hunger and food price volatility confronting our world,” US Agriculture Secretary Tom Vilsack said in a statement.
The agreement reached by agriculture ministers from the Group of 20 leading economies meeting in Paris also supported establishing an international agricultural market information system, or AMIS, said the US minister.
Vilsack said that “if fully supported and utilised” the information system would mitigate volatility on agricultural commodity markets by improving production and price information.
The farm ministers went into the Paris meeting divided on how far measures to control trading in food commodities should go and on how much information should be given to the new data service, AMIS, on production levels and stocks.
French President Nicolas Sarkozy said on Wednesday that the challenge was not only to combat hunger, but to cure capitalism.
“By addressing the volatility of agricultural markets, in assuring food security for the world for today and tomorrow, we will rebalance the structure of capitalism,” he told the ministers on the eve of their first-ever talks.
The G20 nations pledged to contain agricultural commodity volatility in the wake of the 2007-2008 surge in food prices, widely blamed on speculation, that triggered riots in some countries.
Fresh price spikes at the beginning of this year, seen as helping fuel the Arab Spring revolts, have kept the issue on the front-burner.
The ministers are seeking to agree on an action plan.
“In adopting this plan you will change not only the lives of a billion farmers but the course of capitalism itself so capitalism once again contributes to the development and well-being of people,” Sarkozy said.
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.
Paris wants changes such as limits on the participation of purely financial actors in the agricultural commodity markets.
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.
Brazilian Agriculture Minister Wagner Rossi said his country “will oppose any measures which impede the market, for example anything that would amount to price controls.”
There is also disagreement over increasing transparency on agricultural commodities production and stocks, with France hoping G20 nations will pledge to submit data to a newly created global farm information network.
Paucity of farm data 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, negotiators have said.
Biofuels are another contentious issue, with poverty relief groups disappointed that the draft G20 document does not acknowledge that the use of food crops to produce fuels is helping push up prices and causing hunger.
They are also disappointed that G20 nations may only back a pilot programme for humanitarian food aid reserves, a prominent idea to emerge from the 2007-2008 food price crisis.
Without major policy changes food prices will likely be high and volatile for the next decade, driven by rising incomes in emerging nations and demand for biofuels, the Organisation for Economic Cooperation and Development and UN Food and Agricultural Organization warned last week.
Long-term price increases of up to 20 percent for cereals and 30 percent for meat can be expected over the decade while agricultural production will have to increase 70 percent by the middle of this century to meet expected population growth and avoid widespread hunger.