French President Nicolas Sarkozy on Wednesday urged the world’s top economies to ensure food security by eliminating speculative price spikes because high costs are again hitting consumers and fueling unrest.
“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,” Sarkozy told agriculture ministers from G20 nations as they began their first-ever meeting.
The G20 nations pledged to contain agricultural commodity volatility in the wake of the 2007 to 2008 surge in food prices that triggered riots in some countries, which was widely blamed on speculation.
The issue has gained urgency with a fresh spike in prices at the beginning of this year seen as helping fuel the Arab Spring revolts.
At their formal talks yesterday, the ministers were to seek to overcome divisions to adopt an action plan to stifle speculation and improve market transparency.
“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.
Last week, French officials said there were still major divisions on key issues, but Brazilian Agriculture Minister Wagner Rossi said on Wednesday that an agreement was close.
“I think we are very close to a consensus,” Rossi told journalists.
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.
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 US, Britain, Australia and Brazil, however, are concerned that such limits could crimp futures and derivatives markets, which are increasingly vital to farmers and processors.
Rossi said Brazil “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.
Paucity of information on agricultural production and stocks is widely seen as fueling speculation, but countries such as China and India are still reluctant to share information they view as important to national security, diplomats said.
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 recognize that the use of food crops to produce fuels is pushing up prices and causing hunger.
In a report issued last week, the Organisation for Economic Co-operation and Development (OECD) and Food and Agriculture Organization (FAO) said that by 2020, about 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.
Poverty relief groups are also disappointed that the G20 action plan only calls for a pilot program for humanitarian food aid reserves, a prominent idea to emerge from the 2007 to 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.
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