G20 attacked on food crisis plan
Javier Blas
Financial Times
Jun 24, 2011
The US, Brazil and China have joined forces to water down the G20’s first-ever communiqué on agriculture, defeating proposals to reduce the use of biofuels and export bans, which have contributed to close to record food commodities prices.
The two-day meeting which ended on Thursday came after France made food security and commodities regulation a centrepiece of its G20 presidency after the 2007-08 food crisis and the more than 36 per cent spike in global food prices over the last year.
Paris, which wanted to send a strong message on regulation of financial commodities markets, was able to secure a diluted agreement to recommend that G20 finance ministers tackle the issue. The communiqué echoes an earlier agreement by finance ministers to study limiting the number of contracts that speculators can hold.
But Bruno Le Maire, the French agriculture minister, claimed the meeting a success, saying the communiqué set the “base for a new global agriculture”.
However, Oxfam, echoing other non-governmental organisations, said the G20’s “sticking plaster approach falls well short of the major surgery” needed to tackle the global food price crisis. The European Union also said it was disappointed.
The criticism came after the G20 ignored many of the recommendations of a report itself commissioned to international bodies, including the World Bank, the UN’s Food and Agriculture Organisation and the International Monetary Fund, asking for policy ideas for the meeting on how to deal with rising food prices.
In negotiations over the two-day meeting, the group approved some measures, such as creating a global database to better measure the level of supply, consumption and inventories of staples such as corn, wheat, rice and soyabean and research on agriculture. But the communiqué was watered-down on the key issues: the mandate to consume biofuels and subsidies on their production, and the use of export restrictions.
As late as Monday, the draft declaration called for “studies on the feasibility of flexible mandates”, which link the production of biofuels such as ethanol to the price of the commodity. But this call was not mentioned in the final declaration after strong lobbying overnight from the US and Brazilian delegations, which oppose the idea.
The report from the international organisations had called on the G20 to “remove . . . policies that subsidise or mandate biofuels production or consumption”.
Ahead of the meeting, Tom Vilsack, US agriculture secretary, told the Financial Times in an interview that biofuels were only a “minor” contributor to global food inflation. The US is the world’s largest corn producer and exporter, but its burgeoning biofuel industry consumes 40 per cent of the crop.
Marie Brill, of ActionAid, said that it was “a shame” that the G20 commissioned a study to international organisations about how to deal with high food prices, “but chose to ignore the clear recommendation to remove subsidies and mandates for biofuels”.
On exports, the World Bank and FAO report had said that “export restrictions by major food exporters had strong destabilising effects on international markets” and recommended that the G20 use them only as a last resort policy under a tight timeframe.
The G20 agreed to exclude humanitarian purchases by the World Food Program from export restrictions, an agreement hailed by French officials. This proposal is to be taken to the full World Trade Organisation membership for approval.
The WFP accounts for 90 per cent of of all humanitarian food aid, but is a tiny proportion of global food sales. “It will still be possible to impose export bans, but not to the WFP,” a French official said.
The communique also said, in what is seen as implicit backing of export restrictions, that it recognised that “the first responsibility of each member state is to ensure the food security of its own population”.