How does the G-33 proposal address LDC concerns in the area of food security?
This article assesses the G-33 proposal in regard to the food security issues faced by the LDCs.
The Agreement on Agriculture (AoA), which was negotiated during the Uruguay Round, addressed the trade issues that agricultural crops faced on the world market at that time, i.e. oversupply of food products and low international prices. The Agreement therefore rightly regulates primarily market access restrictions and trade distorting subsidies.
The last few years have seen a sharp increase both in the price level and in the price volatility of foodstuff, as well as in the occurrence of food shortages. This situation is expected to continue: we seem to have entered into a situation of supply-constraints in the agricultural commodities markets. It is thus normal that international attention has passed from price support measures (subsidies) and market access issues (import barriers) to issues of access to food in times of shortages, as well as to rules addressing price volatility in the name of food security.
The G-33 text is part of this evolution and proposes to address the issue of food security. It is supposed to provide developing countries the policy space required to deliver financial incentives to low income, resource poor farmers through the purchase of food crops for public food stocks at administered prices.
LDCs are the most food-insecure group of countries in the WTO and suffer regularly from major food shortages. Therefore, any proposal on food security should be geared primarily toward the issues faced by the LDCs.
What do LDCs need to ensure food security?
Food security in poor countries essentially means two things: (i) the physical availability of food where it is needed in times of local shortages; and (ii) the ability to afford the food at both the macro- and micro-levels.
Most LDCs have large areas of underutilised land and technological resources in agriculture. Increasing food production, on the basis of this potential, is therefore the first and foremost task of a government when addressing the issue of food security. Food security does not, however, mean self-sufficiency. The latter is best ensured by producing what a country produces best and by relying on the international market to ensure food security. Farmers - even largely self-sufficient producers - are price-sensitive and willing to specialise.
To have the option to integrate their agricultural economies into the world economy, both LDC governments and farmers have to be assured that in times of local shortages they do have access to affordable supplies of basic food products from the outside.
LDCs cannot allow themselves to be exposed to either export restrictions or high fluctuations of prices. If the multilateral trade framework fails to guarantee that, LDCs are forced to aim at self-sufficiency - even if this is clearly a sub-optimal approach.
Thus, the multilateral trade rules that allow LDCs to implement a rational food security policy are rules that guarantee their access to basic food staples in times of shortages at prices that they and their consumers can afford.
Does the G-33 proposal address the constraints of LDCs in the area of food security?
The G-33 has requested the extension of the content of the green box for developing countries by including into the green box the financing of development projects and, most importantly, the possibility to buy - at subsidised prices - staple food crops from low income, resource poor farmers for the purpose of creating public stocks.
These proposed changes are of limited interest to LDCs: (i) development programs for rural small farmer communities are uncontroversial and have been so in the past and (ii) LDCs already have the possibility to use 10 percent of the value of their agricultural production for subsidising their agriculture under the de minimis clause - a privilege they cannot fully utilise given their limited financial resources. Therefore, the extension of the policy space to subsidise food prices to producers is of very little interest to most of them.
More importantly, the G-33 proposal, while potentially useful for some of the LDCs, is not responding to the main issues of LDCs: (i) physical access to food at times of shortages; and (ii) availability of food at prices they can afford both at the macro and at the household level.
Options proposed to ensure that Bali constitutes a step towards LDCs' food security.
It is expected that Bali will deal with the G-33 proposal in the following way: The approval in Bali of some intermediate measures, such as a peace clause allowing developing countries to finance stocks at administered prices without risking that other member countries will attack these measures; and an agreement on a road map to negotiate a longer-term solution to the food security problem identified and recognised by all WTO members.
This development provides the LDCs the opportunity to insert their specific concerns into the post Bali work program on food security.
A possible request from the LDCs could include the following elements:
- Some short-term measures to be decided in Bali to facilitate LDCs' access to food in times of shortages. They could consist of a clarification of existing disciplines concerning export-control measures, possibly through a Ministerial declaration;
- Recognition by the Ministers that LDCs need a preferential access to world food production and stocks in times of shortages at prices they and their consumers can afford in order to be able to address their food security concerns and to implement an agricultural policy open to the world;
- A road map for the negotiations of such a multilateral framework with concrete timetables; and
- The definition of some principles that should be followed in those negotiations.
The way forward
To guide future negotiations on food security, LDCs might propose the following principles to be adopted in Bali: In terms of physical availability of basic food, WTO members will define rules that guarantee LDCs preferential access to food in times of shortages. Such measures could include the exemption of the World Food Program and LDCs from any export restrictions imposed by any country - including net food exporting developing ones - for reasons of food security; In terms of price volatility and affordability of food in periods of high prices, WTO members will explore and define multilateral mechanisms that limit the price volatility of staple food products to LDC consumers and producers to a predetermined level.The purpose of such mechanisms would be to ensure minimum revenue to LDC farmers in times of low prices and a maximum price for LDC consumers at times of high prices. Such a mechanism, which should respect longer-term market signals, would allow LDCs that do not have the resources to provide farm insurance and food stamp programs as exist in developed countries to nevertheless protect their populations from short-term variations in world market prices of basic staple foods.
See related ICTSD Note: G-33 Proposal: Early Agreement on Elements of the Draft Doha Accord to Address Food Security. This short information note produced by ICTSD looks at how rules, policies and practices in this area can affect trade and food security, in the run-up to the global trade body’s ninth ministerial conference this December.
Author: Nicolas Imboden is the Executive Director of IDEAS Centre, Geneva, Switzerland.