Food Prices: Report for G-20 Clears First Hurdle

30 March 2011

Officials from the G-20 group of leading economies are expressing hope that the group could play a leadership role in addressing price volatility in agricultural markets, as key food exporters did not reject out of hand a call for measures disciplining the use of export restrictions, as they have in the past.

In talks last week on a draft report prepared by seven international organizations for the G-20, representatives from member countries demonstrated remarkable cohesion, according to sources present. The expert recommendations of the report inform an action plan for an agriculture ministers meeting in June.

Notably, countries that have opposed action at the WTO and in other fora to discipline the use of export restrictions, such as Russia and Argentina, voiced scant opposition to recommendations in the report calling for just that. Even its recommendations to curb bio-fuel blending mandates seemingly passed muster without objection from producers such as the US.

Responding to questions about its role in the G-20 discussions on food security, a senior French official told Bridges that it "falls upon on the leadership of France to press the process further." Internal documents from a developing country G-20 member appreciated that the "substance of price volatility" had been seen by the group.

Earlier versions of the report on price volatility have been shared with Bridges. The report lays out the causes of price volatility and means to mitigate it through improved market transparency, better trade policies and emergency reserves. A revised draft is expected in the third week of May.

Sources close to the talks expect the most actionable elements to be the creation of a Joint Organizations Data Initiative for Food Security (JODI), bans on export restrictions for food being purchased for humanitarian relief purposes, and an emergency food supply system.

The meetings took place over the course of the week with two separate working groups, one on development and another on agriculture, each addressing elements of food security. Senior officials from G-20 countries met with experts from the international organizations commission to prepare the report.

Circumventing the political exchanges that often accompany such collaborative reports, experts from leading international food agencies divvied up the sections by the strengths of their respective institutions. A participant described the document as one "that is independent but helpful." Controversial claims were removed, "so that countries don't dismiss the report based on one specific objection."

Echoing the absence of "conflicting stances," observed by a participant, buffer stocks were left out of the recommendations of the price volatility report which described them as "potentially very costly."

A survey conducted by the French for the group found that eight members believed that a conclusion to the Doha Round would help prevent crises in the future. The survey also found support for the Committee on World Food Security in Rome (CFS) peppered throughout. Noel De Luna, the committee's Chair took part in both the development and agriculture working groups

Agriculture delegates in Geneva have spoken optimistically of the events in Paris. The representative of one G-20 member told Bridges that the process "can feed into the agriculture modalities." He added that a "G-20 stronger political message can come out at the WTO where more negotiations are needed."

The boom in agricultural commodities continues unabated and prices are now affecting developed as well as developing country consumers. Although developed consumers are likely to experience the shocks of suddenly higher food prices through changes in purchasing power, those in developing countries may see their food security threatened.

ICTSD reporting. "Annual household incomes fall for first time since 1981" FINANCIAL TIMES, 29 March 2011.

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