High food prices have pushed an estimated 44 million more people into poverty in the past year, according to the World Bank. France says taming food price volatility is one of its major goals as current head of the Group of 20 leading and emerging economies. For the first time, G-20 agriculture ministers will meet in Paris from June 22-23.
The reasons and remedies for today’s volatile food prices are complex, says French Agriculture Minister Bruno Le Maire, and finding consensus among the G20 members has been a challenge. "I think at the beginning of the negotiation I was quite pessimistic," he said.
For example, there are contentious debates over the role of price speculation in the commodity markets. Investors have poured billions of dollars into these markets in just the past few years. Critics say that is fueling sharp spikes in prices. Le Maire says that while the investors profit, the developing world feels the pain. "Nobody can accept to have speculation on the poorest countries in the world, on the poorest people in the world," Le Maire added.
France is leading calls for more regulations on commodity trading.
But many economists are not convinced that would help. They say the evidence does not prove the case that the flood of new investment money is really behind the price spikes.
Le Maire says this has been one of the most difficult areas of discussion. But he is hopeful the agriculture ministers can find common ground. “After 10 months of negotiation, I really think that a consensus among G-20 members is not out of reach,” he said.
Le Maire says he would also like to see G-20 members reach a consensus to oppose export bans in response to crises. Russia suspended its wheat exports last summer after a serious drought cut its harvest by a third. Although the move was intended to protect Russia’s own food supplies, it was widely condemned for contributing to this year’s run-up in wheat prices.
Shenggen Fan, head of the International Food Policy Research Institute, says he does not expect the G-20 to pledge to keep markets open. “I think probably we will not reach certain agreement. But maybe some language will be there. Countries should be discouraged to use export bans to safeguard their own domestic food security. By doing that they will starve their neighbors,” Fan said.
Fan says there may be an agreement to exempt humanitarian food supplies from a ban, but not much more.
One of the biggest and most controversial issues in the food security debate that will likely not be addressed is the role of biofuels. National policies in the United States, Europe and Brazil support the use of food crops to produce fuel. Fan is one of many critics. “We know that biofuel has been a major cause of [the] last two rounds of food price increases. So, we do need to take urgent actions to prevent further expansion of biofuel production,” Fan said.
But these industries have strong domestic political support, and France did not include biofuels on the agenda for the Paris meeting.
On the positive side, analysts say the G-20 ministers might agree to set up an emergency grain reserve that can provide food supplies in humanitarian crises.
And there may be another financial commitment to help developing-world farmers become more productive. G8 leaders pledged $22 billion for this purpose in L’Aquila, Italy, in 2009.
But experts estimate that only about a quarter of that money has been delivered so far, and budgets are extremely tight in many G-20 countries. Charlotte Hebebrand of the International Food and Agricultural Trade Policy Council says wealthy countries should break the habit of over-promising and under-delivering.
“I think countries are going to lose credibility when these ambitious pledges are announced to great fanfare and then they are not implemented,” Hebebrand said.
On some levels, experts say what is most significant about the G-20 agriculture ministers meeting is that it is happening at all. Agriculture has been a neglected issue for years, which is part of the reason for the current crisis. The next challenge for the farm ministers, they say, is to convince their bosses to keep food security high on the agenda.