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Rising world food prices: Can a G20 'action plan' prevent a crisis?

The last spike in global food prices was marked by rioting. With prices again on the rise, G20 agriculture ministers are meeting in Paris and are expected to adopt an 'action plan.'

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“We’ll see some concrete steps in some areas,” he says, “but some of these issues, for lack of agreement, will be put off for further study.”

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Biofuel subsidies is an area of intense disagreement. Food production advocates want to see subsidies for grains as fuel (over food) eliminated, but the world’s major grain producers have been unable to find common ground on ending the subsidies.

Restrictions on commodities speculation is another hot topic. France, which presides over the G20 this year and will host a G20 summit in Cannes in November, would like the agriculture ministers to address food-price volatility through restrictions on the commodities trading market.

French President Nicolas Sarkozy opened the meeting at a reception Wednesday before the ministers got down to work Thursday.

But any action on price volatility by targeting speculation will be limited at best, most experts say. For one thing, some economists insist that a boom in investment in commodities markets in recent years has not abetted food price swings but if anything has encouraged production.

Torero notes that the United States has already implemented some regulations aimed at reducing speculation-fueled price swings. The European Union is advancing its own set of regulations.

“People are being very careful in this area because you don’t want to go too far in trying to fix a problem,” Torero says. “You don’t want to reduce liquidity in the food market, and you want to favor investment in agriculture.”

Global food reserves

Two areas of possible action are creation of a global humanitarian and emergency food reserves system, and development of a global agriculture market information system.

One possibility is creation of a food reserve in Africa which member countries could build up and then tap into when facing a humanitarian crisis, weather shocks, or seasonal food shortages.

With the World Bank estimating that rising food prices resulting from tighter food markets pushed more than 40 million people into poverty over the last year, a continental food bank could be an effective step.

Other proposals includes extending to developing countries the concept of “insurance” against food-price volatility, and a better global system for collecting and sharing information on food prices and stocks and projections.

“All of this is part of stocking a tool box to help developing countries deal better with risk,” Torero says. “This Paris meeting is about a tool box for food security.”


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