Global Agriculture Ministers Convene in Paris, Yielding Sparse Outcomes

G20 Summit Addresses Food Price Volatility, Falls Short on Regulating Speculation

The first G20 summit of Agricultural Ministers, held in Paris on June 23, 2011, aimed to address the issue of food price volatility, a concern that has reached levels not seen since the early 1970s and affects all commodities.

The summit focused on various aspects of food security and the challenges in agricultural markets. The emphasis was on stability and sustainable production. However, a specific solution for regulating speculation on agricultural commodities was not agreed upon.

One of the key issues discussed was the persistent volatility in food prices, which has deadly effects on poor consumers, particularly in developing countries that depend on cereal imports. This volatility has never affected so many people, and commodity speculation is of interest in this context. The final declaration mentions the need to tighten regulations governing commodities futures exchanges.

The G20 also discussed the role of biofuels in driving up agricultural commodity prices and their contribution to volatility. Despite identifying biofuels as a significant issue, the G20 agreed to do nothing on the matter. Biofuels policies have been identified as a key driver of higher and more volatile agricultural commodity prices.

Another point of discussion was the Agricultural Marketing Information System (AMIS), which was agreed upon by the Agriculture Ministers. The four largest grain multinationals (ABCD: Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus) control an estimated 75-90% of the global grain trade, but the four grain multinationals have shown no indication of cooperating with the proposed AMIS.

The G20 also refused to reconsider policy regarding public stocks, focusing only on their use to support prices rather than to dampen excessive speculation and ensure a physical grain supply. The G20 did not agree to govern export restrictions by a multilateral agreement.

Instead, the G20 emphasized various risk management tools based on finance, including public subsidies to financiers for hedging food import needs. The chance to reform the rules governing agricultural commodity markets was largely missed.

A feasibility study is needed before a pilot project can be launched for a WFP programme to pre-position food aid with the creation of small emergency stocks in regions prone to food emergencies. The International Organization of Securities Commissions (IOSCO) is due to report at that time on some of the issues.

China holds important levels of domestic stocks, but their size remains unknown. The Finance Ministers are jealously guarding their preserve, and actual binding decisions on the issue were pushed back to the next G20 Finance Ministers' meeting in September.

In conclusion, while the G20 summit addressed the issue of food price volatility, it fell short on regulating speculation on agricultural commodities. The need for reform in the rules governing agricultural commodity markets remains a pressing issue.