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G20 agriculture ministers agreed on action plan on high food prices

27 July 2011

Against the background of ‘a 32% rise in wholesale prices of agricultural commodities in the second half of 2010’, an ‘action plan to deal with volatility in world food prices’ was agreed at the first-ever meeting of G20 agriculture ministers. The action plan is to be presented to G20 leaders at their summit in November 2011. The communiqué from the two-day meeting recognised the need for ‘appropriately regulated and transparent agriculture financial markets’ and urged G20 finance ministers to ‘improve rules and supervision of commodity markets’, although this fell short of the ‘tough crackdown’ on speculators called for earlier by French President Nicolas Sarkozy. In addition to this exhortation to EU finance ministers, the action plan included components on:

  • increasing agricultural output;
  • removing export restrictions on food aid;
  • strengthening international coordination;
  • biofuels;
  • the establishment of an early warning system, via the Agricultural Market Information System;
  • food reserves;
  • the creation of instruments to hedge against volatility, notably the Agricultural Price Risk Management Tool’.

A number of ministers agreed that ‘the G20 action plan constitutes a good starting-point’ and would ‘go a long way to creating a more predictable world for food producers and consumers alike’. Agricultural Commissioner Dacian Cioloş however noted that the Commission ‘would have liked [the agreement] to go a bit further’. World Bank President Robert Zoellick meanwhile described the plan as ‘modest’, saying ‘it’s just a start, but it’s progress.’ He maintained that the world was ‘in a danger zone… If you get a bad weather event, you get hammered.’ EU farmers’ organisation Copa-Cogeca welcomed the agreement, ‘especially the setting up of a mechanism to ensure transparency in the market’.

Analysis in the press noted that no specific financial commitments were made as part of the action plan.

Development NGOs however were critical of the action plan, suggesting a lack of political will to get to grips with underlying causes of high prices. The UN Special Rapporteur on the Right to Food, while welcoming the agreement, felt it was ‘insufficient’ in its treatment of biofuels, food reserves, financial regulation, and instruments for hedging against price volatility. He concluded that ‘The roots of the problem remain unaddressed in this action plan.’ This needs to be seen in the context of his earlier call in the press on 16 June 2011 for substantive action in these areas.

Editorial comment

Now that the G20 action plan has been published, a critical issue will be the mechanisms established for its implementation. It should be noted that as regards improving the rules on supervision of commodity markets, the agriculture ministers have left this ball firmly in the court of EU finance ministers. In this context, wider financial concerns – rather than concerns related to the impact on agricultural producers – are likely to dominate future deliberations.

Other aspects of the action plan are largely delegated to existing international bodies to take the lead. The Agricultural Market Information System is to be housed at the FAO, along with the Rapid Response Forum. The emergency humanitarian food reserves are to be established in collaboration with the World Food Programme, while initiatives to develop an agricultural and food security risk management toolbox are to be operationalised within the framework of the Comprehensive Africa Agriculture Development Programme (CAADP), with the assistance of the World Bank through its new Agricultural Price Risk Management tool. Commitments to boosting agricultural production and productivity will also seek to build on existing programmes and initiatives, with the ministers largely seeking to ‘encourage international organisations and the private sector to increase investment in developing countries’ agriculture’.

The action plan can thus be seen more as a political-level endorsement of a range of existing initiatives.

From an ACP perspective, a critical issue will be whether this translates into increased funding for agricultural investments under EU member states’ and EC-managed aid programmes. With funding from the EU’s Food Facility having largely worked its way through the system, the issue arises as to whether programmes linked to enhancing agricultural productivity will now be given a higher priority in the programming of the EU’s core National Indicative Programme aid allocations to ACP countries.


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