The Hagstrom Report

Agriculture News As It Happens

G20 ag ministers come to agreement on global food issues


PARIS — In an attempt to reduce global food price volatility, the agriculture ministers from the G20 countries, including the United States, agreed today to launch a new wheat research initiative, convinced China and India to participate in a new food market supply and demand system, and released a proposal for a pilot project on humanitarian food reserves. But the group did not take a position opposing biofuels subsidies.

The decision to consider physical food reserves was a concession by Agriculture Secretary Tom Vilsack, who had called for a “virtual” food reserve involving information on where food supplies are located and where they are needed.

But Vilsack also fended off attempts to oppose biofuels subsidies, and the document includes a provision calling for science-based rule-making systems — a provision important to the American genetically modified seed producers who hope to get those seeds and the foods produced from them approved in other countries in the future.

At a news conference after the meeting here, Vilsack said the agreement “marks an historic union of resolve in combating the pressing challenges of hunger and food price volatility confronting our world with greater regularity.” He noted that the agreement contains the science-based rules and said, “The United States has always had concerns about reserves, but we need to keep an open mind about small, regional reserves.”

In response to question about biofuels subsidies, Vilsack noted that Congress is discussing changing the way biofuels are subsidized in the United States and said that it is important to use biofuels, particularly from algae, biomass and other nonfood sources, to stabilize food costs.

The meeting was the first-ever of the G20 agriculture ministers and was called by French President Nicholas Sarkozy, who holds the presidency of the Group of G20 countries, which includes the 20 largest economies in the world.

French Agriculture Minister Bruno Le Maire, who has spent 11 months traveling around the world to achieve the consensus document released today, said that he hopes the meeting puts agriculture on the G20 agenda on a permanent basis. The document will be submitted to the leaders of the G20 countries for ratification at their meeting in France in November.

LeMaire said he considered the meeting “a real success” whose results would address “the outright scandal” of world hunger.

A source who was present at the meetings said the most contentious issues were the creation of the Agricultural Market Information System (AMIS) to increase the availability of data on agricultural production consumption and stocks, and the position on financial regulation.

The United States and many other countries have long released agricultural consumption data and made it available to buyers and traders. China continued to argue that such information is a matter of national security and India has said it does not have the technical capability to provide the data, the source said, but both countries agreed to participate in the new system, which will be known as AMIS and housed at the U.N. Food and Agriculture Organization in Rome.

Asked whether there would be a penalty system for countries that did not provide the data, FAO Director General Jacques Diouf said it would not be appropriate to launch the new system with a discussion of penalties.

Australia and the United Kingdom balked at statements urging the G20 finance ministers to tighten up on regulation of agricultural and financial futures markets, the source said. Australian government officials remain uncertain about whether speculators who are not users of agricultural commodities such as index funds, hedge funds and institutional investors are having much of an effect on the market, while the United Kingdom did not want to take any action that would hurt London-based financial firms, the source said.

Sarkozy has said he considers the need to address speculation to be a key goal of his G20 presidency, but finance ministers have told the agriculture ministers that they consider the issue to be in their domain, and the issue has turned out to be the most difficult for the French G20 presidency to address.

The agriculture ministers said they support previous recommendations to the finance ministers that the markets need to be better regulated “to address market absues and manipulation, such as through formalized position management powers including the authority to set ex-ante position limits where appropriate, among other powers of interventions.”

The ministers also declared their opposition to countries’ bans on exports of food to be used for food aid. The fact that Russia, whose ban on wheat exports last year led to world price spikes, agreed to that provision was considered a real accomplishment.

World Bank President Robert Zoellick, who attended the meeting, said he hopes that the World Trade Organization will adopt the proposal, which would make such bans a violation of WTO rules, at a meeting of trade ministers in December. Zoellick said WTO Director General Pascal Lamy had said at a dinner meeting Wednesday evening that the WTO has often acted to remove barriers to importers, but that this would be its first action to stop countries from banning exports.

In their declaration, the ministers said they wanted to “stress the need to increase agricultural production and productivity on a sustainble basis.” The fact that they did not limit those increases to developing countries could be considered an achievement for developed countries, since subsidized agriculture in developed countries has been subject to so much criticism in international forums.

ActionAid, a nongovernmental group, welcomed a provision in the text saying that people have “a right to food,” but said the agreement should have opposed biofuels subsidies and provided more aid for small farmers in developing countries.

Agreements by groups of countries such as the G8 and the G20 are notorious for reaching highly publicized agreements that they do not follow, and it is unclear whether countries will live up to the agreement. Le Maire acknowledged the need for follow-up, and said the agreement includes a provision urging Mexico, which will next hold the presidency, to continue the work the French presidency has initiated.

“In the end, this agreement is only as good as the actions we take together to aggressively confront food security’s difficult challenges, but our cooperation as reflected today is a significant achievement for the nearly one billion people grappling with hunger each day,” Vilsack said in a statement.