Seminar hopes to encourage long-term pro-poor strategies as the G20 address food price volatility

By Matt Styslinger

On June 22 and 23 the Group of Twenty (G20)—an economic forum made up of finance ministers and central bank governors from 20 major world economies—will hold a meeting of the ministers of agriculture of the G20 countries in Paris. Top on the agenda will be discussions on how to combat excessive commodity price volatility and address food security for the world’s poor. This comes in the wake of the 2007-08 world food crisis and recent food price spikes. These timely issues will also be a top priority in the G20 summit in Cannes in November to discuss financial markets and the world economy.

Agriculture ministers from G20 countries will meet in Paris June 22 and 23 to address excessive food price volatility. (Photo: G20.org)

In a seminar to inform the agendas at the G20 meetings—held by the International Food Policy Research Institute (IFPRI) in Washington, D.C.—three leading expert panelists shared their perspectives on what was needed to address food price volatility. Charlotte Hebebrand, Chief Executive of the International Food & Agricultural Trade Policy Council (IPC), Peter Timmer, Professor Emeritus at Harvard University, and Rob Townsend, Senior Economist at the World Bank Agriculture and Rural Development Department, spoke about what the G20 meetings might accomplish to prevent recurring food crises. IFPRI’s Director General Shenggen Fan chaired the event, offering some of his own insights.

“My guess is we’re going to see some pretty sharp conflicts at the agriculture ministers meeting,” predicted Timmer. He said that this was in part because international-level action to control food markets does not resonate very well with agendas in Washington or in Toronto.

“We’re at a tricky point in international governance,” said Hebebrand. “WTO (World Trade Organization) is not going very well. Climate Change negotiations are not going very well.” She said that the G20 has been held up as a new international body with the potential to successfully address pressing international issues. “But if all we get is a lot of talk, that would be a big disappointment…hopefully the [G20] countries can actually make some commitments and then live by those commitments.”

Hebebrand predicted that the agricultural ministers at the G20 meeting would address export restrictions—which several countries have implemented to address the food crisis—saying that humanitarian considerations should be worked into regulations on exports. “More reforms will be required in the future, and I think we need to think about the international trading system in the context of supply availability,” she said. Hebebrand also said that the ministers would likely attempt to clarify how WTO rules apply to biofuels and take action to urge the World Trade Organization to move its Doha Round of international trade negotiations—which may include rules on food aid—toward completion. “We’d very much like to see the successful completion of the Doha round,” said Shenngen Fan. “Without [it], US$200-300 million in economic benefit is lost every year.”

The panelists agreed that demand for biofuels was a significant factor contributing to global food price spikes. They said that demand for biofuels would continue to rise without regulations to curb it. “I just don’t think we can be using grains and vegetable oils to make liquid fuel,” said Timmer. He said that biofuels were a bad idea and even suggested that governments tax them in order to reduce market incentive to produce them. “We need to find a way to give poor people in the world access to reasonably priced food and biofuels are going to price them right out of the market,” he said. Hebebrand said that she did not expect the G20 to approve any tax or prohibition of biofuels. “I don’t think we’re going to be able to stop biofuels,” she said. “I think we’re going to have to be very smart about the policies that we use. Certainly, I think subsidies should be phased out.” Fan said that it was essential that the agricultural ministers take action to minimize biofuel production. “I know there is a debate—it’s political and sensitive. But we’ve got to have something there. We just cannot let biofuels compromise poor people’s nutrition and health.”

Rob Townsend said he hoped to remind the G20 that long-term strategies for food production, rather than short-term business decisions, are necessary to reduce the volatility of food prices. “Longer-term productivity growth is still a key part in improving resilience in longer-term volatility reductions in food markets,” he said. “There are existing commitments that need to be thought about.” Timmer echoed those remarks and argued that financial speculation was one of the factors standing in the way of long-term strategies for food markets. “The financialization of food markets has significantly increased volatility,” he said. “I happen to believe that volatility—financial volatility, food price volatility—is a terrible impediment to pro-poor economic growth. It’s very difficult to get policymakers to focus on the long-run investments and policies that they need when they’re fighting fires in the short run on instability.”

“I agree that we have to increase our investment in agricultural activity,” concluded Fan. “But I want to argue that that investment should target smallholders. It’s the smallholders that account for a large percentage of the poor and hungry people.” Fan said that by investing in smallholder farming the incomes of the poor will increase with the production of food. “They will be out of poverty, they will improve their nutrition, and they will provide nutritious and high-value production to the general population.”

What steps do you think can be taken to reduce unpredictable spikes in global food prices? Tell us in the comments!

Matt Styslinger is a research intern with the Nourishing the Planet project.

To read more about IFPRI and international food policy see: IFPRI Conference Emphasizes the Next Steps Towards Using Agriculture to Improve Global Health and Nutrition, Halving Hunger Through “Business as Unusual”, Beyond Production to Reduce Poverty and Hunger, and New Initiative Aims to Influence UN Policy Discussions on Agriculture, Food, Non-Communicable Diseases.

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