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China’s foundation for economic growth is fragile. Our economic mix needs to be improved. Development is unbalanced between eastern and western China, between rural areas and cities. (Andy Wong/Andy Wong/AP)
China’s foundation for economic growth is fragile. Our economic mix needs to be improved. Development is unbalanced between eastern and western China, between rural areas and cities. (Andy Wong/Andy Wong/AP)

Global action plan aims to rein in surging food prices Add to ...

Agriculture ministers representing both the world’s advanced and emerging economies have agreed on an action plan to combat out-of-control global food prices, which have been growing steadily more volatile since 2008.

Central to the plan is the creation of an Agricultural Market Information System that will log public and private commodity holdings, according to a draft copy of the declaration obtained by The Globe and Mail.

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The system is designed to increase transparency and stability in world markets by opening a window into the level of food stocks held by participating nations and agri-food conglomerates, companies that buy huge volumes in international markets but do not disclose data on their holdings. Several nations, including China and parts of Europe, are similarly secretive about the quantity of food they maintain. Many argue this has clouded attempts to accurately judge the gap between global food supply and demand, exacerbating the market volatility that G20 agriculture ministers will gather in Paris to discuss next week.

The meeting will be the first of its kind: French President Nicolas Sarkozy, who holds the G20 presidency, asked the agriculture ministers to convene last year after an extreme period of food price volatility that set off riots in Africa and the Middle East. It came on the heels of a price crisis in 2008 that prompted similar outbreaks in Haiti, Egypt and elsewhere.

The ministers’ response to Mr. Sarkozy’s request was, at first, cool. For this reason, policy advisers say the action plan officials sketched out represents a remarkable consensus.

“It’s a very positive step that they tried to grapple with this issue because it [volatility]is a new issue and one that needs new solutions, not old ones,” said Stuart Clark, a senior policy adviser with the Canada Foodgrains Bank, a non-government food aid group.

The launch of an emergency humanitarian food reserve system that will be administered by the World Food Program to mitigate volatility and ensure rapid access to food for vulnerable populations is one of those solutions; the ministers also pledged to remove “food export restrictions or extraordinary taxes for food purchased for non-commercial humanitarian purposes,” and to support better regulation of agriculture futures and derivatives markets. Details of the latter task, though, will be left to the G20 finance ministers.

A big disappointment for observers of the process was the ministers’ position on biofuels: The group agreed to conduct further analysis on the industry’s impact on food prices despite the fact that an analysis commissioned by the group and completed by a coalition of 10 intergovernmental agencies linked increased biofuel production with volatility.

Also missing from the declaration, which pledges more resources to boost agricultural production and research, was mention of the need for the development of climate-smart agriculture.

“If you don’t put a climate-smart lens around it, you might simply suggest that we need more of what we do here: large-scale, energy-intensive, input-intensive agriculture,” Mr. Clark said. “I think it’s pretty clear we need to take a look at that.”

More worrisome to critics of the declaration is the absence of vital details on how private agri-food companies will be persuaded to submit to the agricultural information system.

“Those businesses depend on secrecy in order to do their business – their interest is … in a very different point from where the public interest lies,” said Sophia Murphy, a senior adviser to the global Institute for Agriculture and Trade policy and the United Nations. “They’re right to acknowledge how important the private sector is … we all agree more information would be better,” she said. “Just asking the public sector to tell us what they have is not going to cut it.”

International organizations, including Ms. Murphy’s, the Foodgrains bank and Oxfam, were hoping the ministers would advocate for the buildup of buffer stocks in vulnerable countries.

“If you have stocks, you manage volatility right away,” Ms. Murphy said. “You secure physical food against hunger.”

Ms. Murphy is concerned that underdeveloped countries will remain disconnected from international markets under the new plan. Risk management programs the ministers are advocating are designed to help smooth those countries’ entry into markets. But Ms. Murphy said she is skeptical of their value given the high cost of similar programs such as farm income supports to taxpayers in Canada and the United States.

“They cost a huge amount of public money,” she said. “How all of this is meant to work in countries that have no money and have 80 per cent of their country farming … I question how realistic this is,” she said.

Mark Fried, a policy expert with Oxfam Canada, said those types of small farmers Ms. Murphy refers to do not factor in the draft as equal participants in the global food system. That is despite the fact they feed one-third of the world’s people.

“There is nothing there to make [the action plan]accessible or useful to smallholders,” he said. “It’s a broad, global approach geared to large actors. It may or may not be the way forward for the people that are hungry today.”

Follow on Twitter: @jessleeder

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