By Stefan Tangermann
Spiking food prices, and their impact on hunger, were finally given the attention they deserve at a recent summit of agriculture ministers from the G-20 group of major economies. However, while the action plan from their June 22-23 meeting in Paris contains much to applaud, it is also notable for some glaring omissions that must be addressed in the months ahead.
In addition to the usual statements about the importance of supporting smallholder farmers and encouraging investment in developing country agriculture, the ministers laid out a practical framework for action in six specific areas. They launched laudable initiatives to enhance wheat yields, strengthen market information and transparency, and improve remote monitoring of crop production and weather. They established a rapid response forum of senior officials, asked the World Food Program to look at setting up targeted emergency food reserves, and emphasized the importance of market-based instruments to manage risks.
The detailed follow-up activities and ambitious timetables annexed to the declaration suggest that, at least this time, the G-20 were determined to have more than just warm words to show for their efforts.
Despite the impasse in the World Trade Organization’s troubled Doha Round talks, ministers also recognized that international trade can play a role in improving food security and addressing price volatility. They observed that a stable, predictable and distortion free trading system allows food and farm commodities to flow more freely around the globe, and pointed out that open and well functioning markets are essential to allow more investment in agriculture.
Before the meeting, some developed country farm ministers seemed to suggest that everyone would benefit if their own producers were insulated from price fluctuations; they also called for tough action to regulate derivatives markets. Along with proposals for grandiose reserve schemes, these elements were fortunately missing from the final communiqué — suggesting that some of the pre-meeting statements may just have been political posturing, or that less well thought-out ideas were dropped as negotiations on the plan progressed.
As I argued in two recent papers for the International Centre for Trade and Sustainable Development, governments should respond to the recent volatility in food prices not by once again bolstering support for rich country farmers, but by reinforcing protection for poor consumers in the developing world — for example, by establishing social safety nets that help the most vulnerable households and individuals. I was relieved to see this approach clearly reflected in the G-20 declaration.
However, two other omissions are unfortunate and should be rectified as soon as possible.
Firstly, ministers failed to tackle the problems caused by government support to biofuels — despite widespread agreement among analysts that current policies contribute to higher and more volatile food prices. Instead of agreeing to reduce subsidies or make current mandates more flexible, the G-20 merely called for more analysis.
Secondly, ministers were unable to agree to tougher new rules on the use of export restrictions — even though these measures have aggravated volatility and severely exacerbated food shortages in poor countries when major farm exporters have applied them during high price episodes. The communiqué only included an agreement not to impose export restrictions on the World Food Program’s purchases of humanitarian food aid, leaving millions of poor people who do not receive emergency assistance to carry on paying higher prices for their food.
A specific resolution on export restrictions should be adopted by trade ministers when they meet at the World Trade Organization’s conference this December, the declaration says — leaving the door open for a more systemic solution to the problem.
Despite these shortcomings, the G-20 declaration stands out as a rare example of international collaboration in a world in which governments seem to find it harder than ever to agree on joint action — be it on trade, climate change or in other areas of shared responsibility. The communiqué must now be followed up with concrete action by the governments concerned, if the fine words are to turn into food on people’s plates.
Professor Stefan Tangermann is the former Director for Trade and Agriculture at the Organisation for Economic Co-operation and Development (OECD).