G20 reach historic accord on food commodity speculation

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Farm ministers from the world s top economies agreed on action on Thursday to tame market speculation blamed for the food price spikes that have hit consumers pockets and sparked unrest. Today is a great day. We have reached an historic accord, France s minister for agriculture Bruno Le Maire declared after the Paris meeting, organised as part of the French presidency of the G20 group of nations. It s a tour de force for the international community, he said, insisting the deal contains concrete measures and not just declarations of intent. The consensus. . . marks an historic union of resolve in combating the pressing challenges of hunger and food price volatility confronting our world, US Agriculture Secretary Tom Vilsack said in a statement. The agreement reached by agriculture ministers from the G20 leading economies also supported establishing an international agricultural market information system, or AMIS, said the US minister. Vilsack said that if fully supported and utilised the information system would mitigate volatility on agricultural commodity markets by improving production and price information. The final agreement did not formally accept, as many experts argue, that the use of farm production to make biofuels has contributed to rising food prices, and simply called for more research into the question. This is not something ignored or left by the wayside, said Le Maire. We are going to be able to make some headway in this area. The farm ministers went into the Paris meeting divided on how far measures to control trading in food commodities should go and on how much information should be given to the new data service on production levels and stocks. French President Nicolas Sarkozy said on Wednesday that the challenge was not only to combat hunger, but to cure capitalism. By addressing the volatility of agricultural markets, in assuring food security for the world for today and tomorrow, we will rebalance the structure of capitalism, he told the ministers on the eve of their first-ever talks. The G20 nations pledged to contain agricultural commodity volatility in the wake of the 2007-2008 surge in food prices, widely blamed on speculation, that triggered riots in some countries. Fresh price spikes at the beginning of this year, seen as helping fuel the Arab Spring revolts, have kept the issue on the front-burner. France has made limiting speculation and reining in markets a centrepiece of its G20 presidency and said it will accept no fudges on key issues. Paris wants changes such as limits on the participation of purely financial actors in the agricultural commodity markets. Countries such as the United States, Britain, Australia and Brazil however are concerned that such limits could crimp futures and derivatives markets, which are increasingly vital to farmers and processors. Brazilian Agriculture Minister Wagner Rossi said his country will oppose any measures which impede the market, for example anything that would amount to price controls. Paucity of farm data is widely seen as fuelling speculation but countries such as China and India are still reluctant to share information they view as important to national security, negotiators have said. Biofuels are another contentious issue, with poverty relief groups disappointed that the draft G20 document does not acknowledge that the use of food crops to produce fuels is helping push up prices and causing hunger. They are also disappointed that G20 nations may only back a pilot programme for humanitarian food aid reserves, a prominent idea to emerge from the 2007-2008 food price crisis. Without major policy changes food prices will likely be high and volatile for the next decade, driven by rising incomes in emerging nations and demand for biofuels, the Organisation for Economic Co-operation and Development and UN Food and Agricultural Organisation warned last week. Long-term price increases of up to 20 percent for cereals and 30 percent for meat can be expected over the decade while agricultural production will have to increase 70 percent by the middle of this century to meet expected population growth and avoid widespread hunger.

Courtesy : Business Recorder

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