Bridges Weekly Trade News Digest (11th May 2011) reveals new details from a leaked report urging G-20 to tackle food price volatility by reforming biofuel policies, curbing the use of agricultural export restrictions, and rebuilding emergency food reserves. The report is a collaborative effort between ten international organisations working on food, such as the UN Food and Agriculture Organization and the Organization for Economic Cooperation and Development, and is an important document for the action plan that agriculture ministers from the G20 will agree to at their first ever meeting on 22-23 June.
The document provides new advice on biofuel policy and an Agricultural Market Information System (AMIS) and acknowledges that there is a role for stringent regulation of agricultural commodity futures markets. But it lacks a clear answer on the fiercely debated issue of whether futures markets themselves are the cause of price volatility.
Trade and trade policies are important for food security. In that context it is obvious that experts (mainly economists) hammer at trade-related issues in their report. They recommend less protectionist measures, especially on export restrictions, and the conclusion of multilateral-trade negotiations in the Doha Round as a step towards improved free trade policy and less price volatility.
The emphasis on trade and the conclusion of the Doha Round angers Jennifer Clapp, Professor in the Environment and Resource Studies Department and CIGI Chair in Global Environmental Governance at the University of Waterloo in Canada, who wrote (and that's my opinion) an interesting comment on the leaked report in her blog for Triple Crisis.
'...these talks [Doha Round] have been effectively stalled since 2008 precisely because of the rich world’s unwillingness to reduce domestic farm subsidies and allow poor countries to have strong safeguard mechanisms that enable them to block surges of subsidized imports when it threatens their farmers’ livelihoods. Whether a “successful conclusion” to the round will incorporate provisions to rebalance the rules remains to be seen.'
On biofuels, the report concludes that investments and subsidies in biofuels have resulted in higher food prices. The authors urged G20 members to be flexible when providing incentives for fuels derived from food crops and call for more integrated international biofuel markets. I would recommend reading Clapp's comment here as well.
'This [report's recommendation on biofuels] is hardly tough talk, especially when compared to the report’s emphasis on food export restrictions.'
Photo credit main picture: jaime.silva