At the meetings of the UN Committee on World Food Security (CFS) in Rome two weeks ago, disappointment was in the air. Expectations that the body would be able to agree to anything near what is needed to effectively address food price volatility had been seriously deflated, especially among civil society groups that were participating. What was the source of the trouble for the CFS? In a nutshell, it was the G20.
Earlier this year when France took on the chair of G20 and President Sarkozy announced his intention to use the forum to address food price volatility, there was initial excitement. Sarkozy promised to rein in excessive speculation on commodity futures markets that was seen to be contributing to price volatility and resulting food insecurity in the world’s poorest countries. There was also hope that the G20 would do away with market-distorting biofuel policies that also have contributed the volatility in food prices. There was even hope that the G20 might support the idea of reserves to manage food stocks and smooth prices.
With its member countries being host to the world’s major commodity exchanges, the source of most of the world’s major biofuel production, and having experience with holding grain stocks for managing domestic food prices, the idea of the G20 taking on these matters made some sense.
Action on these fronts by the world’s 20 leading economies could have given an important boost to the global initiatives being undertaken under the newly reformed CFS. The CFS – long captured by agricultural ministries, and nearly destined for the history books due to its lack of relevance – underwent substantial reform in 2009. The newly refurbished CFS focuses its work more explicitly on global cooperation required to eradicate hunger. It also now incorporates a broader range of nongovernmental stakeholders as participants, including civil society and the private sector, and it established a High Level Panel of Experts from which to draw the best of current technical advice. These reforms were explicitly aimed to make the CFS the foremost international forum for coordinating efforts to address world food security issues.
It seemed that there was a potential for synergy: that together the G20 focus on food price volatility and the newly reformed CFS with its focus on hunger eradication were going to result, finally, in meaningful global structural economic reform that would smooth food price fluctuations and promote global food security. Indeed, the CFS had commissioned, among others, a report on food price volatility from its High Level Panel of Experts.
But now, on the eve of the Cannes G20 summit, the level of excitement about addressing food price volatility has faded. What happened? In less than 9 months, the G20’s efforts were significantly scaled back from Sarkozy’s initial intentions. In short, the forum’s lack of ability to support any significant initiative that directly addresses the root causes of food price volatility has hobbled the ability of the CFS to make any meaningful recommendations itself on the topic.
In what ways has the G20 failed to deliver? To start, it turned the matter of food price volatility over to the G20 agriculture ministers, who subsequently pushed the question of addressing commodity price speculation onto their finance ministers. The finance ministers in turn ignored food security concerns, other than a brief mention that farmers need to use more hedging tools as a risk management strategy.
The agriculture ministers also completely failed to take up biofuel policies. They also made clear that they did not support the idea of reserves to manage price volatility. Reserves, they stressed, should only be used for emergency purposes, and only on a pilot basis to gather information on how they might work.
Instead of tackling the root causes of price volatility, or even a key mechanism that could potentially help to address it, the G20 agriculture ministers rolled out a new initiative, the Agricultural Market Information System (AMIS). As a colleague and I noted earlier when it was announced, the AMIS is a weak tool at best. But it was much easier politically to gather support for a new information system compared to the structural economic changes required to tackle the root causes of food price volatility.
This is likely to be the extent of the G20’s efforts on food price volatility unveiled in Cannes, unless it is able to pull a rabbit out of the hat by the end of the week. The expectation of only weak efforts by this forum meant that the G20 governments attending the CFS in Rome two weeks ago were unable to agree to anything that might go beyond the G20 agenda. Other governments and civil society groups participating in the CFS were largely pushed into accepting this as the best they could get. The final wording of the CFS Round Table on Food Price Volatility reads almost as if it were cribbed from the G20 agriculture ministers’ declaration from last June, rather than taking the advice from the report of its own High Level Panel of Experts.
The G20’s uptake of the issue of food price volatility, while potentially path-breaking, ended up as a large disappointment. The G20 governments in effect foisted their own preferences onto the CFS – the UN body officially charged with coordinating efforts to promote global food security. This is a shame because G20 could have made a real difference by reforming financial policies in a way that scaled back excessive speculation, by ending biofuel subsidies, and by supporting reserves policies. The G20 blew its chance, and in the process, seriously disarmed the efforts of the CFS to tackle food price volatility.