Spotlight G20: Efforts on Food Price Volatility Hobbled: The G20 and the CFS

Jennifer Clapp, part of our 2011 Spotlight G20 Series

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.

Read the rest of this entry »

Spotlight G20: The G20’s Motto: “No We Cannes’t”?

Nancy Alexander, guest blogger,  part of our 2011 Spotlight G20 Series

As is customary now, the days of the business summit – the B20 – overlap with the Leaders’ Summit.  In Cannes, the B20 is on November 2-3; the G20 is on November 3-4.   At these Summits, the Presidents of the business confederations of the G20 countries, as well as 120 CEOs and Chairmen from global companies are delivering messages on 12 themes to the G20.

Many of these Ultra-High Net Worth Individuals (HNWIs) live in a rarified world according to the World Wealth Report 2011. A world far from the “99%” of the population represented by the “Occupy” protests or the civil society mobilizations in Nice on 2-3 November.

The G20 Advisory Group of the International Chamber of Commerce (ICC) is already working closely with its counterparts on the June 18-19 G20 Summit in Los Cabos, Mexico.  That Summit will focus on seven themes: financial regulation and supervision; IFI, especially IMF, reform; the International Monetary System; financial inclusion; commodity price volatility and food security; green growth; and challenges for economic growth.

Read the rest of this entry »

Spotlight G20: More Fodder for the Food Price Debates: Ethanol, speculation drove prices

Timothy A. Wise, part of our 2011 Spotlight G20 series

As the G20 takes its November meetings into the belly of the eurozone crisis, its food security agenda drifts toward irrelevance. Or worse. Early promises to address commodity speculation and market volatility have given way to tepid recommendations from G20 agricultural ministers in June and last month’s underwhelming communiqué from its Washington meeting on development, with its one snappy paragraph on food security issues. Now that finance ministers on their gilded steeds have turned and fled from the dragons of commodity speculation, the G20 is unlikely to slay any of the monsters threatening global food security – biofuels expansion, land grabs, speculation, price volatility, low public investment.

Fortunately, new research keeps coming, and it should inform the debate. The latest is from a group of researchers at New England Complex Systems Institute (NECSI). As their name would indicate, these are modelers, and their paper, “The Food Crises: A quantitative model of food prices including speculators and ethanol conversion,” offers evidence that the underlying cause of rising food prices over the last decade is primarily the US corn ethanol program, while the cause of the two recent price spikes is speculation.

Read the rest of this entry »

The G-20’s opportunity on food reserves

Sophia Murphy, Guest Blogger

G-20 development ministers meet on Friday in Washington, D.C. One of the items on their agenda is a proposal developed in June for the G-20 agriculture ministers to allow the World Food Program to develop a pilot proposal for an emergency food reserve. The decision was possibly the most important outcome in an otherwise thin summit communiqué: however circumscribed, we know that food price volatility correlates with low stocks, and that providing stocks is a proven way to curb excessive volatility. We also know that in emergencies, in most of the poorest countries, it takes an average of 90 days to bring food into food-deficit areas. 90 days is too long. The costs of working in emergency conditions are also too high, in both resources and human life. There are cheaper, better ways to ensure food is available when it’s needed: a reserve in the food-vulnerable regions is one of them.

Read the rest of this entry »

The G-20's opportunity on food reserves

Sophia Murphy, Guest Blogger

G-20 development ministers meet on Friday in Washington, D.C. One of the items on their agenda is a proposal developed in June for the G-20 agriculture ministers to allow the World Food Program to develop a pilot proposal for an emergency food reserve. The decision was possibly the most important outcome in an otherwise thin summit communiqué: however circumscribed, we know that food price volatility correlates with low stocks, and that providing stocks is a proven way to curb excessive volatility. We also know that in emergencies, in most of the poorest countries, it takes an average of 90 days to bring food into food-deficit areas. 90 days is too long. The costs of working in emergency conditions are also too high, in both resources and human life. There are cheaper, better ways to ensure food is available when it’s needed: a reserve in the food-vulnerable regions is one of them.

Read the rest of this entry »

Grabbing Global Farmland

Jayati Ghosh

An extraordinary new process has been at work in the past few years: the aggressive entry of Indian corporations into the markets for agricultural land in Africa. At one level, this process is simply following the hoary old tradition in global capitalism, of firms (often supported by the governments of the originating countries) entering new areas in search of access to natural resources on preferential terms.

Several centuries ago, the growth of plantation agriculture in large parts of the western hemisphere was essentially the product of such a process. This was further facilitated by cross-border movements of labour (in the extreme case of African labour through slavery, then through indentured labour contracts largely from South Asia, then through supposedly more ”free” movements driven by lack of adequate income opportunities in the home countries). Together these flows generated production and trade patterns that were critical in shaping the international division of labour by the mid-twentieth century.

Read the rest of this entry »

Keeping Those Food and Agriculture Assistance Promises

Jennifer Clapp

International assistance for food and agriculture has seen a dramatic drop since the late 1980s, with the share of agriculture in ODA and funding for food aid both falling. The food price rises and climbing rates of global hunger that occurred as a result of the 2007-08 food price rises have not yet led to a significant reversal of these trends. The lacklustre global commitment to food and agriculture is disconcerting in a context where food prices have remained high and famine is currently gripping parts of the Horn of Africa.

Agriculture used to have a prominent role in development assistance programs. But according to the OECD, the share of agriculture in official development assistance (ODA) fell from approximately 17 percent in the late 1980s to around 6 percent today, which is up from below 4 percent in 2003.

Recognizing that this level of support for agriculture was unacceptable, the G8 countries and others pledged at the L’Aquila summit in 2009 to mobilize US$20 billion over a three year period for investments in sustainable agricultural development as part of the L’Aquila Food Security Initiative (AFSI). This funding pledge was reiterated by the G20 at Pittsburgh later that year. The G8 and G20 both endorsed the World Bank managed multilateral fund, the Global Agriculture and Food Security Program (GAFSP), as a key channel for these funds. It should be noted that not all of this US$20 billion is new funds over what these donors had already pledged.

Have donors lived up to their commitment for increased agricultural assistance? Two full years later, only US$ 925.2 million has actually been pledged to the GAFSP, and only just over half of that amount was actually received.  And only some US$345 million in project funding decisions have actually been made through this funding window.

Read the rest of this entry »

Another Famine in the Horn of Africa: Putting Hunger in Context

Ali Kadri

By 2002, five years after the World Food Summit, the FAO reported that it was not possible to meet the objective of halving the numbers of the world hungry and eliminate its more extreme manifestations in starvations and famines by 2015. In 2002, basic food prices had fallen to two-thirds the level at which they were five years earlier. That was a time when food was cheap.

In 2002, declining basic food production per capita and a higher frequency of production shortfalls in poorer food-importing countries represented the hollow reasons as to why the human-right to food was not going to be met. Accompanying the quantitative trend, rising basic food imports per capita added to an already asphyxiating Least Developing Countries debt burden. Responding to this, the World Bank, the IMF, and the WTO contemplated setting up a financial institution that would lend to poorer countries at concessional interest rates so that they could offset hunger or, its extreme manifestation in famine, with adequate food imports.

Read the rest of this entry »

The truth about the global demand for food

In this article from The Guardian, Jayati Ghosh provides more a more detailed analysis of some of the new research from the FAO, noted earlier by Wise, which shows that biofuels demand in the US and Europe, not growing demand for meat in China and India, is the real driver of the rise in global cereal demand.

A new report from the FAO blows the myth about increased grain consumption from developing countries leads to higher global demand and higher prices.

Ever since the global food crisis of 2007-08, a perception has persisted in many parts of the world that one of the main underlying reasons for the price spikes in major food items – especially food grain – is the increased demand from countries such as China and India. If anything, this perception has become even more widespread since prices started rising again, especially since early 2010.

On the face of it, such a perception seems quite reasonable. After all, China and India both have huge populations, accounting for nearly 40% of the total world population between them. Their economies have both been expanding very rapidly, much faster than most of the rest of the world, so per capita incomes have been rising from relatively low bases. It is well known that as incomes rise from low levels, people tend to consume more food grain – not necessarily directly, but indirectly through the consumption of livestock products that require more grain in the form of food.

So it is only to be expected that the increased incomes in China and India would translate into more demand for food grain, and this could certainly affect the global supply demand balance in ways that would cause food prices to rise. Expected, yes: but did this actually happen?

Read the rest of this entry »

Food Aid Talks: What’s on the Table?

Jennifer Clapp

The Horn of Africa is experiencing its worst drought in 60 years. The impact is so serious that the United Nations has declared a famine in parts of southern Somalia. Several million people face starvation and the UN has called for an additional $300 million in emergency aid to avert an even bigger disaster in the region. The magnitude of the situation reminds us that the renegotiation of the Food Aid Convention (FAC) could not come soon enough.

The FAC is an international agreement among eight major donors (Australia, Argentina, Canada, European Union, Japan, Norway, Switzerland and the United States) that sets out rules for food aid. Its signatories agree to provide a minimum amount of food aid each year to meet the needs of the world’s hungry. The intention of a guaranteed amount of aid is to reduce the UN’s need to rely on special aid appeals to address crises.

Canada has played a leading role in the renegotiation the FAC as chair of the Food Aid Committee, the body that oversees the treaty, since the discussions began in June 2010. Negotiators aspire to have a revised agreement in place by the end of 2011. The current talks are especially challenging given the major changes that have taken place in the negotiating context since the treaty was last updated in 1999.

Read the rest of this entry »