Food policy experts expecting for tangible results to deal with an escalating food crisis among developing nations are disappointed with the results of past week’s first meeting of G20 agriculture ministers at Paris.
One oxfam policy advisor explained the G20 results as “little more than the usual sticking plaster” if the food cost crisis required major operation. Meanwhile, the G20 nations have failed to achieve agreement on regulating round the controversial problem of food cost speculation.
Looming Food Crisis
There’s a lot at stake for the G20 participants, provided that its members accounts for 54 percent of the planet’s agricultural surfaces, 65 percent of farmland and 77 percent of global production of grains (based on 2008 data.
Since the world is gripped from the next world food crisis within four decades, food has been and is still a battleground for rival interests at which costs, no more under state management, are abandoned to fluctuate based on the prevailing market forces.
Together with the commercialisation of agricultural products provoking political and social conflicts, the issue of a “fair cost” for meals is still quite meaningful now, particularly when food supplies are under increased stress.
The possible causes of current increasing global food costs have drawn widespread attention and debate, together with the confluence of permanent (structural changes) and transitory factors (shocks) leading to food cost surges given the best prominence.
On the demand side, these variables include income and population increase, diversion of food plants into the production of biofuels, and diminishing inventory amounts which can no more serve their buffer role (markets are more vulnerable to speculative operations).
On the supply side, variables incorporate the consequences of climate change, the absence of investment in agricultural research and development and energy cost volatility.
Additional macro economic facets, such as depreciation of the US dollar, decreased state regulatory function in agricultural production and commerce, and speculation about the futures markets are frequently cited as other potential causes.
Nations likely to be affected by macro economic affects of agricultural price volatility would be people with growing or emerging markets. All these nations are usually either reliant on agricultural products to construct their export earnings or their food imports are important from the domestic balance of payment.
In other Words, food cost variations can have significant repercussions on such economies. Low-income food-importing nations will observe horrible consequences on the vulnerable people, typically women and kids.
Developed Markets are vulnerable to food cost volatility and specifically low-income families where the comparative effect of food cost variations is higher compared to national average, possibly exposing those communities to higher welfare loss. Most importantly, cost volatility threatens farm viability (low costs) and food safety (high costs).
Many authorities are therefore rightly worried about the consequences of changing commodity costs on domestic manufacturers and customers.
The report short explicitly requested the consortium to create options about the best way best to mitigate and manage the risks related to price volatility of agricultural and food products, without alerting market behavior.
The regulation over product financial markets has also caused tension and debate. Even though the absence of coordinated regulation within these markets, and in certain cases the lack of principles sanctioning market abuses and cost manipulations, is a specific concern to the French, the G20 failed to achieve an agreement.
The G20 agriculture ministers have basically handed over the issue for their counterparts for after discussion. AMIS to be housed in the FAO will need the entire involvement of the private industry to be of no significance.
Around 90 percent Maize, soy, wheat and rice is going to be the primary agricultural products to be tracked by AMIS. Even though that the global community accepts that policy coordination is a significant element in handling food cost crises, no significant initiative has been agreed upon.
But a quick answer forum, comprising senior policy officials, will soon be put up over the AMIS framework. The initiative, if effective, should help growing markets to eliminate some of the danger involved in volatility.
The G20 Ministers also agreed to eliminate any export limitation for meals bought for non-commercial diplomatic functions by the World Food Program.
The G20 ministers Didn’t suggest any constraints regarding biofuels production, only acknowledging the requirement “to further analyse all variables” nor was there any suggestion to boost global stock amounts (since it moves against neo-classical financial ideology).
Lack Of Critical Leadership
There’s a awareness one of the meals policy professionals the G20 ministers did neglect to demonstrate critical leadership, preferring to take care of symptoms instead of tackling the causes of the food cost crises and general leaving a flavor of more might have been achieved.
We all know intuitively that countries and the market economy interact with one another to form and re-shape each other as time passes. But, the small outcomes from this assembly remind us the way the market economy (and its own particular control) constrains the capacity of countries to act in their coverage initiatives.
Finally, the execution of any meaningful policy to curtail agricultural rates Volatility won’t be possible with no co-operation of important players on the marketplace market, from food processing and trading businesses to food makers and retailers.