G20 farm ministers struck a deal yesterday (23 June) to tackle high food prices, agreeing to a watered-down declaration that fell short of France's ambitious proposals to tighten regulation of commodity markets.
"The member states of the G20 concluded an agreement this morning on an action plan on volatility of food prices and global agriculture," French Farm Minister Bruno Le Maire told journalists after chairing the meeting.
A communique was not immediately available, but a G20 source said it urged finance ministers of the Group of 20 major economies to improve rules and supervision of commodity markets.
The deal appeared to lack, however, a commitment for a tough crackdown on speculators that French President Nicolas Sarkozy had campaigned for in the run-up to the summit, the first-ever G20 agriculture meeting.
"We recognise that appropriately regulated and transparent agricultural financial markets are indeed key for well-functioning physical markets," the communique said, according to the source.
"On this basis we strongly encourage G20 finance ministers and central bank governors to take the appropriate decisions for a better regulation and supervision of agricultural financial markets," it added.
World food prices hit a record high earlier this year, reviving memories of soaring prices in 2007-2008 that sparked riots in developing countries, and giving fresh urgency to debate about how to improve a global food system that leaves some 925 million people hungry.
France had wanted all G20 countries to commit themselves to imposing position limits – a curb on how much of the market an investor can buy into – but the G20 source said the communique only said reforms could include trading limits.
The action plan includes increasing agricultural output, improving market transparency through a new database and removing export restrictions for food aid, Le Maire said.
France, which heads the G20 this year, was keen to crown agreement on areas like data transparency and policy coordination with firm proposals for regulating commodity derivatives, but partners like Britain had so far remained opposed to stringent controls on financial markets.
UK Agriculture Minister Caroline Spelman told Reuters on Wednesday that Britain backed efforts to improve regulation but said it was up to G20 finance ministers, not farm ministers, to come up with concrete measures.
Paris has taken a hard stance on negotiations in recent days, saying it would not sign a half-hearted agreement as it pushed for an ambitious deal that would boost Sarkozy's profile 10 months before a new presidential election.
Under the deal, G20 members agreed to exclude humanitarian aid from export restrictions, US Agriculture Secretary Tom Vilsack said in a statement.
G20 members had committed to getting the deal approved under World Trade Organisation rules, a source close to the talks said.
The scope of commitments on regulation and other divisive issues like biofuels and emergency food stocks would be limited, however, other sources had said.
Brazil, a major producer of sugar-based ethanol, has been staunchly opposed to suggestions that biofuels contribute to rising food prices, while the United States has been sceptical about the idea of developing food stocks for humanitarian purposes.
"There will be some sentences about biofuels but these will be about the need for more studies, research, not really trying to introduce a drastic new approach," said a source, who was involved in last night's discussions.
Sarkozy had urged G20 farm ministers on Wednesday to adopt France's proposed action plan, including a tough line on speculators whom he blames for driving up food prices and fuelling political upheaval in some countries.
"A market that is not regulated is not a market but a lottery where fortune favors the most cynical instead of rewarding work, investment and value creation," he said.
European wheat prices tumbled 7% on Wednesday (22 June) amid signs of intense competition on export markets, giving fresh evidence of market volatility which France sees as not justified by physical supply-and-demand factors.
EURACTIV with Reuters