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Oxfam Critiques G20’s Band-Aid Approach to Global Food Price Crisis

Oxfam Critiques G20’s Band-Aid Approach to Global Food Price Crisis

June 23, 2011

The outcome of the G20 Agriculture Ministers meeting in Paris today on the sudden rise in global food prices is disappointing, according to Oxfam. Agriculture Ministers agreed to address some of the impacts of high and volatile prices, but failed to introduce measures to prevent food prices spiralling further out of control.

Mark Fried, policy coordinator for Oxfam Canada said:

“As a major food producer, Canada has a responsibility to ensure the smooth functioning of international markets. Fixing the problem of rising food prices requires major surgery and the G20 produced little more than a band-aid.Crossing our fingers and hoping high and volatile food prices will go away is simply not good enough when millions of people are going hungry.

“The ministers sidestepped two key solutions in Paris: fixing flawed biofuels policies which divert food into fuel, and helping poor countries build up food stocks to cope with extremes in food price volatility.

“Canada has yet to come to grips with the fact that turning so much of our corn crop into ethanol increases hunger.”

“This is not the end of the road. G20 Finance Ministers could still deal with the problem of excessive speculation in commodity markets when they meet in July. And the G20 Heads of State have the opportunity to match bold rhetoric with bold action when they meet in November.”

The World Bank estimates that 44 million people fell below the poverty line in the second half of 2010 due to high and volatile food prices. Research for Oxfam’s GROW campaign indicates thatthe price of staple foods such as corn could more than double in the next 20 years, with half of the increase due to climate change.

Oxfam Analysis of the G20 communiqué

Biofuels: Verdict – Poor
There were high hopes that the ministers would tackle flawed biofuels policies after calls for action by the Food and Agriculture Organization, World Bank, International Monetary Fund and others. However, they only agreed to look at the links between biofuels production and food price volatility, and took no concrete measures aimed at reforming biofuels policies or adjusting biofuels targets when food supplies are endangered. Countries suspected of blocking progress include the US, Brazil, Canada and France. Nearly 40 per cent of the US corn crop, and a similar percentage in Canada, went into ethanol production rather than food production in 2010 – precisely when the second food price crisis in three years began to hit.

Food reserves: Verdict – Poor
Oxfam welcomed the agriculture ministers’ decision to look into bolstering emergency reserves which provide food to people in crisis situations. However this approach only addresses impacts, not causes. G20 ministers failed to recognize the critical role of strategic food reserves or buffer stocks in helping poor countries cope with price volatility. Additional grain reserves of just 105 million tons would have been enough to help avoid the food price crisis in 2007-8. The cost of maintaining such a reserve would have been $1.5 billion or just $10 for each of the extra 150 million people who joined the ranks of the hungry as a direct result of the last food price surge.

Speculation:Verdict – Inconclusive
The G20 agriculture ministers agreed to explore the links between excessive speculation in commodity markets and food price volatility and to look at mechanisms for improved regulation. G20 finance ministers will take up this issue when they meet in July.

Transparency: Verdict – Pass
Agriculture ministers agreed to set up system to provide information on agricultural production and food stocks held by countries around the world. This will help ensure countries and the international community analyze the global food situation and take action to avert a crisis. Unfortunately Ministers stopped short of requiring agribusinesses – which dominate the trade in many staple foods– to disclose information on the stocks they hold. According to one estimate Cargill, Bunge, and ADM control nearly 90 per cent of global grain trading.

Insurance Mechanisms:  Verdict – Poor
France pushed for market-based hedging instruments that would help vulnerable countries protect against future food price shocks. Without action to regulate and increase the transparency of global commodity futures markets the measures may well benefit the financial institutions providing the insurance rather than poor food insecure countries purchasing it. Oxfam believes resources would be better directed at other instruments to manage risk such as buffer stocks.

Investment in agriculture: Verdict – Fail
Agriculture ministers agreed that more investment is needed in agriculture. However, they adopted no concrete measures to support poor producers in developing countries who offer the greatest potential to sustainably increase global agricultural yields and tackle hunger. Investing to provide women farmers with even the meagre resources now available to male farmers could raise total agricultural output by up to 30 per cent.

Climate change: Verdict – Fail
The ministers failed even to acknowledge that climate change is major cause of food price volatility. Climate change is estimated to have increased the amount we spend on food worldwide by $50 billion a year.

Katia Gianneschi

Oxfam spokespeople are available for comment in Paris and around the globe.

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