Speculation and price swings in agricultural markets might threaten food security, farm ministers meeting in Berlin said at the weekend, a month after a UN gauge of costs reached a record.
There was a risk of more food riots unless the surge in prices was contained, including through trading regulations, French Agriculture Minister Bruno Le Maire said on Saturday. This year France chairs the Group of 20 (G20), a group created in 1999 to stabilise global financial markets.
“Food markets may not be the object of gamblers,” German Agriculture Minister Ilse Aigner said during the meeting. “Food and agricultural commodities are not like anything else. Sometimes it’s about pure survival.”
World food prices in total increased 25 percent last year and countries probably spent at least $1 trillion (R7 trillion) on imports, with the poorest nations paying as much as 20 percent more than in 2009, according to the UN.
Governments from Beijing to Belgrade are boosting imports, limiting sales or releasing stockpiles to curb inflation. Riots in Algeria and Tunisia this month were in part caused by food costs.
The 48 agriculture ministers meeting in Berlin, including representatives from Brazil, Russia and Japan, said they were “concerned that excessive price volatility and speculation on international agricultural markets might constitute a threat to food security”, according to a joint statement on Saturday.
France, in its role as the head of the G20, would propose to regulate the “financial agricultural” markets, Le Maire said.
Germany’s Aigner said limits on prices and the scale of trading positions should be among measures considered.
Wheat traded in Chicago, a global benchmark, rose 65 percent in the last 12 months, while maize jumped 79 percent and soya beans gained 50 percent. Prices rose after crops were ruined by Russia’s worst drought in at least a half century, flooding in Canada and parched fields in Kazakhstan, Europe and South America.
More disclosure on agricultural commodity trading would help “eliminate those who conduct these transactions only to speculate and make short-term profits, without really having the goods being traded”, said Dacian Ciolos, the EU’s agriculture commissioner.
The officials called on the G20 leaders to “improve market transparency” and to “fight the abuse and manipulation of prices” in agriculture.
“We don’t want to accept this speculation on agricultural commodities, which… enriches a lot of people but which impoverishes the rest of the planet,” Le Maire said.”
Surging food prices in 2008 sparked protests and riots in more than 30 countries, including Egypt and Haiti.
“It’s an unbearable situation for a number of developing countries who can’t handle the increase of agricultural commodity prices and find themselves confronted with the risk of food riots,” Le Maire said. “We’ll see them again in 2011 or 2012 if we fail to quickly take the necessary measures.”
Price swings in agriculture had been driven by increased investor interest over the last two years, Le Maire said.
Food production will have to rise 70 percent by 2050 as the world population expands to 9.1 billion people from about 6.8 billion people in 2010, according to the UN’s Food and Agriculture Organisation.
Public and private investment in agriculture needed to be raised, the ministers gathered in Berlin said. Food security needed “an integrated and sustainable approach”. – Bloomberg