G20 agricultural meeting: Biofuels, food reserves and stock transparency need urgent attention

The G20 must scrap their most damaging biofuel policies and demand more open information about food stocks as part of urgent measures needed to tackle global food price volatility. International agency Oxfam is also calling on G20 Agricultural Ministers meeting in Paris 22-24 June) to reconsider the case for food reserves so that countries can better handle the kind of price spikes that left an extra 150 million people hungry during the last food price crisis. Many poor people are continuing to be hurt by rising food prices.

An early draft of the G20 communiqué, leaked last week, was disappointing. Oxfam said it did not go far enough in trying to tackle the problems. Oxfam says that a recent expert report on price volatility into the G20 made it crystal clear that biofuels were part of the problem. The G20 must urgently remove the types of biofuels subsidies and mandates that are increasing price volatility and failing to tackle climate change. The G20 must have immediate contingency plans to adjust their biofuels targets when food supplies are endangered.

Oxfam also said the G20 must require major private sector traders and investors to provide governments with adequate and timely information on their food stocks in order to improve market transparency. In a new briefing paper, Oxfam says policy-makers should re-examine evidence from countries like Madagascar and Indonesia that show that properly designed food reserves combined with other measures could help developing countries to tackle food price volatility. Oxfam’s call comes with a warning that global grain stocks are again dropping alarmingly. When global cereal stocks fall below 15-20% of world consumption, price hikes and market break-down have followed. By the end of this year, Oxfam says, this ratio could be as low as 17%.

A global grain reserve of just 105 million tons would have been enough to help avoid the food price crisis in 2007-8, the paper said. The cost of maintaining this would have been $1.5bn “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. The paper says that India managed to stabilize food prices in 2008 because the government made a massive purchase and release of rice and wheat. International institutions have warned G20 leaders that renewed food price volatility is now a high risk. However, the same institutions have summarily dismissed food reserves as one of the ways to stabilize prices,” report co-author Thierry Kesteloot from Oxfam said.

Oxfam acknowledged that in some cases food reserves may have been poorly managed in the past but that did not mean the policy itself was wrong – rather, it meant that the reserves themselves needed to be better implemented and governed. “The prevailing view that food reserves in themselves don’t work is unsophisticated and short-sighted. There are smart new ways that countries can maintain sufficient food reserves as part of a bundle of policies that could work to limit price surges. We’ve already seen the huge human cost of countries not having food reserves,” Kesteloot said. Oxfam says that G20 governments should agree to scale up national and regional reserves in developing countries and support public intervention of developing countries in buffer stocks managed in a durable, transparent manner. The G20 should commit technical and financial resources to establish these reserves and encourage other governments to do so.