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June 7, 2011
G20 targets volatile food prices
The G20 group of leading nations is to launch an attempt to reduce price volatility in agricultural commodities by collating greater market information on global stocks and production.
The initiative, called the Agriculture Market Information System (Amis), comes as the world economy weathers its second food prices shock since 2007 due to production shortfalls, strong demand and the lowest inventories in decades ...
The UN Food and Agriculture Organisation on Tuesday warned that agricultural commodities prices were likely to remain high and volatile for the rest of the year, in a sign that food inflationary pressures would not ease any time soon.
“Markets cannot operate blindly,” said Bruno Le Maire, French minister of agriculture, who is leading the initiative. “We need reliable information on stocks and production,” he told the Financial Times in an interview.
France has placed food security at the centre of its presidency of the G20 this year, calling a meeting of agricultural ministers in Paris this month. The Amis launch will be at the top of the agenda, officials said.
Agriculture officials rely on patchy information about global supply and stocks of food commodities, hampering policymaking. While some countries, such as the US, release prompt and detailed data, others, including the European Union and most developing countries, are far behind. China, which hitherto has kept secret the level of its stocks of food commodities, is to join the Amis project.
“China are ready for the first time to go the way of transparency,” said Mr Le Maine.
He said there was still some political reluctance in Beijing to fully disclose the level of stocks, adding that China will disclose data “step by step”.
Agriculture ministers will meet in Paris on June 22-23 to discuss the details and give the FAO a mandate to create a secretariat for the initiative.
Amis will receive data from the FAO, international agencies and G20 countries.
The initiative could be in operation by the end of the year and initially would only cover wheat, corn, rice and soyabeans on a monthly basis, according to a G20 official.
Moreover, Mr Le Maire said he had met agricultural commodities traders such as Cargill to secure the support of the private sector. Cargill and its rivals ADM, Bunge and Louis Dreyfus– known in the industry as the ABCD of food because of their initials – dominate global grains trade and boast the best market intelligence.
The project mirrors an older G8 project for oil markets known as the Joint Oil Data Initiative, or Jodi, which has improved the flow of oil supply, demand and inventories information. Progress, however, has been slow since its launch in 2002.
Mr Le Maire acknowledged that, as with the case of Jodi, progress was likely to be slow. “We will not have tomorrow morning all the information,” he said, but insisted that the launch of the initiative was a first step in the right direction.
