Bloomberg News

World Faces Century of Hunger Without Farm Deal, France Says

June 17, 2011

(Adds G-20 proposals in second paragraph, comment in third, food-demand outlook in fourth.)

June 17 (Bloomberg) -- The Group of 20 countries must reach an agreement at a meeting of farm ministers in Paris next week to avoid the 21st century from becoming “the century of hunger,” French Agriculture Minister Bruno Le Maire said.

France, as president of the G-20 this year, is proposing a shared database on food stocks and harvests, a forum on export restrictions, emergency stocks in food-deficient countries and regulation to reduce commodity-price swings, Le Maire said.

“If we’re not able to cooperate, we’re heading for a major food crisis,” Le Maire told reporters today. The G-20 has a responsibility for food security, and the world “will not understand” if the countries can’t reach a deal, he said.

World food output will have to rise 70 percent by 2050 as the planet’s population climbs to 9.2 billion from an estimated 6.9 billion in 2010, the United Nations’ Food and Agriculture Organization says. At the same time, growth in world farm production may slow to an average 1.7 percent a year through 2020, from 2.6 percent in the previous decade, the Organization for Economic Cooperation and Development and the FAO said in their annual Agricultural Outlook report today.

“The crisis isn’t tomorrow, the crisis is now,” Le Maire said at a conference of international farm organizations in the French capital. “We don’t know how to correctly feed the world population. We therefore are all responsible for finding the solution.”

‘Crucial’ Decisions

“All the countries of the G-20 will have to assume their responsibility for taking crucial decisions for world agriculture,” Le Maire said. Governments can choose either “international solidarity” or “egoism,” he said.

The three “especially sensitive points” of the French G-20 proposal are transparency on stocks and production, “because it raises very big questions about national sovereignty,” as well as financial regulation of agricultural- commodity markets and export restrictions, Le Maire told reporters.

“The Chinese consider that being transparent on production and stocks, when you have 1.4 billion people to feed, risks showing a weakness or difficulty to the world,” Le Maire said. “The European countries, in terms of transparency, are not good pupils. Many don’t want to disclose their stocks.”

At the start of negotiations about a year ago, the U.K. and Australia had reservations about market regulation, the U.S. was worried that emergency food stocks might affect their capacity to export and Brazil and Argentina were concerned that the G-20 nations would seek to regulate prices, according to Le Maire.

No Guarantee

“An agreement is possible but this agreement isn’t at all guaranteed,” Le Maire said. “We’re negotiating 24 hours a day to wrench out this agreement on June 23. I specifically say ‘wrench out’ an agreement, because it has been difficult.”

“We’re negotiating every word. Every one of those words is the subject of hours of negotiation.”

Le Maire said there’s no room for a partial agreement and there will be no further negotiations on agriculture after next week, before a meeting of G-20 heads of state later this year.

“There is a moment when either you have an overall agreement, or you have no agreement at all,” he said. “There will be no second meeting. It’ll be white smoke or black smoke, there is no partial accord possible,” Le Maire said, referring to the signal indicating whether a new Pope has been chosen.

French President Nicolas Sarkozy has “drawn a red line” by demanding “a text with substance,” according to Le Maire. The G-20 agreement should be “a first step towards a global governance of agriculture,” the minister said.

Markets Regulation

France won’t sign an agreement that doesn’t mention regulation of financial markets for agricultural commodities, Le Maire said. Details on regulation will be discussed at a meeting of G-20 finance ministers later this year, he said.

“The fight against excessive speculation is a cardinal point for France,” the minister said. “I won’t withdraw one of the cardinal points from the agreement to have a deal. Nothing is agreed until everything is agreed.”

Speculation in agricultural-futures markets may amplify price movements in the short term, though there is “no conclusive evidence” of a longer-term effect on volatility, the OECD and FAO said in their report.

‘Excessive’ Volatility

“This volatility of agricultural commodity prices is one of the elements that disrupts production,” Le Maire said. “Our goal is absolutely not to lower the prices, which wouldn’t be in the interest of farmers, our goal is to avoid excessive volatility.”

Le Maire said price swings cause famine in parts of the world as cost spikes mean some people can’t afford food.

There will be no agreement on biofuels, which is a “very sensitive subject,” as part of the G-20 agriculture meeting, according to Le Maire. “We touched upon this question but there will be no decision,” he said. “The subject isn’t mature.”

An estimated 13 percent of world production of coarse grains, which includes corn, will be used to make fuel by 2020, as well as 15 percent of vegetable oil and 30 percent of sugar- cane production, according to the joint OECD and FAO report.

“The political choices made by the governments are too different,” Le Maire said. “If you want a substantial agreement, you also have to accept that some subjects are not ready.”

--Editors: John Deane, Alastair Reed

To contact the reporters on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net;

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.


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