Free markets can still feed the world

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Free markets can still feed the world

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Nicolas Sarkozy, France’s president, has rightly identified food price volatility as a priority for his country as it chairs the Group of 20 leading economies this year. Figures released on Wednesday by the UN’s Food and Agricultural Organisation show that costs for a range of basic commodities have now surpassed their peaks of 2008. With food accounting for a large and volatile share of tight family budgets in the poorest countries, rising prices are re-emerging as a threat to global growth and social stability.

The G20 should agree to put food first – because food is the essence of life, and because practical action by the G20 could help make a real difference to hundreds of millions of people.

The overarching goal should be to ensure that the most vulnerable people and countries are no longer denied access to nutritious food. The G20 can achieve this, providing we take the following practical and interconnected steps.

Increase public access to information on the quality and quantity of grain stocks.
Improve long-range weather forecasting and monitoring, especially in Africa.
Deepen our understanding of the relationship between international prices and local prices in poor countries.

Establish small regional humanitarian reserves in disaster-prone, infrastructure-poor areas. Large stocks can be costly, degrade easily and impede producers. But in places where food crises are likely to recur and transport links are weak such as the Horn of Africa, small, pre-positioned strategic reserves would get food to the hungry fast, probably at lower cost. The World Food Programme (WFP) could manage this system.

Agree on a code of conduct to exempt humanitarian food aid from export bans. Export restrictions make food price volatility worse. Ideally, countries would not impose any export bans; in 2011 they should at least agree that food for humanitarian purposes be allowed to move freely.

Ensure effective social safety nets.
Give countries access to fast-disbursing support as an alternative to export bans or price fixing.

Develop a robust menu of other risk management products.

In some cases, the most useful tools might be weather insurance or a rainfall index; in others, it could be a hedge on energy prices to keep transport and input costs low.

Help smallholder farmers become a bigger part of the solution to food security. Eighty-six per cent of staples in poor areas come from local sources, so support for country-led efforts to bolster smallholder agriculture is critical. One concrete step would be for the G20 to help farmers benefit from tenders from humanitarian purchasers such as the WFP. This may require flexibility to allow development benefits such as building local markets to be taken into account in sourcing decisions. South Sudan could offer a timely pilot.




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