Bold action needed now from G20 agricultural ministers to tackle causes of food price volatility

Published: 21 June 2011

Biofuels, food reserves and stock transparency all 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 tomorrow (Wed 22) 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. Oxfam has recently launched the GROW campaign to end hunger today and tomorrow.

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. “We hope that ministers will be bolder at the meeting,” GROW campaign head Katia Maia said.

Biofuels support increases food price volatility

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.

Global grain stocks dropping alarmingly

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 $1.5 billion “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.

“Food reserves were largely dismantled in the 1990s and have been ignored ever since as too expensive and ineffective,” Kesteloot said.

Food reserves must be well-managed

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.

“People’s discontent is palpable”

Oxfam and IDS interviews reveal political views of food crisis

Oxfam and the UK’s Institute of Development Studies (IDS) today publish a new report called “Living On A Spike” based on interviews they have conducted over three years (2009-11) with people in Indonesia, Kenya, Zambia and Bangladesh, asking them how they are coping with rising food prices.

“The steady rise in global food prices from 2009 through 2011 is producing a pattern of many ‘weak losers’ and a few ‘strong winners’ in these four countries,” Oxfam co-author Duncan Green said. “People who are already struggling in low-paid informal work like street vendors, casual laborers and transport drivers say they are worse off year-on-year and tend to blame their governments. But some groups – usually those who are already relatively better off, like public sector workers – have done better because their earnings have kept pace with inflation.”

IDS co-author Naomi Hossain said: “Our interviews reveal that food price hikes affect people’s quality of life in all its dimensions, not just their calorie intake. The anxieties of the daily grind have become even more arduous and attritional. Physical and mental health have suffered, along with marital and parental relationships; stress because of over-indebtedness; social lives and social cohesion. People are being hit in more nuanced ways than in the 2008/9 price spike. The pattern is for people to shift to cheaper, less preferred and often poorer-quality foods.”

Hossain said: “And always, women are saying that they feel the stress of their children’s hunger most acutely, coming under more pressure to provide good meals with less. These stresses are pushing women into poorly paid informal work. In the worse instances, couples split or look for better-off partners to cope with these tough times.”

Read the report: Living on a Spike

Read more

Oxfam's GROW campaign

Read the report: Preparing For Thin Cows: Why the G20 Should Keep Buffer Stocks On the Agenda

Contact Information

Matt Grainger, matt.grainger@oxfaminternational.org, +44(0)7730680837

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