Bold action needed from Secretary Vilsack and G20 agricultural ministers to tackle food price volatility

The US and G20 nations 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, urged international relief and development organization Oxfam on the eve of the G20 Agricultural Ministers meeting in Paris tomorrow.

In a new briefing paper launched ahead of the meeting, Oxfam also urged the G20 to reconsider the case for food reserves so that countries can better handle the humanitarian needs that accompany price spikes that left an extra 150 million people hungry during the last food price crisis. Many poor people continue to struggle with rising food prices (see sidebar below). An early draft of the G20 communiqué leaked last week did not go far enough in tackling the problems.

“Secretary Vilsack should lead the way in Paris to address the root causes of food insecurity and price volatility,” said Oxfam’s GROW campaign manager, Vicky Rateau. “The measures so far offered by the US are insufficient to face the challenges of rising hunger and poverty, increased price volatility and climate change. Agriculture Secretaries do not usually get the chance to play a leading role in tackling global problems, but this can be Secretary Vilsack’s moment to do exactly that."

A recent expert report from ten major international institutions including the World Bank, the UN FAO and OECD on price volatility in the G20 made it crystal clear that biofuels were part of the problem. The US and other G20 countries must urgently remove the types of biofuels subsidies and mandates that are leading to increased price volatility and failing to tackle climate change.  

“Recent votes in both chambers of congress show  strong bipartisan support to cut back on taxpayer funded giveaways to the ethanol industry” continued Rateau. “Secretary Vilsack should support these adjustments in the light of tightened food supplies and high prices.”

The Oxfam report also urges the G20 to 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. The briefing paper points to 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 falling to alarmingly low levels. In the past 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, Oxfam’s research shows. The cost of maintaining this reserve would have been $1.5 billion; or just $10 for each of the 150 million additional hungry people that may have been avoided. India managed to stabilize food prices in 2008 because the government made a significant purchase and release of rice and wheat.

“It is abundantly clear that high and erratic food prices are a major risk for everyone, but especially for the poorest people who spend a large portion of their income on food,” said Gawain Kripke, Research and Policy Director for Oxfam America.  “Food reserves were largely dismantled in the 1990s and have been ignored ever since.  There are smart new ways that vulnerable 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.”

Oxfam’s report shows 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.

Oxfam says that the US and other G20 governments should support national and regional food reserves in developing countries and 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.

/ENDS