Bridges Weekly Trade News Digest • Volume 12 • Number 21 • 11th June 2008
FAO Summit Attendees Commit to Eliminating Hunger, Securing Food for All
A major international conference recently concluded with a call to address the complex issues underlying the current food crisis, focusing both on short-term action, such as increasing food aid, and long-term action, such as investing in the agriculture sector in developing countries.
Heads of state, ministers, and other high-level officials from 181 countries attended a summit on climate change, energy and food in Rome on 3-5 June. The UN Food and Agricultural Organisation (FAO) ‘High-Level Conference on World Food Security: the Challenges of Climate Change and Bioenergy’ was a culmination of months of expert-level meetings that assessed the complex causes and effects of the recent rise in food prices. The Declaration on World Food Security that was issued at the conclusion of the meeting committed the attendees to “eliminating hunger and securing food for all.” It included provisions on short and long term measures to address the causes and effects of the recent spike in food prices.
The Director-General of the FAO, Jaques Diouf, appealed to the international community to commit “US$30 billion a year to enable 862 million hungry people to enjoy the most fundamental of human rights: the right to food and thus the right to life.” To date, participants have pledged US$6.8 billion towards a fund to address hunger and poverty.
The first line of action: getting food to the hungry
In the immediate term, the declaration of the food summit called for increased resources for UN agencies, cooperation between international and national food security actors, and food assistance that is cognisant of a “continuum from urgent to longer term assistance.”
UN agencies were encouraged to purchase food locally and regionally “when appropriate.” Regional organisations with emergency food security arrangements were called on to coordinate their efforts to cope with the surge in food prices. The declaration called for countries to ensure the efficient and timely delivery of food aid.
Summit participants also commented on the financial distress of low-income countries that are net importers of food. Some of these countries suffer from balance-of-payment and budgetary difficulties because of the surge in import prices. According to the declaration, and in acknowledgement of a likely sustained increase in food prices, international financial institutions were asked to facilitate an adjustment by providing necessary support, as well as to review debt servicing requirements. The document also mentioned the need for existing financial mechanisms to begin supporting agriculture and environment.
The second line of action: channel support back to the agriculture sector
After addressing the urgent need for food assistance and humanitarian relief, the declaration emphasised the need for an appropriate set of policies that support agricultural trade and production. Global market integration, reduced barriers to trade, and capacity building through improved agricultural inputs were particular areas of emphasis.
In recognition of the urgency to increase production, development partners of the FAO were invited to participate in technical assistance initiatives involving improved, locally adapted seed varieties, fertilisers, and other agricultural inputs. Many small farmers lack access to the resources that can improve production; improved access, coupled with a broad range of policy changes, could help farmers scale up production to keep pace with demand. Also, the declaration called on international institutions to assist countries in developing their food stocks — a financially challenging proposition for many — to help dampen the potential swings in prices faced by both producers and consumers.
The Doha round of trade negotiations was explicitly mentioned by Members of the WTO. They reiterated “their willingness to reach comprehensive and ambitious results conducive to improving food security in developing countries.” The declaration went further in reaffirming the “need to minimise the use of restrictive measures that could increase the volatility” of food prices. Negotiations at the WTO have focused on reducing developed country subsidies and improving access to developed country markets for developing country exports. Some argue that lowered barriers to trade and subsidies would spur agricultural production in developing countries.
Looking to the future
The summit declaration set out a series of longer term measures and objectives to reduce hunger, decrease the vulnerability to shocks of the food system, and address the challenges and opportunities that climate change and biofuels present.
In language less pressing than that on short-term measures, the declaration urged governments to prioritise agriculture, fisheries, and forest management so as to protect the needs of small farmers, indigenous people, and vulnerable areas. Preservation of biodiversity and mitigation of climate change through investment and the transfer of technology were suggested as a means to help governments achieve their policy objectives.
The summit also called for further liberalisation of agricultural trade; investment in research and development was also given a high priority. Member states were encouraged to develop a set of policies to promote investment in agricultural technologies. The private sector in particular was recognised as a source of potential research, application, transfer and dissemination of improved technologies and approaches to agriculture.
On biofuels, the declaration proposed that an additional international forum be organised to present the findings of in-depth research that international bodies need to conduct. According to the declaration, there is need for clarity on the sustainability of biofuels, especially in relation to food security.
Countries react
Countries neither arrived at nor departed from the conference with a unified stance on the issues discussed. The declaration proved controversial for some. Argentina, Cuba and Venezuela opposed language in the draft declaration that did not clarify the causes of the food crisis. Identifying agricultural trade policies and subsidies as the main culprits, Argentina stated that on “the basis of mistaken diagnosis… no appropriate remedy can be found.” Venezuela lamented that “an opportunity was lost” to address the “structural problem” of hunger. The reference to “restrictive measures” in trade policies drew the ire of some attendees, causing some to call for its deletion. Also, the absence of initiatives under the UN Framework Convention on Climate Change (UNFCCC) and language against the violations of international laws threatening food security from the declaration caused some consternation. Though some countries remained unsatisfied with the declaration, they did not block its adoption.
Protests in parallel
Civil society representatives, including farmer activists and representatives of indigenous groups gathered in ‘Forum Terra Preta’, which was held in parallel to the FAO summit in Rome. The groups issued a platform for collective action, calling for food sovereignty, the national capacity for food self-sufficiency, and the right to food. They were critical of futures trading and speculation of agricultural commodities and provided a variety of proposals for an ecologically considerate approach to agriculture. They called for immediate criminal proceedings against corporations or governments that have denied others the right to food and the creation of a UN Commission on Food Security. The organisations also committed themselves to monitoring the outcomes and goals of the FAO summit.
Additionally, humanitarian group Oxfam International protested the use of biofuels, but did not participate in the Forum Terra Preta.
Background report on food prices, trade and agricultural production
In a report entitled “Soaring Food Prices: Facts, Perspectives, Impacts and Actions Required” — issued before the summit in Rome — the FAO outlined recent developments in agricultural markets and production, and predicted the impact of rising food prices. The report identified 22 vulnerable countries and recommended a two-pronged approach of addressing immediate food security needs and increasing agricultural production.
The report listed weather-related shortfalls, declining stock levels, and increasing fuel costs as important causes of a decrease in the supply of commodities. Currently, world food stocks are at historic lows and cannot withstand shocks in either supply or demand. Rising fuel prices have increased the price of not just agricultural inputs, but transportation as well. The increase in oil prices has effectively rendered cereals, such as maize, viable for the production of ethanol. Moreover, OECD subsidies of US$11-12 billion have only encouraged the use of cereals for energy.
Emerging markets have long been cited as sources of demand-led increases in food prices. However, the report challenged these assertions by pointing out that China has been a net cereal exporter on average. Although India is a net importer, its cereal imports have consistently declined since the 1990s. Shifting patterns of consumption away from starchy cereals and towards meat and dairy may be strengthening the linkages between commodities, but do not fully explain the rise in food prices. Additionally, financial markets have recently come under scrutiny to help explain the change in prices. According to the report, the ability to spread financial risk, along with liquidity in the financial markets, allowed investors to enter the commodity spot markets in a way that influenced the decisions of farmers, traders, and processors of agricultural commodities. Studies conducted by the IMF and OECD do not draw a wholly causal relationship between commodity prices and speculation. The report considers speculation a contributory factor.
The trend in declining food prices was long blamed for a stagnation and decline in income for many poor farmers. Therefore, the report views the recent rise in food prices as a potential opportunity. An increase in food prices can potentially raise the incomes of small farmers while bolstering international food security. However, an appropriate set of flanking policies is necessary. Both the FAO report and the Declaration on World Food Security suggest that high food prices are here to stay. Drawing a constructive set of solutions from the current crisis will continue to be an important concern for officials in Geneva, Rome, and in national capitals.
Additional resources:
World Declaration on Food Security is available at http://www.fao.org/fileadmin/user_upload/foodclimate/HLCdocs/declaration-E.pdf
The report “Soaring Food Prices: Facts, Perspectives, Impacts and Actions Required” is available at http://www.fao.org/fileadmin/user_upload/foodclimate/HLCdocs/HLC08-inf-1-E.pdf
For daily reports and a summary of the World Food Summit by IISD’s Earth Negotiations Bulletin, visit http://www.iisd.ca/ymb/wfs/
ICTSD Reporting.