G20 farm ministers ducked issues

LONDON: The agreement reached by G20 farm ministers does little to address the threat posed by rising food prices, an independent consultant to the UN's Food and Agriculture Organization said.

G20 farm ministers agreed on Thursday to launch a database on food supply, demand and stocks information, along with increasing policy coordination.

"If this is all that's come-out of the G20, an agreement to get more information it's a non-event," said Ann Berg, who is also a former trader and Chicago Board of Trade director.

The action plan to boost food market transparency and policy coordination reflected only some of France's ambitious proposals for its G20 presidency this year, falling short of calls by Paris for a tough crackdown on speculators.

Under the deal, Group of 20 nations agreed to launch a database known as AMIS, for Agricultural Market Information System, housed at the United Nations' Food and Agriculture Organisation.

AMIS may be difficult to implement given concerns from India and China about the practicality of providing data for their countries.

"The challenge for AMIS will be the uneven playing field in crop survey capabilities and the differing priorities among countries to be transparent," Berg said.

Berg noted it would be particularly difficult to gauge supply and demand in China due to its vast scale and rapidly changing dietary needs.

"It's not that easy to go out in the field and determine crop prospects. Due to its long history, the US Department of Agriculture is the best at assessing crops," Berg said.

France failed to gain the support of the G20 ministers for the introduction of position limits in agricultural futures markets to curb speculation, instead recommending finance ministers take decisions for better regulation of these markets.

"The decision to encourage finance ministers to tackle regulation is just passing the buck to another group. I don't know that the finance ministers are going to have the skills, experience and understanding of the underlying commodity markets to regulate commodity futures," Berg said.

"Virtually every commodity futures market in the world has position limits other than the soft commodity futures markets in London."

France believes speculation in agricultural commodity markets has contributed to a sharp rise in food inflation but Britain was amongst the governments which saw little value in more regulation.

Berg said position limits could help curb volatility in London's agricultural futures markets.

"Futures contracts were designed as risk transfer instruments for those with bona fide commercial interests," said Berg.

"Their financing has transformed a crust of bread into a securitised asset class."

COPYRIGHT REUTERS, 2011