Brussels, 31/01/2011 (Agence Europe) - On Thursday 27 January, the French agriculture minister fleshed out France's proposals to the G20 for tackling price volatility in agricultural raw materials and for setting up “new global governance in agriculture”. The G20, which is currently chaired by France, has scheduled a ministerial meeting for Paris in June to discuss this issue and present proposals for the summit in November at which decisions will be taken.
To guarantee transparency on the markets, France would like to see a global database set up, containing the main information on agricultural production (stocks, crops, production, consumption, etc). Such an instrument could be modelled on the Joint Oil Data Initiative (JODI) that has been put in place in the oil sector. To make them more useable, available data on the agricultural markets should be harmonised. With a view to further ensuring transparency, Paris suggests that a distinction be made between “speculative” and “commercial” operators. The system is in operation in the United States where operators have what may be described as an “identity card” on which they describe their activities.
To address speculation, France advocates position limits, a system which would prevent any operator from buying vast quantities, and thereby artificially creating shortages. This arrangement already exists in the United States (Dodd Frank Act, July 2010). France would like also to see a system for registering private contract operations.
France is calling, too, for improved coordination among G20 members to avoid price surges on the markets as witnessed last summer when Russia put an embargo on wheat exports. The French government would go as far as recommending that the WTO make use of facilities for banning or limiting export restrictions, especially to the poorest countries. France also advocates aid for the most vulnerable countries, with the creation or strengthening of stock networks and especially emergency stocks.
Call for effective regulation to tackle speculation. At the World Economic Forum in Davos, Switzerland, on Friday 28 January, COPA-COGECA (agricultural organisations and cooperatives) called for “effective regulation to combat excessive price speculation in agricultural commodities. This could reduce extreme market volatility”. “It means limiting the extremes characteristic of most financial markets. I don't claim to have the solution but more transparency and information would certainly help”, said COPA President Padraig Walshe. “Maybe also by limiting the size of position or close markets when prices exceed a certain range. There must also be more effective controls on outright manipulation of the market”, he proposed, too. In a press release, he acknowledged, however, that speculation can also play a positive role. “Most operators in the food chain, be it processors, traders, input suppliers, cooperatives and some large farmers, use futures markets to try to protect themselves against price risks”, he said. “The recent extreme market volatility is also a result of other fundamental factors such as climate change and the dismantling of our market management mechanisms under the common agricultural policy (CAP) as well as the opening up of our markets”, he added. Thus, COPA-COGECA is calling for “measures to manage the market under the CAP”. “Most farmers are too small or do not have the means to offset price unpredictability through hedging.” (L.C./transl.rt)