Tag Archives: world
Global Food Prices Expected To Remain Volatile In Coming Years, Warns UN Official
New York, Oct 8 (IBNS): Although global food prices have recently stabilized, they are expected to remain volatile over the next few years, the head of the United Nations Food and Agriculture Organization (FAO) said Monday, as a ministerial meeting on global food prices kicked off in Rome. FAO Director-General José Graziano da Silva told the meeting, which coincided with the opening of the Committee on World Food Security, that this year’s session was taking place in a less troubled climate than a year ago, when the ministers came together in response to the third spike in international grain prices in five years. “The outlook for international food commodity markets finally looks calmer this year,” he told the meeting, which was attended by some 30 agriculture ministers. “Grain production has rebounded and higher stock-to-use ratios should bring greater stability to prices.” And while the FAO Cereal Price Index is 20 per cent lower than it was one year ago, this is not the time for complacency, he stated. “International prices have declined but they are still above their historical levels. And prices are expected to remain volatile over the next years,” he warned. Graziano da Silva urged countries to take advantage of the relative calm to prepare for future market turbulence and find lasting solutions to the issues surrounding food price volatility. “If higher and volatile prices are here to stay, then we need to adapt to this new pattern.” The two critical issues for countries to address are how to help poor small-scale farmers benefit from the higher food prices, and how to protect low-income families who suffer as a result of them, he said. “The current situation offers an opportunity for farmers to reinvest in agriculture,” he continued, calling for a right set of policies to ensure that small-scale farmers have the means to take advantage of it. The Committee on World Food Security (CFS), which runs until Oct 11, opened Monday amid urgent calls to build more effective links between international policies and the daily needs of millions of the world’s most vulnerable people. “The latest estimates signal there are nearly 30 million less hungry people in the world in 2013, compared to last year,” Graziano da Silva said at the opening. “And we continue to progress towards achieving the Millennium Development Goal hunger target of reducing by half the proportion of the undernourished population between 1990 and 2015. “I see many challenges ahead of us, but also progress and successful experiences that we can build on,” he added. “We are convinced that working together is the only way forward.” “Poverty and hunger go hand-in-hand and poverty runs deepest in rural areas,” said Kanayo F. Nwanze, President of the International Fund for Agricultural Development (IFAD). “Let us not forget that rural areas are a key element of any new development agenda and global food security. Let us not forget that investing in smallholder agriculture is the most cost effective way for developing countries to tackle poverty and hunger.” Ertharin Cousin, Executive Director of the World Food Programme (WFP), said the world needs a strong and effective CFS. “Together, we shoulder an enormous responsibility, but our burdens weigh nothing in comparison to the suffering of the 840 million chronically undernourished people depending on us to get it right.” In a message delivered by his Special Representative for Food Security and Nutrition, David Nabarro, Secretary-General Ban Ki-moon called the Committee “the point of reference” for all who seek to achieve the goal of eliminating hunger through collaboration with governments, social movements, farmers’ organizations, business and the research community. “Working with a spirit of trust and mutual accountability, multiple actors are collaborating to address some of the thorniest issues of food security: land tenure; climate change; food price volatility; biofuels; and responsible investment in agriculture,” he noted. The weeklong session will feature two round tables: on biofuels and food security, and investing in smallholder agriculture for food security and nutrition. Continue reading
Are Global Agricultural Trade Policies Only Protecting The Developed World?
By: East Asia Forum Date: 20 September 2013 The agriculture sector is a large part of the developing world and supports the livelihoods of a significant portion of its population. But since the last WTO Doha Round, the developing world have been concerned that ambitious tariff reduction proposals will leave their domestic agriculture sector, and by extension their economies more generally, vulnerable. The Agreement on Agriculture negotiated in the Uruguay Round was expected to bring about a structural change in the global agricultural trade and lead to efficient agricultural producers. Yet despite several further rounds of negotiations there has been minimal progress on all issues related to the Agreement and agricultural trade continues to be distorted. Given the prevalence of these distortions and the importance of agriculture to developing countries, the need to create a framework to tackle agricultural trade issues is stronger than ever. Both developed and emerging economies have been accused of protectionism. Developed countries often heavily subsidise their farmers, while developing countries often impose high import restrictions that inhibit free trade. Developing countries are advocating two instruments to defend their concerns of food security, farmers’ livelihood and rural development. The first is the Special Safeguard Mechanism (SSM), allowing for the temporary raising of tariffs. The other is the concept of Special Products (SP), which proposes to create a list of products that directly impact the developmental concerns of developing countries and should not be subject to tariff reductions under the Doha talks. Paragraph 7 of the Hong Kong Ministerial Declaration states: Developing country members will also have the right to have recourse to a Special Safeguard Mechanism based on import quantity and price triggers, with precise arrangements to be further defined. Special Products and the Special Safeguard Mechanism shall be an integral part of the modalities and the outcome of negotiations in agriculture. What this means is that a WTO member country will have the right to impose SSMs if it finds that imports are increasing to the extent that local markets are being disrupted (a ‘volume’ trigger) or if there is a collapse of the international price of that commodity which undermines or threatens to undermine the otherwise viable domestic production (a ‘price’ trigger). The leading bloc arguing for SP and SSM is the G33, which comprises more than 40 developing countries, including India and China. Although all WTO members have acquiesced in principle to establishing a SSM, some developed countries, particularly the United States, and some developing countries with an export interest in agriculture (such as Thailand, Paraguay, Argentina, Uruguay) have sought to restrict the use of SSMs. They seek, in particular, to limit the number of times it can be used and the extent to which it can be used to raise tariffs. The main justification for SSM and SP is that international commodity prices remain extremely volatile. Studies show that there has been no systemic decline of volatility in the post-WTO period, and that import surges have been common in developing economies. A Food and Agriculture Organization report states that: ‘Indeed, import surges seem to be more common in product groups that are subject to high levels of subsidies in exporting countries, notably diary/livestock products (milk products, poultry parts), certain fruits and vegetable preparations and sugar’. Against this backdrop, developing countries are worried that the ambitious tariff reduction proposals being negotiated at the Doha Round will leave their domestic agriculture sector, and by extension their economies more generally, vulnerable. A SSM would provide a measure of insurance. Unlike in industrial production, the production cycle of agriculture does not allow for sudden halts and rapid restarts in production. If cheaper imports lead to a fall in domestic production and the decreased demand persists for more than a few weeks, farmers may be forced to switch to other crops. It could be difficult for them to return to the original crop even when the price of that crop becomes favourable again in the medium term. Price volatility thus makes farmers disinclined to implement long-term plans to build capacity in particular crops, which would lead to economies of scale, and exposes farmers and the nation to damaging fluctuations in income. Normal safeguards are insufficient to address this problem. When the price of industrial products declines factories can increase their inventory and save for when prices rise again. But when demand for domestic agricultural products is reduced, small farmers in developing countries find it difficult to store their product in the hope of a return to higher prices because of the lack of storage facilities and the perishability of agricultural products. What is needed is a mechanism to reduce the severity of fluctuations in prices. A SSM can do this. The agriculture sector is a large part of the developing world and thus supports the livelihoods of a significant portion of its population. The viability and dynamism of the developing world’s agriculture sector thus remains essential to secure success in the developing world’s poverty alleviation strategies. The next ministerial at Bali in December must ensure pressure remains on developed nations to meet the aspirations of developing countries with regards to the global agriculture trade. By Rohit Sinha & Geethanjali Nataraj, ORF Rohit Sinha is a research intern and Geethanjali Nataraj is Senior Fellow at the Observer Research Foundation, New Delhi. Continue reading
How Farmland Became Canada’s Hottest Real Estate Market
JEFF RUBIN The Globe and Mail Published Wednesday, Sep. 18 2013 Buy land, advised Mark Twain, because, as the punch line goes, they ain’t making any more of it. Fast forward to 2013 and that advice, as a look at prices for farmland shows, seems as prescient as ever. As any farmer will readily tell you, the agriculture business has had a tough run. Agriculture was once an economic mainstay. Turn back the clock to 1950 and the sector employed nearly a fifth of Canada’s work force. Today, agriculture accounts for less than 2 per cent of the country’s employed workers, while its share of gross domestic product is also a shadow of what it once was. Farm prices have languished for decades, as Canada’s population has shifted from rural to urban. By the 1990s, North America was losing two acres of productive farmland to development every minute. How the world has changed for Canada’s farmers in 2013. The hottest sector of the country’s real estate market is, you guessed it, farmland. The price of farmland in Canada has outpaced both residential and commercial real estate, gaining an average of 12 per cent over the last five years. In some hotspots, such as southwestern Ontario, the price-per-acre has been going up by as much as 50 per cent a year. Even pension plans and hedge funds have become players in the pursuit of prime agricultural land, interest that is only sending prices that much higher. If global food prices are any indication, such investments could be a solid bet. Over the last decade, global food prices have more than doubled, according to the United Nations FAO Food Price Index, which tracks monthly changes in prices for international food commodities. The food riots stemming from that price inflation were part of the spark that set off the Arab Spring. So far this year prices have been falling, but they still remain within shouting distance of the record highs reached in 2011. The strength in global food prices is no accident. The growth in global food demand is unrelenting. Part of the reason is due to population growth. The world is at 7-billion people and counting. But that’s not the only thing straining food supply. World grain demand has also soared, as households in fast-growing Asian countries trade in rice bowls for cheeseburgers. It takes seven pounds of grain to raise a pound of beef. That’s a whole lot more than it takes to make a loaf of bread. The newfound economic clout in emerging economies such as China and India, which between them have roughly 2.5 billion people, has allowed more people to diversify their diets. In turn, global meat consumption has bounded ahead at double the rate of population growth over the last two decades. All that demand for protein bodes well for the world’s breadbaskets. That is if Mother Nature doesn’t get in the way first. A severe drought a few years ago forced Russia, the world’s third largest producer of wheat, barley and rye, to suspend grain exports for nearly a year. Before that a drought in China caused a spike in grain prices that affected everything from the price of pasta in Italy to the cost of tortillas in Mexico. Closer to home the US Midwest has been grinding through one of the worst droughts in more than half a century. Climate change scientists warn that droughts and other agricultural shocks will be even more common in the future. Against a backdrop of climbing temperatures, Canada sits in an interesting spot. With a wealth of arable land and 7 per cent of the world’s fresh water, Canada’s agricultural potential is considerable. It’s also possible the amount of land under cultivation in Canada could actually increase as global temperatures continue to rise and the wheat belt climbs farther north. Could it be that in the coming years we’ll also see farmers actually start reclaiming acres from far-flung suburbs? The idea is much more plausible now than it was only a few years ago. It was depressed farm prices that allowed prime agricultural land to be paved over in the first place. As food becomes more precious and more expensive, it will only add to the market forces that will push some of those farms to come back. Jeff Rubin is a former chief economist of CIBC World Markets and the author of the award-winning Why Your World Is About To Get A Whole Lot Smaller as well as The End of Growth. Continue reading
