World powers weigh emergency meeting on food prices

PARIS (Reuters) - Leading members of the Group of 20 nations are prepared to trigger an emergency meeting to tackle soaring grain prices caused by the worst U.S. drought in half a century and poor crops from the Black Sea bread basket.

France, the United States and G20 president Mexico will hold a conference call at the end of August to discuss whether an emergency international meeting is required, aiming to avoid a repeat of the 2007/08 food price spike that triggered riots in poorer countries in 2008.

Analysts had little hope of concrete action, although there could be further calls for the United States to change its biofuels policy in response to the crisis while Russia will be encouraged not to impose an export ban.

The United States uses 40 percent of its corn crop to produce biofuel ethanol, drawing criticism from some groups which argue against the use of food for fuel when hunger is widespread in some poorer countries.

"They might talk about the U.S. ethanol mandate requirements but I don't seem them making any massive responses at the moment. They don't have a lot of tools at their disposal," said analyst Muktadir Ur Rahman Of Capital Economics

Benchmark Chicago corn climbed to an all-time high on Friday after the U.S. Department of Agriculture cut its production estimate by 17 percent, intensifying fears the world is headed for a repeat of the 2008 food price crisis.

The U.N.'s food agency stepped up the pressure on the U.S. on Friday to change its biofuel policies because of the danger of a world food crisis, arguing the importance of growing crops for food over their use for fuel.

The FAO's food index jumped 6 percent in July to higher than in 2008 and the body warned against the kind of export bans, tariffs and buying binges that worsened the price surge four years ago.

BIOFUELS AND FOOD

Charity Oxfam said its top priority was for ministers to agree action on beginning to abolish mandates and targets for biofuels production, which it says are having a major impact on food price rises.

"In 2011 eleven intergovernmental agencies produced a report to the G20 where it unequivocally said there was a link between increasing biofuels production and food price rises and recommended quite clearly that biofuels mandates and targets should be scrapped," said Hannah Stoddart, head of economic justice at Oxfam Great Britain.

France, the United States and Mexico will discuss a report on agricultural prices requested by France last month and compiled by the Agricultural Market Information System (AMIS).

This system, created last year under France's presidency of the G20, is designed to share information on crop prices with a view to averting a repeat of the 2007-08 food crisis.

France currently presides both the forum and the AMIS system, which is based at the U.N. Food and Agriculture Organisation (FAO) in Rome. The United States will take over the reins in October.

"France...and the United States remain attentive to any new fact that could justify a meeting of the Rapid Response Forum," French Agricultural Minister Stephane Le Foll said in a statement on Monday.

The forum has no power to impose binding decisions on member states but it is hoped that discussion can discourage countries from taking unilateral action.

Russia banned grain exports for almost a year after a severe drought two years ago and weather problems this year have fueled speculation it could resort to export curbs again. However, French officials have said that Russia has given reassuring indicators in contacts through the AMIS system.

A French agriculture ministry official said the call would decide whether to convene the first meeting of the G20's Rapid Response Forum. The body was created last year to promote early discussion among decision-makers about abnormal market conditions with the aim of avoiding unilateral action.

"If the situation requires it, a meeting of the Rapid Response Forum could be called as soon as the start of September," the official said, adding the forum could hold its discussions in person or by a conference call.

"The aim is to talk about the situation and avoid measures like export embargoes which would be damaging for everyone," he said.

(Additional reporting by Gavin Jones in Rome, Sarah McFarlane and Nigel Hunt in London; editing by Jason Neely and Keiron Henderson)

Source: http://news.yahoo.com/world-powers-weigh-emergency-meeting-food-prices-111231685.html

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