G20 and Food Security: Keep the Focus on Economic Policy Reform

May 28, 2012
Vendors sell produce from carts in Allahabad, India. The country's inflation accelerated to a worse than expected 7.2 percent in April, on rising food and manufacturing prices (AP Photo/Rajesh Kumar Singh).

When the G20 put food security on its agenda for the 2011 Cannes summit, many analysts were initially optimistic. As the world’s leading economies, the G20 has the potential to make important economic policy changes that could help improve access to food for the world’s poorest people.

In 2012, optimism about the G20’s ability to deliver on this front has begun to fade. There has not been much action since the Cannes summit and, in the run-up to the Los Cabos summit, the discussion has shifted toward a narrower focus on productivity growth and away from broader economic policy reforms that can contribute to food security. Both are important and should remain on the agenda.

International economic policy coordination is widely seen as crucial to addressing high and volatile food prices, an ongoing problem since 2008. Financial regulation could stem speculation on agricultural commodity markets. Improved trade policies could reduce restrictions on exports that were associated with price spikes, as well as reduce subsidies in the rich, industrialized countries that have discouraged small farmers in developing countries from producing more. Reforms to market-distorting biofuel policies could help to reduce upward pressure on food prices.

The source of many of these economic policy problems that contribute to food insecurity are the G20 countries, and they should take the lead on addressing them in Mexico in 2012 and beyond.

The G20 leaders missed their opportunity at Cannes, where it looked, at first, as if they might tackle these issues. The Action Plan on Food Price Volatility and Agriculture put forward by the G20 agriculture ministers in June 2011, advocated measures to promote greater investment, more balanced trade policy and better market information, policy coordination, risk management and financial regulation. But there was resistance to making meaningful policy changes, because the proposed measures threatened domestic interests within a number of G20 countries.

In the end, the leaders endorsed only minor reforms to financial policies that might affect commodity speculation at Cannes. They also stalled on meaningful trade reforms. And they promised only further study — rather than real action — on biofuel policies. The only significant output of the Cannes summit with respect to food security was the unveiling of the Agricultural Market Information System. This initiative seeks to improve the collection and dissemination of market data. The idea is that more information on production and trade will calm food price volatility — an assumption that many question.

This year, under Mexico’s leadership, food security remains on the G20 agenda, but there is a strong risk that the momentum on the economic policy reforms identified in advance of the Cannes summit will be lost in the discussions at Los Cabos. Mexico made clear in a recent G20 discussion paper on food security that follow-up on the 2011 action plan is important; however, Mexico’s food security focus thus far has been on measures to improve agricultural productivity, rather than address the structural economic forces that work against food security.

Indeed, a recently released interagency report to the Mexican G20 presidency focuses exclusively on measures to enhance agricultural productivity growth. Its 10 recommendations are clustered around information and education systems, agricultural research and innovation, increased investment and risk management. Only one recommendation touches on trade policy, which is virtually identical to the trade recommendation in the 2011 action plan. With the Doha Round appearing to be permanently stalled, the prospect of this recommendation being fulfilled is dim.

The deputy agriculture ministers of the G20 countries met May 16-17, 2012, to put togetherrecommendations for the leaders’ summit, which will be held in Los Cabos in June. These recommendations included an emphasis on crop research, technology transfer, public-private investment partnerships and the promotion of sustainable agriculture.

The shift in the G20 discourse on food security, from addressing price volatility (which fundamentally relates to access to food) to productivity (which fundamentally relates to availability of food), is not surprising. Politically, it is much easier to call for more information, more technology and more investment than it is to get the governments of 20 powerful economies to commit to significant economic reforms.

Promoting improvement in agricultural productivity is certainly worthwhile, and should be included in any strategy to improve food security. But productivity measures alone are not sufficient to address world hunger. After decades of research on the subject (not least of which is the seminal work of Nobel-prize-winning economist Amartya Sen), it is now clear that the problem is as much one ofaccess to food as it is one of availability of food.

Economic policy reforms can go a long way towards addressing access problems by reducing price volatility and promoting more balanced agricultural growth in both rich and poor countries. Such reforms should not be sidestepped by the G20 in favour of production measures alone.

It is not too late for the G20 to refocus its efforts on economic policy reforms that will enhance access and thus improve food security for the world’s poorest people. Devising appropriate economic policies that affect access is as important as increasing food production.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.

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