Agricultural priorities of the French G20 presidency
New York, February 17, 2011
GLOBAL AGRICULTURAL CHALLENGE
I want to thank you for your invitation to come and speak before the UN General Assembly.
As you know, President Sarkozy has decided to include the issue of agriculture in general, and the issue of the volatility of commodity prices in particular, on the agenda of the G20 presidency. As Minister for Agriculture and Food, I wanted to come here at the start of our presidency to underline the United Nations’ key role in responding to the global agricultural challenge. I will of course be very happy to receive your remarks, proposals and observations following my speech.
The global agricultural challenge is first of all a food challenge.
It’s firstly a global hunger challenge on which we set ourselves an ambitious target in 2010: to halve by 2015 the proportion of the world’s population suffering from hunger.
When we look at the current situation, we have to realize that there is still considerable progress to be made in order to eradicate hunger throughout the world.
Hunger has increased dramatically in many countries since 2009; this is one of the terrible consequences of the global food and financial crises. In many of the poorest regions of the world, progress in this area is at a standstill. The increase in food prices over the last few months has pushed an additional 44 million people below the poverty line. And as the president of our Assembly stated so well, the increase in agricultural prices affects the poorest countries and the most disadvantaged populations first of all. Despite some progress, one child in four still suffers from being underweight in the developing world. All this is unacceptable.
The food challenge is also about being able to produce more in order to feed the nine billion people who will be on the planet by 2050. For that, a 70% increase in agricultural production by 2050 is needed. Will we be capable of achieving this?
Global agricultural production today is increasing by only 1.5% a year, while it increased by 3% a year between 1960 and 1990. It’s coming up against stagnant agricultural yields, particularly in the wheat sector. And it’s coming up against the increasingly apparent effects of climate change, increasingly severe climate disruptions which require more efficient production and lead to instability in agricultural production.
Responding to the food challenge by 2050 will therefore be extraordinarily difficult for all countries in the world.
FOOD AND LAND PRICES
This agricultural challenge is, after all, an economic challenge.
Let’s not forget that agriculture is the main source of employment in the world, providing 1.3 billion jobs. Let’s not forget that 40% of the world’s working population depends directly on global agricultural markets.
Yet when we look at the situation, today’s economic and agricultural situation is perilous. It faces much greater volatility than all of the other economic sectors in the world without exception.
The price of wheat, for example, has increased from €140 per tonne in Europe in July to more than €260 today. The price of barley has doubled. The Food Price Index established by the FAO is at its highest level since its creation in 1990.
UNCTAD reaffirmed this on 1 February in Geneva and I want to stress at this podium that this volatility in global agricultural prices is intolerable for the most vulnerable countries. It’s intolerable for the producers, affecting their investment capacities. It’s intolerable for consumers, who have to pay more for their food, and we run the risk of seeing new food riots like those affecting certain countries in 2008.
Lastly, everyone can also see that agriculture is now subject to unacceptable speculative behaviour. Speculation is not the cause of the volatility of global agricultural prices but it further increases their intolerable volatility .
Land itself has become subject to speculation. Throughout the world we see massive purchases of agricultural land: 45 million hectares of agricultural land were purchased throughout the world at the beginning of 2010, according to the World Bank. 70 % of this agricultural land was purchased in Africa. These purchases deprive Africa of the ability to develop its agriculture independently.
The financialization of agricultural commodities has become apparent. The financial markets, which used to depend on real estate or shares, now – since the financial crisis in 2008 – depend on agricultural products. 15 times the global cereal production (wheat and corn) is traded on paper in the markets. 85% of the market positions are held by purely financial stakeholders whose activities have no real link to agriculture.
Given this dual food and economic challenge, what are we proposing?
France’s first proposal is to reinvest in global agriculture. We achieved a certain level of progress during the 1980s with respect to developing agriculture in the developing countries. We’ve gone backwards. We must regain control and allow the developing countries to be agriculturally independent.
This requires public investment.
All countries must redefine agricultural development policies that are compatible with international trade commitments. Investment in agriculture has a multiplicative effect on the fight against poverty. The development of food agriculture, improving yields, sustainable irrigation, the construction of new infrastructures and the improvement of the food chain are key, urgent challenges for developing countries.
In this framework – and I won’t hesitate to say this – the rich countries have a duty to stand alongside the poor countries. The rich countries should not focus on developing their own agriculture to the detriment of the poor countries. The rich countries should help the poor countries develop their own agriculture, develop self-reliant agriculture. Official Development Assistance [ODA] for agriculture is vital: it must be maintained. I remind you that the share of agriculture in ODA has decreased from 15% to 5% in a period of 20 years. We must reverse this trend; we must honour the commitments made by the international community, particularly the commitments made by the G8 at the Aquila Summit in 2009.
Reinvesting in global agriculture also requires the development of private investment.
We all know that, given the budgetary problems most States are facing, public investment won’t be enough: we must also develop private investment in agriculture. To that end, we propose creating a suitable framework which will enable stakeholders to invest by limiting their risks, particularly with respect to land. I know that, together with the FAO and the World Bank, you are working on developing a code of conduct for more responsible investment. France, together with Brazil, supports this initiative.
We must also develop public-private partnerships, particularly for infrastructures. Lastly, we must allow agriculture in developing countries to benefit from the research conducted by developed countries. We must share research and agricultural technology resources with those that need it most. The establishment of a Consultative Group on International Agricultural Research must contribute to this goal.
The second solution we propose, after reinvestment in global agriculture, is the regulation of international agricultural markets.
I want to be very clear about this. Regulating the market is not fighting against the market. Regulating the market involves improving how it operates, and ensuring that it distributes wealth in the most effective way possible. We don’t want to return to a managed agricultural economy. We want agricultural markets that operate more effectively, more fairly and more equitably.
I’m saying this here, a few metres away from Wall Street: we have introduced global financial regulation; we must now introduce global agricultural regulation. Otherwise, it will be the poorest countries and the most vulnerable populations that will once again suffer.
In order to regulate these markets we propose working in four directions.
The first direction is improving market transparency, since uncertainty and the unavailability of information lead to volatility and speculation. Not knowing the global stock status of wheat, rice or corn encourages price volatility and leads to major difficulties for developing countries.
The second direction is improving the coordination of agricultural policies in order to anticipate and manage risks. It’s not right that every producer State in the world can make a unilateral decision to reduce its exports when it feels the need to, even if it leads to a sudden increase in market prices, without us being able to coordinate decisions more effectively.
The third direction is the regulation of agricultural commodity derivative markets. This doesn’t mean depriving agriculture of the necessary hedging instruments. It involves improving the existing market instruments by providing, for example, position limits on global agricultural markets.
The fourth direction for regulating agricultural markets is support for the most vulnerable countries – those countries most affected by recurring agricultural crises. We propose establishing prepositioned emergency humanitarian reserves in collaboration with the World Food Programme. We propose defining instruments to provide protection and insurance to agricultural commodity importing countries. We propose limiting restrictions on exports, for example, for emergency food aid or the most vulnerable countries.
What timeframe are we proposing and what methods do we intend to use to implement all these proposals?
The G20 Summit in November will propose concrete solutions in order to respond to the global agricultural challenge. The “Development” branch of the G20 will work on implementing the action plan for the development plan defined in Seoul. The finance ministers who are meeting in Paris tomorrow will make proposals for managing the derivative markets more effectively. As for me, I’ll meet all the G20 agriculture ministers and the international organizations concerned in Paris in June. This is the first time the G20 agriculture ministers will have met the international organizations to discuss the problem of agricultural crises.
Regarding the methods, the G20 will provide the political impetus at the highest level – that of heads of State and government. President Sarkozy is convinced agriculture has become a key factor for the stability of the planet, and he is convinced we need to respond urgently; he is convinced we need to urgently develop concrete solutions. But the G20 won’tdo everything. The G20 doesn’t have the legitimacy or the capacity to solve the problem of global food crises alone.
The G20 will therefore work in close collaboration with the international organizations – that’s why I am here today – in particular the UN organizations. I said this in Rome to Jacques Diouf, and I say it here to the UN General Assembly.
We don’t want to create new international structures. We want to improve the existing structures and work in the framework of these structures.
I also want us to be able to work towards achieving an international consensus with all States. It’s not a matter of the G20 finding a solution for all the others; we all need to find a solution to world hunger and the issue of global food security.
On 22 January in Berlin I gathered proposals from 48 agriculture ministers. I went to India, China and Russia. I will go to Brazil, Argentina and Africa over the next few weeks; I will go to Istanbul in May for the UN Conference on the Least Developed Countries.
Obviously, I’m looking forward to receiving all your proposals on this issue. The next General Assembly in September will also provide an opportunity to review our work.
I’m very serious about this: the issue of global food security is not a G20 issue; it’s an issue that involves everyone, that concerns us all. We have a moral responsibility to find solutions that we haven’t been able to find for years now. We have a moral responsibility not to leave dozens of developing countries worldwide to face the food crises alone.
We have a moral responsibility – we the member countries of the G20, which have strong agricultural economies – to help develop agriculture in developing countries, to support their agriculture, to provide them with technological solutions, expertise that they need in order to become self-reliant in agriculture.
The “Agricultural G20” presents an opportunity for the G20 member countries themselves and for all countries in the world. I want us to be able to seize this opportunity together.