Market deregulation and the resultant price volatility in food prices.
Paris hosted agriculture ministers from the group of 20 nations on June 23, 2011. The discussion centered on restraining speculation and improving agricultural market transparency. This was a meeting that took place at a time when about a billion people worldwide go hungry. The present international skyrocketing prices on basic food commodities coupled with serious food production shortfalls is putting a heavy pressure on governments worldwide. Fears are growing as global instabilities are realized when food prices could become a lightning rod for instability. The issue becomes more critical when one considers the future population growth and critical resource shortage.
According to the UN Food and Agricultural Organization, “Without major policy changes food prices will likely be high and volatile for the next decade, driven by rising incomes in emerging nations and demand for bio-fuel. Long-term price increases of up to 20 percent for cereals and 30 percent for meat can be expected over the decade while agricultural production will have to increase 70 percent by the middle of this century to meet expected population growth and avoid widespread hunger.”
While the representatives of the world richest nations were huddled to stave off a repeat of 2007-2008 surge in food prices that triggered riots in some countries, the host President Sarkozy told the ministers, that “By addressing the volatility of agricultural markets, in assuring food security for the world for today and tomorrow, we will rebalance the structure of capitalism,” Moreover, he continued, “In adopting this plan you will change not only the lives of a billion farmers but the course of capitalism itself so capitalism once again contributes to the development and well-being of people.” What the President is referring to here, is the fact that market speculation is a result of absence of government regulation of the market. When neo-liberal economic policy forces governments to relinquish all their powers to the so-called “free market”, societal turmoil takes place. There is no alternative to reining in markets. Government regulation of the market is a must.
The agreement reached in Paris and the declaration adopted by the G20 to:
* Ensure the hungry have access to food through WFP in emergencies by removing export barriers for humanitarian food;
* Give vulnerable nations predictable access to sufficient food in times of need;
* Protect humanitarian food supply chains against price and supply shocks; and
* strengthen assessments of food needs by launching a new global Agricultural Market Information System (AMIS) and a Rapid Response Forum, seem to be a timid start to solving the continuing rise in food prices and the volatility of the market.
Secretary Clinton recently said, that “global food crisis are once again on the rise,’ and” food security is a foreign policy priority for our country”. There shouldn’t be any doubt that food security is a national security issue of the highest order. Food security should be taken as an urgent priority. Diverse challenges are facing policy decision makers. The task becomes even more difficult because, there are certain issues that are out of the control of governments. Unless concrete steps are taken to avert food insecurity, it would become impossible to pursue other visions governments have. The consequences of inaction, is unacceptable. Radical steps must be taken to address the challenges of food security.