17 February 2011 - General Assembly - Priorities of the French presidency of the G20 on agricultural matters - Speech by Mr. Bruno Le Maire, Minister for Agriculture, Food, Fisheries, Rural Affairs and Regional Development
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 relating to the volatility of commodity prices in particular, on the agenda of its G20 presidency. As Minister for Agriculture and Food, I wanted to come here at the start of our presidency in order to underline the United Nations’ key role in terms of 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 regarding which we set ourselves an ambitious objective in 2005: to reduce by half by 2015 the proportion of the 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 44 million additional people over the poverty threshold. And as the president of our Assembly stated so well, the increase in agricultural prices affects the poorest countries and the most underprivileged populations first of all.
Despite a certain level of progress, one child in 4 still suffers from being underweight in the developing world. All this is unacceptable.
The food challenge also relates to being able to produce more in order to feed the 9 billion people that will be on the planet by 2050. For that, a 70% increase in agricultural production by 2050 is needed. Will we be able to respond to this challenge?
Global agricultural production is now only increasing by 1.5% a year, while it increased by 3% a year between 1960 and 1990. Global agricultural production is coming up against stagnating agricultural yields, notably in the wheat sector. Global agricultural production is coming up against the increasingly apparent effects of climate change, increasingly severe climate disruptions which require more efficient production and which lead to instability in agricultural production.
Responding to the food challenge by 2050 will therefore be extraordinarily difficult for all countries in the world.
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.
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 ton 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 since it affects their investment capacities. It’s intolerable for the consumers who have to pay more for their food and we run the risk of seeing new food riots like those that affected certain countries in 2008.
Lastly, everyone can also see that agriculture is now subject to unacceptable speculative behavior. Speculation is not the cause of the volatility of global agricultural prices but speculation further increases the intolerable volatility of global agricultural prices.
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 according to the World Bank at the beginning of 2010. 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 developing countries. We’ve gone backwards. We must regain control and allow developing countries develop their agriculture independently.
This requires public investment.
All countries must redefine agricultural development policies that are compatible with international trade commitments. Investment in agriculture has a multiplier 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.
Within 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 to develop their own agriculture, to develop self-reliant agriculture. Official Development Assistance for agriculture is vital: it must be maintained. I want to reaffirm that the share of agriculture in ODA decreased from 15% to 5% in a period of 20 years. We must reverse this trend, we must honor the commitments made by the international community, notably the commitments made by the G8 at the Aquila Summit in 2009.
Reinvesting in global agriculture also requires the development of private investment.
Since we all know that, given the budgetary problems that most States are facing, public investment will not be enough: we must also develop private investment in agriculture. For that, 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, notably with respect to 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 should contribute to this objective.
The second solution that we propose, after reinvesting 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 functions, 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, that operate more fairly and more equitably.
I want to say this here, a few meters 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 relates to improving market transparency since uncertainty, the non-availability of information, leads 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 relates to improving the coordination of agricultural policies in order to prevent and manage risks. It doesn’t seem normal 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 area which aims to regulate agricultural markets relates to support for the most vulnerable countries - those countries that are most affected by recurring agricultural crises. We propose establishing prepositioned emergency humanitarian reserves in collaboration with the World Food Program. We propose defining instruments to provide protection and insurance to agricultural commodity importing countries. We propose limiting the 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 in order to implement all of 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 will meet with all of the agriculture ministers of the G20 and the international organizations concerned in Paris in June. This will be the first time that the agriculture ministers of the G20 will meet with the international organizations to discuss the agricultural crisis issue.
Regarding the methods: the G20 will provide the political impetus at the highest level - that of the heads of State and government. President Sarkozy is convinced that agriculture has become a key factor for the stability of the planet, and he is convinced that we need to respond urgently; he is convinced that we need to urgently develop concrete solutions. But the G20 will not do everything. The G20 doesn’t have the legitimacy or the capacity to solve the global food crisis issue alone.
The G20 will therefore work in close collaboration with the international organizations - that’s why I am here today - in particular with 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 within 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 global food security.
On 22 January in Berlin I gathered proposals from 48 agriculture ministers. I went to India, China, 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 of your proposals on this issue. The next General Assembly in September will also provide an opportunity to review our work.
I am very serious about this: the issue of global food security is not a G20 issue; it’s an issue that involves everyone, that concerns all of us. 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 throughout the world 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 technical solutions, expertise that they need in order to become self-reliant with respect to agriculture.
The "Agricultural G20" presents an opportunity for the member countries of the G20 themselves and for all countries in the world. I want us to be able to seize this opportunity together.