French minister seeks G20 affordable food plan

By Charles Abbott

WASHINGTON (Reuters) – The world could battle soaring food prices with an age-old idea of emergency reserves combined with mordern financial tools such as hedging, the French agriculture minister said on Friday.

Minister Bruno Le Maire said he would draw on expertise of U.N. famine fighters and the World Bank in proposing global action to control skyrocketing food prices.

“I will say we are not far from having a consensus,” Le Maire told reporters in a briefing.

Agriculture ministers from the Group of 20 wealthy nations will consider France’s five-point plan on June 23 in Paris. France is the G20 leader this year. Past proposals for a global food reserve have failed, because the United States and some European nations object that they keep farm prices artificially low and can discourage production.

Le Maire said any network of food reserves should be limited in size and dedicated to emergency use. The U.N. World Food Program will share its ideas at the G20 meeting about whether a network of stockpiles is needed.

U.S. Agriculture Secretary Tom Vilsack sounded lukewarm to the idea. Food-aid activists in America say it is more efficient to donate money and save the expense of shipping U.S. food long distances.

“With market transparency and better understanding of stocks, there is not the need for physical reserves, you can have a virtual reserve,” Vilsack told Reuters.

The world already holds emergency stockpiles of energy sources, with the U.S. storing billions of barrels of oil in its Strategic Petroleum Reserve and European countries maintaining stocks of refined crude products through the International Energy Agency.

The French minister met Vilsack during a two-day visit to Washington to promote France’s action plan.”

“We discussed the need for a focused discussion by agriculture ministers,” said Vilsack, on topics such as increased agricultural production and open markets.

Le Maire said the World Bank was looking into “risk hedging instruments” that developing nations could use to mitigate high prices.

The French plan includes assistance to expand food production in developing nations, sharing data on food output and stocks as a way to dampen price shocks, coordination to avoid steps that escalate crises, mitigating price volatility in poor nations, and better regulation of financial markets.

While the G20 agriculture ministers will discuss market regulation, finance ministers will have primary responsibility, said Le Maire to reporters. Market reforms could include standardization of agricultural derivatives, reporting of over-the-counter deals, trading limits in agricultural derivatives and oversight of high-frequency trading. (Reporting by Charles Abbott; Editing by David Gregorio)