G20 to consider action on food prices next month - Russia
LONDON (Reuters) - Group of 20 nations will decide next month whether to take joint action on soaring global grains prices, Russia said on Thursday, but analysts doubted they can cool markets which are close to levels that provoked food riots four years ago.
A charity demanded urgent action to protect the world's hungry as harvests fall short of needs for the coming year, and the U.N. Food and Agriculture Organization (FAO) called on nations to calm markets, although it played down talk of a new crisis.
Markets themselves were sceptical about what the G20, which comprises wealthy nations and leading emerging economies, could achieve as exports from major grains producers Ukraine and Russia may be limited.
Russian Deputy Agriculture Minister Ilya Shestakov said that senior G20 officials would tackle the problem in the Rapid Response Forum, which was created last year.
"At the beginning or mid October, Russian representatives will take part in the rapid response forum, which was set up within G20 to discuss food market issues," he told a grains conference in Moscow.
"We are not planning any emergency measures, we want to carry out analysis, discuss possible scenarios and our joint actions to calm down the market," he said. "We will take the decision on whether joint actions are needed."
France, which presides over the G20 agriculture body AMIS, had said any decision on convening the forum would be made after a U.S. government report on grains due on September 12. French officials declined immediate comment on Shestakov's remarks.
The worst U.S. drought in more than half a century and poor crops from the Black Sea bread basket pushed grain prices to record levels this summer, raising the chance of a repeat of the crisis four years ago that provoked riots around the world.
Analysts were doubtful about what the G20 could do to curb runaway markets. "So far all the G20 succeeded in doing is to create a new bureaucracy above other bureaucracies, that can do nothing and will do nothing," said James Dunsterville, analyst at Geneva-based Agrinews consultancy.
THIRD SURGE IN FOUR YEARS
The third global food price surge in four years has revived memories of the 2007/2008 crisis which the FAO estimated added 75 million to the number of chronically hungry people in the world. Other estimates put the increase at up to 160 million.
"Food prices remain at peak levels and governments cannot turn their backs on the need to take action," the charity Oxfam said in a statement. "The G20 wants to wait for U.S. crop results before acting when it's clear that prices remain high and millions of people cannot afford to eat."
The FAO said on Thursday that the U.S. drought would lead to a larger-than-expected drawdown in global grain stocks.
"Although we should remain vigilant, current prices do not justify talk of a world food crisis. But the international community can and should move to calm markets further," FAO Director-General Jose Graziano da Silva said in a statement.
The FAO Food Price Index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy products, meat and sugar, averaged 213 points in August, unchanged from July, FAO said in its monthly update.
Although the index was below a peak of 238 points in February 2011 - when high food prices helped to drive the Arab Spring uprisings in the Middle East and North Africa - it is still close to levels during the 2008 crisis.
The U.S. Midwest, the world's most important producing region for maize and soybeans, has suffered its worst drought in 56 years, while traders have also warned that Russia and Ukraine could soon exhaust stocks of exportable grain as major importers look to secure supplies.
"Ukrainian and Russian wheat is pouring into export markets like an avalanche and will sell out very quickly unless something is done," one European trader said.
The main thrust of any international policy action would include an effort to ease export controls, which can further distort volatile markets.
This has raised concerns about Russia and its Black Sea neighbours even though Moscow has promised not to impose export limits due to drought damage to its grain harvest.
Russia imposed a grain export ban in 2010 to keep down prices at home following a severe drought. This sent international wheat prices soaring and damaged its reputation with foreign importers, but Shestakov said on Thursday he saw no immediate need to limit grain exports.
Russia could start selling grain from its intervention stocks, which would be sufficient to keep prices under control during the 2012/2013 season, he said.
IKAR, a leading Russian analyst, said on Thursday that supplies are also likely to be boosted by imports from neighbouring Kazakhstan.
Ukraine may, however, limit wheat exports in early 2013 to prevent a jump in domestic grain prices after the harvest declined this year, traders and analysts said on Thursday.
On Wednesday, Ukraine's Agriculture ministry and grain traders' unions agreed on 2012/13 maximum export volumes at 19.4 million tonnes of grain.
The World Bank urged governments last week to shore up programmes that protect the most vulnerable as fears grow that families will take their children out of school and eat less nutritious food to compensate for the high prices.
Africa and the Middle East were particularly vulnerable, the World Bank said.
The FAO said this week that swift international action could prevent a catastrophe from developing. It has urged countries to review their biofuel targets and also warned against panic buying and restrictions on exports.
The Rome-based agency said it had cut its 2012 world cereals output forecast by 4 percent to 2.295 billion tonnes due to the worsening prospects caused by the U.S. drought.
The agency said global cereal output was insufficient to cover the 2012-13 marketing season fully, indicating a larger-than-expected drawdown of stocks. World cereal stocks would fall sharply, it said, forecasting stocks at the end of 2013 would be 503 million tonnes, down 6 percent from its July forecast.
(Additional reporting by Polina Devitt, Sybille de La Hamaide, Michael Hogan, Valerie Parent, Catherine Hornby and Pavel Polityuk; Writing by Nigel Hunt and Veronica Brown; Editing by David Stamp)
- Tweet this
- Share this
- Digg this
DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.
Trending On Reuters
India's largest carmaker Maruti Suzuki India Ltd posted a smaller-than-expected rise in profit for the third quarter, hit by one-off items including a jump in advertising costs, a higher tax rate and lower income from investments. Full Article | Full coverage