Expectations have grown following a conference in Brussels, after which CIAA director General, Mella Frewen, said: “I am confident that the EU is taking the right steps to tackle extreme food price volatility and global food security.”
The European Commission conference, “Commodities and raw materials: Challenges and Policy Responses”, took place this week. This was ahead of the G20 Agriculture Ministers meeting next week that will propose solutions to strengthening food security and enhancing food production and supply.
The CIAA told FoodNavigator.com that “failure to move forward at G20 will represent a missed opportunity to find solutions at the international level.”
However, the federation was encouraged by the EU response and Frewen added: “By supporting measures aimed at increasing production of agricultural raw materials, encouraging international coordination and market transparency, adequate regulation and a supervisory framework to govern commodity derivatives, the EU is sending the right message to Agriculture Ministers ahead of the discussions that will take place on 22/23 June (G20).’’
The French Presidency of the G20 has named combating commodity price volatility, including volatility in agricultural commodity prices, as one of its priorities.
The CIAA (Confederation of the food and drink industries of the EU) is seeking a workable regulatory framework governing agricultural raw material commodity challenges.
It said: “Considering price hikes first occurred in 2008 and returned in the past year (possibly to stay), it is clear a broad approach is needed to address such issues.”
The issues the CIAA will be requesting the G20 to address include:
- Supporting measures aimed at increasing world production of agricultural raw materials as paramount.
- Making the primary role of agriculture to supply the food and feed markets.
- Reinforcing reliable and timely data on physical commodity markets to support public policies and facilitate policy coordination at an international level.
- And with regard to derivatives - international coordination, adequate regulatory and supervisory framework governing commodity derivatives, leading to transparent and better functioning markets.
Commodity derivative markets are essential for the food and drink industry for price discovery (to reflect underlying market fundamentals) and hedging price risks of the underlying physical agricultural raw material.
Food and drink companies are commercial users of commodity derivatives on both exchange and Over-The-Counter (OTC) markets.
The CIAA said it supports the creation of a level playing field, with fair value and opportunities for everybody who has a legitimate role in the entire supply chain.
Wider backing
The call to tackle food price volatility at G20 was echoed in earlier this year when the UK and Brazil agreed to work together on practical measures to tackle volatility in food markets.
Both concurred that global commodities markets should be open, transparent and efficient and that improved information exchange and collaboration would significantly improve the international community’s capacity to deal with and possibly avert future price spikes.