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G20 reach key accord on food speculation

PARIS (AFP) ― Farm ministers from the world’s top economies agreed on action on Thursday to tame the speculative trading blamed for the food price spikes that have hit consumers’ pockets and sparked unrest.

“Today is a great day. We have reached an historic accord,” France’s minister for agriculture Bruno Le Maire declared after the Paris meeting, organized as part of the French presidency of the G20 group of nations.

“It’s a ‘tour de force’ for the international community,” he said, insisting the deal contains concrete measures and not just declarations of intent.

While the gathering endorsed tightening up market regulation to limit speculation, he said they will have to wait for G20 finance ministers to enact concrete measures.

The agreement supports establishing an international agricultural market information system, or AMIS, to remedy a chronic lack of output and stocks data that is seen as a major source for price volatility.

The ministers also agreed to a rapid response mechanism so the G20 nations, responsible for roughly three-quarters of global farm output, can respond collectively in the future to volatility in output and prices.

They also agreed to exempt humanitarian food aid from any additional export taxes or restrictions.

The G20 nations pledged to tackle agricultural commodity volatility in the wake of the 2007-2008 surge in food prices, widely blamed on speculation, that triggered riots in some countries.

Fresh price spikes at the beginning of this year are thought to have fuelled the Arab Spring revolts.

U.S. Agriculture Secretary Tom Vilsack called the agreement “an historic union of resolve in combating the pressing challenges of hunger and food price volatility.”

He said the AMIS and rapid response mechanism “will provide us with better and shared info that will let us respond together” to future crises.

The agreement marks a major change for nations such as China and India, which previously viewed detailed agricultural production and stocks information as too sensitive to national security to share.

“It’s a good vehicle to have an early warning system about the developing situation in some parts of the world,” a source in the Indian delegation who asked not to be named told AFP.

“We can prepare well, plan well and the response to the triggers (of price volatility) can be better.”

Along with India, Brazil insisted that increasing crops was the top priority in order to stabilize markets. Brazil and Argentina had led opposition to proposals to control agricultural prices.

“The best way to fight price volatility is by raising production,” Brazilian Agriculture Minister Wagner Rossi told AFP.

Ministers failed to call for governments to make their biofuel programs more flexible to lessen pressure on agriculture markets, as France had initially sought.

But Le Maire insisted biofuels were “not something ignored or left by the wayside,” noting pledges for further research.

He dismissed suggestions that they had not made headway on market regulation, noting their endorsement of specific measures to limit the ability of financial traders to take speculative positions.

The farm ministers went into the Paris meeting divided on how far measures to control trading in food commodities should go but Le Maire said all G20 nations supported tightening the rules, including countries usually seen as opposing such measures, such as Britain.

World Bank President Robert Zoellick, who has led calls to reduce food price volatility which disproportionately hurts the poor, hailed the agreement.

“What we saw when prices started to surge in 2008 was the lack of information about (food) stocks, about availability can lead to panic in markets,” said Zoellick. “Panic is what leads to price spikes.”

The French branch of the poverty relief group Oxfam, however, derided the G20 measures as a just a band-aid and “very far from the massive surgery needed to attack the food crisis.”