The outbreak of the financial crisis in 2008 has led to a remarkable rebirth of the Group of 20, turning the club into the self-declared premier forum for global economic coordination. At the same time, the world was shocked by a global food crisis with food-prices skyrocketing at times up to 100 (corn) or 140 percent (wheat). These drastic changes have had tremendous consequences in developing countries, where millions were no longer able to buy their daily food. In some countries like Haiti, the Philippines or Egypt this even lead to wide-spread riots.
Consequently, the G8 and the G20 too, could no longer look away and included food security on their agenda, most prominently at the 2009 G8 summit in L’Aquila, Italy. The heads of state agreed to raise a total of 20 billion US dollars for the fight against hunger. Moreover, in the final communique of the G20 Pittsburgh Summit, they committed to continuously invest in the promotion of food security. The World Bank was commissioned to set up a trust fund for these investments and in April 2010 the so-called Global Agriculture and Food Security Program (GAFSP) was started. Responding to recommendations from the G20, it focuses mostly on the increase of agricultural productivity and the improvement of access to new technologies in developing countries. The fact that OECD countries are now paying attention to the agricultural sector is to be welcomed.
However, the way in which this problem is being dealt with leads to several problems. Putting increasing agricultural production in the spotlight means that the G20 is missing a big part of the picture. Aspects such as the relations in the international trade system or the vulnerability of developing countries to price fluctuations in commodity markets are left out of the debate. The recent rise in wheat-prices after the fires in Russia - even though experts agreed that global supply is sufficient - shows the problematic role that speculators play on agricultural commodity markets. The lack of coherence in the policies of the G20 is especially regrettable because sustainable measures need a more wide-ranging definition of food security. The discussion is stuck in intellectual silos instead of tackling the topic of food security in synchronization with the rest of the economic agenda of the G20 and in order to find a development-friendly trade reform and a way to curb excessive speculation on commodity markets.
Moreover, the initiative of the G20 is not integrated into other programs of international “food security governance” but instead creates parallel structures detached from these existing strategies. For example, the “Committee on World Food Security” (CFS) under the auspices of the FAO has been applauded as successfully integrating groups affected by food insecurity into the decision-making process. In how far this newly established body will become a serious actor in part depends on its financial possibilities and the resulting political authority. Rather than bypassing the CFS completely, the G20 should give it the power to coordinate the newly available funds for food security in order to take advantage of the democratic and participative structure of the committee. This is more likely to result in a fair distribution of the funds in the interest of the affected populace.
What’s more, the increasing financialization of commodity markets has led to more severe price-fluctuations that are not directly related to the market fundamentals of supply and demand, as argued in a recent report of the United Nations Conference on Trade and Development. Since the introduction of so-called commodity index fonds by institutional investors such as Goldman Sachs, traders are allowed to invest in the price of basic foodstuffs. The number of derivatives and future contracts have shot up. In addition, many of these financial instruments are traded over the counter, and are therefore neither transparent nor regulated. The passage of the Dodd-Frank Wall Street reform bill in the United States has shown, that it is possible to combine the discussion on food security and the reform of financial markets in an effective and coherent manner.
The G20 does have the opportunity to push for global financial reforms that would lead to a fairer and more transparent way of trading commodities. In short, the G20 should realize that food security is a complex problem which is dependent on the support and cooperation of both civil society and local actors. As the premier forum of discussion for global economic cooperation it does have a role to play in solving the recurring food crises, but until now it has only attempted to solve part of the puzzle. It remains to be seen whether the G20 will finally be able to draw conclusions not only in regards to the financial-, but also the food crisis and consequently increase the coherence of their recommendations.
…
Ute Straub works at the International Agricultural Policy Desk of Heinrich Böll Foundation. Sandro Gianella is a graduate student at Hertie School of Governance. He works part time with the International Politics Desk of Heinrich Böll Foundation.