MILAN, Italy (Reuters) — Building strategic agricultural stocks to curb market volatility would not be the most effective way to tame food prices, said European Union development commissioner Andris Piebalgs.
Instead, he said an increase in food production is needed in the world’s poorest countries, which remain vulnerable to the threat of a food crisis despite the recent easing in grain prices from record highs this summer.
Last month, French president Francois Hollande launched a global campaign to win support for creating strategic stockpiles of food commodities after a year of drought re-newed fears of a new crisis in agricultural supplies.
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“I believe it is one of the instruments, but it is not the most effective,” Piebalgs said.
“The answer to food insecurity is sufficient food production in the world’s poorest regions,” he said.
Increasing investments in agriculture was the best way to keep a lid on prices, he added.
“Resilience in farming, access to water, fighting against climate change, crops, access to the markets — it’s a lot of elements. One element does not help sufficiently.”
The United States’ worst drought in more than 50 years sent corn and soybean prices to record highs over the summer and, coupled with drought in Russia and other Black Sea exporting countries, raised fears of a global food crisis like the one that led to rioting in poor countries in 2008.
Food prices have fallen back in the past few weeks, but Piebalgs said there was no room for complacency.
“Globally, food prices are now not a matter of concern in the short term but there are problems in the Sahel, continuing problems in the Horn of Africa and other regions,” he said, also mentioning Haiti. “The situation remains very vulnerable.”
France first raised the issue of reserves last year as it chaired the Group of 20 leading economies. However, the final deal limited promises to food aid stocks in countries that might most need them, a measure that is yet to be implemented.
It is unclear whether Hollande will be more successful this time in convincing the U.S. or his European peers to rebuild public grain stockpiles that were liquidated decades ago, or, as in the case of China, use existing government stockpiles more collaboratively to address global issues.
The French proposal, which was backed by the United Nations’ Food and Agriculture Organization, did not specify how and where the food stockpiles would be developed.
Analysts have been skeptical about the idea of reserves on a global scale because they are costly to run, particularly because grain has a shorter storage life than commodities such as oil.
Piebalgs said he hoped European moves to cap the use of food-based biofuel would be followed elsewhere, and said there was a growing consensus, even in the U.S., a major biofuel producer, that food crops should first and foremost feed people.
“We believe that biofuels should be produced from food residues after crops have been used for providing foodstuff, then the remains can be transformed for second- and third-generation biofuels,” he said.
