G20 must act to stabilise food prices: World Bank
Free markets rather than protectionist policies are the solution to volatile food prices and the G20 should take steps to prioritise the provision of food for the poor, World Bank President Robert Zoellick said.
January 06, 2011 / 10:24 IST
Free markets rather than protectionist policies are the solution to volatile food prices and the G20 should take steps to prioritise the provision of food for the poor, World Bank President Robert Zoellick said.
"The answer to food price volatility is not to prosecute or block markets, but to use them better," Zoellick wrote in an opinion piece in Thursday's Financial Times urging G20 leaders to put access to food at the top of its agenda."By empowering the poor the G20 can take practical steps towards ensuring the availability of nutritious food," he wrote.French President Nicholas Sarkozy will take the presidency of the G20 in 2011. In his column Zoellick set out nine action points to make sure the poorest have access to food. Such steps were needed to ensure global growth and stability, he said.Food prices hit a record high last month, outstripping levels that prompted riots in 2008 and key grains could climb even further as weather patterns give cause for concern, the UN's food agency said on Wednesday.Zoellick said more work was needed to understand the relationship between international prices and local prices in poor countries. In Cambodia the local price of rice has risen by a quarter since mid-2009, while international prices have shed 15%."Factors such as transport costs, crop types and exchange rates can mean that local prices are delinked from international prices," he wrote."Work could target first those commodities and countries that are most at risk from volatility."He also called for an international code of conduct to exempt humanitarian food aid from export bans."Export restrictions make food price volatility worse. Ideally, countries would not impose any export bans; in 2011 they should at least agree that food for humanitarian purposes be allowed to move more freely," he wrote.Other steps include improving supply transparency and long-weather forecasting, creating small humanitarian reserves in disaster-prone regions and providing alternatives to export bans and price fixing.Risk management products, such as weather insurance or a hedge on energy prices to keep transport and input costs low, should also be considered, he said. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
