Briefing note: Food security

 

Proposals

Both proposals involve removing export barriers so food can be bought more easily for specific purposes.

 

Proposal 1: World Food Programme aid

Fourteen members (41 if the EU’s 27 member states are also counted) would like to see ministers agree to remove export restrictions or “extraordinary” taxes on food aid when it is bought by the World Food Programme (WFP) for non-commercial humanitarian purposes. They also want agreement not to impose them in the future. (See document WT/GC/138)

The proposal is taken directly from paragraph 40 of the Action Plan on Food Price Volatility and Agriculture agreed by the G-20 agriculture ministers in Paris on 23 June 2011 and reaffirmed at the G-20 Cannes Summit on 3–4 November 2011 (that is, the G-20 group of leading economies, not to be confused with the G-20 in the WTO agriculture negotiations).

One of the reasons why the proposal lacks consensus is the concerns some members raised about transposing a decision by a group of countries outside the WTO, word for word, into a proposed decision for the WTO’s 153 members. Some also said this should have been discussed in the appropriate WTO council or committee first.

The proposed decision’s text is:

“We recognize that the first responsibility of each WTO Member is to ensure the food security of its own population. We also recognize that food export barriers restricting humanitarian aid penalize the most needy. We agree to remove food export restrictions or extraordinary taxes for food purchased for non-commercial humanitarian purposes by the World Food Programme (WFP) and we agree not to impose them in the future.”

The proponents are: Australia, Canada, Chile, Costa Rica, the EU, Rep. Korea, Indonesia, Japan, Mexico, Norway, Saudi Arabia, Singapore, Switzerland and Turkey.

 

Proposal 2: Net food importers and price volatility

The net food importing developing countries and African and Arab groups are concerned about the impact of high and swinging prices on the net food importers among them and on least developed countries in general.

They would like to see a WTO work programme set up in the Agriculture Committee (see document (WT/GC/140 and WT/GC/140/Rev.1). It would explore the possibility of setting up new rules and mechanisms resulting in

• exempting exports from major exporters of specific foods to least developed and net food importing developing countries from quantity restrictions
• financing, including on concessional terms, to address the short-term difficulties the LDCs and NFIDCs face in financing their food imports, to be studied together with other competent institutions

The proposal was modified after a first discussion in an Agriculture Committee meeting called at short notice on 16 November 2011. It lacks consensus partly because some members feel there is no need for a new work programme, since these issues already being discussed in the Agriculture Committee and elsewhere. Some members also say these issues arise because of market distortions caused by subsidies and import and export barriers, which are being tackled in the agriculture negotiations.

The proposed text is:

“We recognize that the first responsibility of each WTO Member is to ensure food security of its own population. We emphasize that the multilateral trading system should contribute to achieving greater coherence for economic policy-making on food security. We direct the General Council to develop a comprehensive, fact-based, result-oriented and time-bound work program on the trade-related response to mitigate the impact of the food market prices and volatility on WTO LDCs and NFIDCs. The elements of the work program will be agreed by Members and could include, inter alia, (i) explore the possibility of developing rules to exempt purchases of LDCs and NFIDCs, authorized by their governments under conditions to be defined, from quantitative export restrictions invoked under Article XI.2(a) of the GATT 1994 by other WTO Members, which are major exporters of the specific foodstuffs concerned; (ii) explore, in coordination with competent institutions, the mechanisms required to provide financing, including on concessional terms, to address the short-term difficulties the LDCs and NFIDCs face in financing their food imports. The work program will also address the challenges encountered by other vulnerable developing countries like NFIDCs and facing critical situation of food insecurity. The General Council will establish the work program, via the Committee of Agriculture, and report on its progress, including recommendations for actions, by the WTO 9th Ministerial Conference.”

Food security in the WTO

WTO rules

The rules that WTO members negotiated and agreed (the Agriculture Agreement) can contribute to more secure food supplies and more stable prices.

Volatility and stability. First, international trade allows food to be moved from regions where there is a surplus to areas where there is a shortage. These situations can change according to the weather and other factors, so trade is an efficient way to even out supply fluctuations across the globe. This in turn reduces market volatility and increases food security.

Sometimes uncertainty can be caused by changes in policy. The WTO promotes consistent and predictable trade measures through bindings (commitments, for example to set ceilings on tariffs, which are legally bound in the WTO), rules, and procedures for governments to disclose and share information on their actions. This helps to reduce uncertainty in food markets caused by policy changes.

Inefficiency and purchasing power. In the long-term, high subsidies and import barriers distort markets and prevent an effective distribution of production around the world. They depress the prices that farmers in low-income non-subsidizing countries need in order to increase their productivity. When producers in some areas can increase their productivity, international trade helps spread the gains to the rest of the world, for example through lower prices or better quality products.

For that to work more effectively around the world, price distortions should be reduced. Within countries, prices should send accurate signals to farmers about whether they should invest and produce more, so that resources are allocated more efficiently to agriculture or other activities according to their real potential (or “comparative advantage”). Nationally, trade and other economic and structural policies can combine to limit costly inefficiencies, boost purchasing power, and national production and income, and with it the country’s food security.

In the WTO. The current agriculture negotiations aim to continue the reform of the present Agriculture Agreement. Members have agreed to further cuts, sometimes substantial, in subsidies, particularly in rich countries, and in high tariffs. At the same time the negotiations envisage more room to manoeuvre to secure supplies for poorer populations in developing countries, for example through public stockholding.

Some importing countries want tighter disciplines on export restraints, which they say jeopardize their food security. Some export restrictions and taxes are designed to keep supplies secure domestically but some analysts say this worsens the situation globally.

See:

• Stabilization policies could destabilize food prices, farm committee hears 17.11.11
• Trade is vital for food security, Lamy tells agricultural economists 30.08.11
• Restricted exports, breached limits and cotton aired in farm committee 23.06.11
• New report examines how to better manage food price volatility 10.06.11
• Agriculture committee continues to discuss export restraints 31.03.11
• Trade important for food security, UN specialist tells agriculture delegations 18.11.10
• DDG Singh: We need an open and predictable trading system to address price volatility 26.05.11
• UN rapporteur and WTO delegates debate the right to food 02.07.09

 

Information and debate

Negotiations, and monitoring commitments and agreements, are only part of the work in the WTO. Information and analysis are also important. The latest development has been the creation of an Agricultural Market Information System (AMIS) jointly run by eight international organizations and hosted by the UN Food and Agriculture Organization (FAO).

The system is used to detect abnormal market conditions that would affect food security and to devise well-informed, coordinated strategies to deal with them.

This was the result of a recommendation by a group of organizations including the WTO in their report on “Price Volatility in Food and Agricultural Markets: Policy Responses” submitted in June 2011 to the G-20 meetings of major economies.

The WTO Agriculture Committee itself regularly monitors the impact of agricultural trade reform on the net food importing developing countries (NFIDCs) and least developed countries.

More information and links to activities and debates on food security can be found on a new web page, www.wto.org/foodsecurity.

 

www.wto.org/agriculture