A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.

Food Security Report
Personal Account

The EU’s role to end Hunger by 2025



Food Security Report 2014, Caritas Europa



If there is enough food to feed the planet, it’s the food system itself that is incapable of ensuring food security for approximately 842 million people suffering from hunger and malnutrition.

As raised in a recent report by Caritas Europa (extract here ), the European Union has a role to play in the fight against poverty and food insecurity across the globe. However, some European market practices may have a potentially very negative impact, such as increased speculation on agricultural commodities on price volatility and ultimately its potentially destabilizing effect for developing countries (DCs).

Consequently, 21 out of 29 African countries are unable to cover their domestic food demand and the reason for this is they are extremely vulnerable to the slightest fluctuation in international prices.

So how can European policies fit into a virtuous circle without adverse consequences for food security in poor countries? Caritas particularly recommends continuing the efforts initiated by the European Union (engaged through MiFID II Directive) for regulating financialised agricultural markets.

If there is no universal solution in the fight against food insecurity, it is clear that uncontrolled trade liberalization has demonstrated its limits, especially in developing countries where agricultural potential has not yet reached maturity. The promotion of global governance based on the regulation of agricultural markets is a sine qua non of development.

momagri Editorial Board




Policy Coherence for Development

The European Common Agricultural Policy, decided in December 2013, has the potential to be in concurrence with local agricultural markets in poor countries. Only a far greater EU wide commitment to Policy Coherence for Development (PCD) and a greater adherence to a Human Rights-based approach will ensure that these policies are coherent with poverty reduction goals and responsive to the needs and rights of the poorest communities.

PCD implies that all EU policy areas must be in support of developing countries’ development needs, or at least not contradict the aim of poverty reduction. Complyin with Article 208 primarily means adopting the overarching principle of ‘Do no harm’ in the EU’s external relations. A Human Rights-Based Approach provides a deeper understanding of the PCD concept, as it describes a more dynamic relationship of rights holders and duty bearers, and of sharing responsibilities and engaging in a progressive realization of rights. Caritas Europa is a member of the European NGO Network CONCORD. In November 2013 CONCORD published its yearly report “Spotlight on EU policy Coherence for Development”, giving examples on how, for example, EU investments in agriculture have a negative impact on people’s lives in many African Countries. Caritas Europa’s members especially advocate on the following EU policies that can have negative implications on poor people’s lives, namely:
    - Food Speculation

    Highly volatile and overall increasing global food prices seem to be our new reality. There are many factors that influence food prices like droughts, poor supply chains and infrastructure, increased ethanol production, the oil price, or insufficient stocks.

    - Development of international commodity prices

    However, global food crises cannot be fully explained by these arguments anymore. There are many studies that conclude that speculation on food commodities has been an important factor for price developments in recent years. The Global Hunger Index 2011 identified speculation as one of the key triggers for increasing prices and erratic volatility. In particular, the speculation on food commodities has increased considerably during the last 10 years. The share of speculators rose from 23% in 1998 up to 69% in 2008.
Caritas supports programmes in several Sub-Saharan countries that aim to increase food security of small holder farmers who are especially vulnerable to high prices of staple foods. In Ethiopia, for example, the average household spends two-thirds of its income on food. A small rise in the price therefore has a strong impact on the coping strategies of households. Today, 21 out of 29 African countries are not able to meet the demand for food themselves. Many African countries are forced to import food and, therefore, are very sensitive to international price developments. The price for imported food is usually linked to the world price. In the Democratic Republic of Congo, where 70 percent of the population is suffering from insufficient access to food, prices of basic food have increased continuously within the last years.


PCD AND THE EU: FOOD SPECULATION

Caritas recommends the EU to:
    - Champion stronger regulation of agricultural commodity markets. In January 2014 an agreement was reached on the European Markets in Financial Instruments Directive (MIFID II) which was offered a chance to regulate excessive speculation on food. Although there are many loopholes regarding speculation on food, Caritas welcomes the agreement as transparency of agricultural commodities exchanges will increase and limitations on derivatives’ trading in foodstuffs will be introduced by means of position limits. Nonetheless, serious loopholes still remain. These loopholes could threaten the efficiency of the new position limits’ rules. As criticized by Caritas since the beginning of the legislative process, limits will be set by national authorities and not by the ESMA or other EU wide authorities. It is expected that not until 2016 will MiFID finally be set into order. There is a risk that a race to the bottom will occur. In order to be more attractive to financial players, Member States could compete in lax regulation measures;

    - Guarantee that the MiFID II rules on transparency and position limits are implemented very strictly, in order to stop excessive speculation on food in European commodity markets. It is important to monitor and critically support the process of how position limits are implemented by competent authorities;

    - Ask the drawing back of European financial actors from excessive speculation on commodity futures’ markets. With the financial crisis, the European population has lost its confidence in the functioning of the European financial markets and in the functioning of banks as their most prominent actors92. Banks should give assurances that their investing activities don’t have any negative consequences on food prices of basic foods.
They should guarantee that:
    - Within their fund management activities they renounce investment in financial products, whose returns are directly related to the prices of agricultural goods.

    - They do not offer products and funds to their clients that are related to bets on agricultural commodity prices or their price differences.

    - They inform their clients about the possible negative humanitarian consequences of speculative investments in agricultural commodity markets.

1 The full report is available from http://www.caritas.eu/sites/default/files/caritas_europa_food_report_2014_-_eu_role_to_end_hunger_by_2025.pdf
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Paris, 29 June 2017