Wednesday

10th Aug 2022

French G20 leadership to focus on commodity prices

  • French President Nicolas Sarkozy outlining France's G20 priorities (Photo: Elysee palace)

French President Nicolas Sarkozy has said that tackling instability in global commodity markets will be a key aim of France's presidency of the Group of 20 major economies.

Outlining France's G20 priorities at a press conference in Paris on Monday (24 January), Mr Sarkozy appeared to back away from earlier calls to change the Bretton Woods system of global monetary order however, seen as a response to recent US resistance in this area.

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"If we don't do anything we run the risk of food riots in the poorest countries and a very unfavourable effect on global economic growth," the French centre-right leader told diplomats and journalists.

"The day there are food riots, what country at the G20 table will say this does not concern them? I don't see a single one," he added.

A report by the UN's Food and Agriculture Association (FAO) earlier this month said global food prices hit an all-time record in December, surpassing the levels seen during the 2007-08 crisis that caused riots in Haiti and parts of Asia.

Unrest over food prices has also resulted in protests in Algeria and other parts of northern Africa this year, with France among EU member states that blame speculators for the rise in commodity prices. Economists are split on the subject.

The European Commission last month called for greater transparency in commodity trading, and is reportedly set to include a separate chapter on the subject in a paper on raw materials to be published this Wednesday.

Originally intended to focus on securing EU access to raw materials such as rubber, minerals and metals, Paris is thought to have succeeded in persuading the commission to include a section on commodities at the last minute, despite German fears this will detract from the document's main message.

France has also used the debate over food security to argue against a radical overhaul of the EU's common agricultural policy post 2013, with CAP reform among the topics under discussion by EU farm ministers in Brussels on Monday.

A group of 22 EU member states, led by France, signed a declaration in late 2009, insisting that an ambitious, continent-wide agricultural policy is essential to secure Europe's food independence.

But some analysts argue that food security is a weak argument for a EU farm policy based on subsides, currently valued at roughly €55 billion a year.

"We are already producing far more food than we need and there are huge gains in productivity still to be made," Valentin Zahrnt, a CAP expert with the European Centre for International Political Economy, a Brussels-based think-tank, told this website.

"EU families currently spend roughly 12 percent of their income on food. This is historically very low," he added. "Even if basic food prices doubled, or even tripled, it wouldn't hurt EU citizens."

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