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EU Summit: Facing Troubles Over World Food, Economy

  • June 20th, 2008
  • Posted by 7thmin

european-council-media-reduced19608.jpgEuropean Union heads of government meeting in Brussels have been told world food prices have passed their peak, but will continue high, demanding new levels of international cooperation.

High prices, shortages and a sharp run-down of global stocks of food have pushed themselves onto the agenda of this gathering of twenty-seven government leaders.

CAUSES OF CRISIS – SOLUTIONS

They are debating also the trends in energy supplies and the price of oil; and they have been looking for a way to continue a proposed reform of the EU system itself – suddenly put on hold by a “no” vote, at a referendum in Ireland.

The European leaders are considered likely to endorse a report from their Economic and Finance Ministers, setting out short and longer-term response to the pressure on the food supply.

That document cites adverse climate conditions, some connected with global warming, as a major cause of supply problems, referring particularly to drought and poor grain harvests in Australia over the last two years.

It refers also to expanding consumer demand from Brazil, China and India, including  demand for meat, which has further reduced the supply of cereals – more of those being used to feed animals.

Biofuel production in response to urgent energy needs has likewise had strong impacts on maize and soybeans wanted to feed the human population.

The EU report goes on to list higher fuel prices coming through as steeper price for food, saying these will go up by 1-2% for any increase of 10% in the price of crude oil.

It says a rundown in stocks has made it impossible to compensate for shortfalls globally, and criticised financial speculation in commodities.

“IT’S NOT US …”

The European Union has excused itself from much of the trouble, pointing out  the “main driving forces ” have been coming from outside of its borders.

It bas identified Brazil and the United State as by far the leading biofuels producers and declared for action to ensure such production is sustainable in terms of allowing for continued viable production of foodstuffs.

Responses being recommended to the European heads of government include:

Targeted aid to developing countries, where the problems with shortages and failing production have been worst.

This effort should concentrate on overcoming underinvestment in agriculture, by financing new investment and development of agricultural markets.

It notes that some EU member governments will be providing short-term aid to low income sectors in their own population, but counsels limits to such aid over time, as a  guard against inflation.

Use of the EU’s formidable powers to regulate finance and business is recommended, with “closer monitoring of  commodity related financial markets”.

CHANGES IN EUROPEAN FARM SYSTEMS

Changes already well advanced in European agriculture have been put forward as helping to ease the squeeze on the cost of eating.

These include withdrawals of quotas on production (entailing guarantees to take up production), and an end to state intervention to buy-up stocks — meaning a more efficient approach to production  and markets.

With the winding up of farm assistance in Europe directly related to production, set-side payments made to keep land out of production will also go p—meaning more use of land to produce food, when in demand.

The current meeting of EU heads of state and heads of government, together with  Foreign Minsters, is scheduled for just-under two days, during 19-20.6.08.

Reference:

European Commission, “Tackling the challenge of rising food prices – directions for EU action,” Communication to the European Council, Council document 9923/08.

European Council, “Recent developments in food prices – main drivers and policy responses”,  Note from the Council (ECOF), document 10326/08.

Picture:

European summit 19.6.08, media centre.

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