Averting Tomorrow's Global Food Crisis: The European Union's role in delivering food justice in a resource-constrained world

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Global food prices will more than double within 20 years, as a new age of crisis forces the collapse of our global food system. These price rises will push millions into poverty in a world where, already, one in seven goes hungry. As the world’s largest economy, the world’s biggest aid donor, and an aspiring leader in the fight against climate change, the European Union has an important role to play in delivering food justice in a resource-constrained world. This Oxfam Briefing Note sets out the steps the EU must take to meet this unprecedented challenge. It was first published in 2011 at the outset of GROW, Oxfam’s global food justice campaign, which aims to transform the way we grow, share, and live together so that all of us have enough to eat, always.
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  Oxfam Briefing Note Updated edition March 2012 Averting Tomorrow s Global Food Crisis THE EUROPEAN UNION'S ROLE IN DELIVERING FOOD JUSTICE IN A RESOURCE-CONSTRAINED WORLD www.oxfam.org/grow   Planting on a camellone  in Loma Suarez, Bolivia. Photo: Mark Chilvers/Oxfam Global food prices will more than double within 20 years, as a new age of crisis forces the collapse of our global food system. These price rises will push millions into poverty in a world where, already, one in seven goes hungry. As the world’s largest economy, the world’s biggest aid donor, and an aspiring leader in the fight against climate change, the European Union has an important role to play in delivering food justice in a resource-constrained world. This Oxfam Briefing Note sets out the steps the EU must take to meet this unprecedented challenge. It was first published in 2011 at the outset of GROW, Oxfam’s global food justice campaign, which aims to transform the way we grow, share, and live together so that all of us have enough to eat, always.  2 1 INTRODUCTION Why, in a world that produces more than enough food to feed everybody, do so many people – one in seven – go hungry? Oxfam’s global campaign, GROW, seeks answers to this question. GROW aims to transform the way we grow, share, and live together. GROW will expose the failing governments and powerful business interests that are propping up a broken food system and sleepwalking the world into an unprecedented and avoidable reversal in human development. The warning signs are clear. We have entered an age of crisis: of food price spikes and oil price hikes; of scrambles for land and water; of creeping, insidious climate change. The 2008 spike in food prices pushed some 100 million people into poverty. Steep price rises from June 2010 to February 2011 have done the same to 44 million more – equivalent to almost the entire population of Spain. Behind these shocking statistics lie millions of tragic individual stories of suffering as families struggle to cope with spiralling food prices, fall into debt and are left with no money to send their children to school or to treat them when they get sick. These crises are spikes – often deadly – on a longer term trend of surging food instability. Research commissioned by Oxfam and published in Growing a Better Future: Food justice in a resource-constrained world 1  projects that global food prices will more than double within 20 years. Today we face unprecedented challenges. The European Union (EU) was one of the first global players to respond to the 2008 food crisis, stepping up its emergency food aid as well as launching a €1bn Food Facility  to help developing countries get their agricultural sectors back on their feet. However, the much-promising EU policy framework to assist developing countries in addressing food security challenges  is still to be implemented, and other EU policies continue to fuel food price volatility. Unregulated European financial markets reward investors speculating on food prices with soaring returns. The EU’s flawed biofuels policy has already fuelled waves of evictions and land grabs in developing countries and diverts food from mouths to petrol tanks. Meanwhile, the EU is dragging its feet on raising domestic ambition to tackle climate change – the greatest challenge of all to global food security. In the end, the structural power imbalances that contaminate the global food system have been left untouched by the EU.  As the world’s largest economy, the world’s biggest aid donor, and an aspiring leader in the fight against climate change, the EU has an important role to play in delivering food justice and building a new prosperity in a resource-constrained world. This role should be played both at home and in key global fora such as the G20, the Committee on World Food Security (CFS) or the United Nations Framework Convention on Climate Change (UNFCCC). Major debates are now taking place within the EU that will reshape the future of its agricultural, The power imbalances that contaminate the global food system have been left untouched by the EU.  3 trade, and development policies, and define its new Multiannual Financial Framework. Oxfam calls on the EU to make global food security a priority across the board. To prove to the world that it means business, Oxfam believes the EU should take the following steps without delay: ã  tackle speculation on agricultural commodities to put a stop to spiralling food prices; ã  put an end to the biofuels mandates and subsidies that fuel food price volatility and land grabs in developing countries; ã  invest in small-scale food producers in developing countries; ã  lead in the fight against climate change and its impacts on global food production.  4 2 STOP SPIRALLING FOOD PRICES Regulate the European financial markets Governments have abdicated their responsibility to regulate how food is grown, traded, and marketed worldwide. Instead, a few powerful and secretive agribusiness firms and investors are profiting while millions of farmers, agricultural workers, and consumers suffer in hunger and grinding poverty. Crops and land have become another asset class for investors to gamble on. Poor families in developing countries spend up to three-quarters of their income on food, making them extremely vulnerable to sudden price changes. Women and children often feel the first impacts when families need to cut back on food, struggle to pay for health and education, and have to take on debt to get by. 2  But volatile food prices present big opportunities for speculators. For example, it is estimated that Barclays Capital, Europe’s most important player in the agricultural commodity derivative market, could have earned as much as €406m (£340m) in 2010 from food speculation. 3  Holdings in commodity index funds, the main vehicle for financial investments in agricultural commodities, rocketed from €11bn ($13bn) in 2003 to €204bn ($317bn) in 2008. 4  In 2011, food producers and processors, who have traditionally used derivatives to hedge risks and secure stable prices, were again outnumbered on the commodity derivatives markets by investors and speculators. 5  To prevent future crises, governments must manage the food system better by regulating volatile commodity markets. The European agricultural commodity derivatives markets are expected to grow significantly in the coming years as the EU’s agricultural policy becomes more market-oriented. Yet derivatives markets in the EU remain less regulated than in the United States. A first step towards improving the regulation of these markets is the European Markets Infrastructure Regulation (EMIR) targeting risky derivatives traded outside regulated exchanges (so-called OTC or ‘over-the-counter’ derivatives). Another important piece of legislation is the Markets in Financial Instruments Directive (MiFID). It is important that this Directive be reviewed to effectively regulate agricultural commodity futures exchanges and other trading platforms. The European Commission (hereafter ‘the Commission’) tabled its proposals for MiFID in October 2011. Despite promises by the Commission to tackle food speculation, strong lobbying from the financial sector weakened the text substantially. It is now up to the European Parliament and the European Council to improve it. 6   Barclays Capital, Europe’s most important player in the agricultural commodity derivative market, could have earned as much as  €406m in 2010 from food speculation.
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