G20 Propositions Towards Sustainable Agriculture

G20 propositions

Towards sustainable agriculture?

Table of Contents

I Introduction 3

II Evaluation of the G20 propositions3

II.I Trading and Investment3

II.II Production and Agricultural goods3

III Pricing and volatility3

III.I Regulatory and systemic prevention3

III.II Alleviating impacts of negative supply shocks3

IV. Implementation3

V. Conclusion and discussion of issues not taken into account3

VII Bibliography4

I Introduction Ever since the subprime crisis started in 2007, the lack of investment opportunities with reasonable risk and higher returns led external traders to increase trading within the agricultural sector. These have no real demand for the product, but are looking for arbitrage opportunities. These can be created either naturally or for example by enhancing speculation via financial derivatives (puts and calls) that increase the volatility of prices (flow) and the price itself (stock). This in turn increases input prices and lowers profits, leaving small farmers uncovered. At the beginning of the conference in Paris, Nicolas Sarkozy addressed the problematic of sudden fluctuations in food prices that caused great misery in poorer countries. According to him, price volatility “is a plague on farmers and consumers...It can plunge entire populations into famine and poverty.” Critical voices say that the meeting only took place because of the increased public pressure (Kellard, 2011). For example, 450 of the worlds most established economists collectively wrote a critical letter calling for a solution to price volatility. If the meeting arose through external pressure, it could be assumed that its outcome will only lead to short-term enhancing solutions and general statements meant to please the public. The question arises whether the G20 propositions actually lead towards more sustainable agriculture and what other approaches might enhance the long-term outcome. This paper will first introduce and evaluate on the G20 main...