World leaders warned on Thursday that soaring food prices risked stoking unrest and even war, but top executives meeting in the Swiss resort of Davos rejected calls for curbs on commodity speculation.
Indonesian President Susilo Bambang Yudhoyono said the world’s population could top 9 billion by 2045, compared with 7 billion now.
“Imagine the pressure on food, energy, water and resources,” he said in a speech at the annual World Economic Forum meeting. “The next economic war or conflict can be over the race for scarce resources, if we don’t manage it together.”
French President Nicolas Sarkozy, who holds the chair of both the G20 global economic forum and the Group of Eight major industrialized economies, repeated his call earlier this week for regulation to rein in speculation and volatility.
“Regulation. Not an excess … but regulation,” he said. “Let those who buy big quantities of commodities commit to putting on deposit part of the financing for those commodities.”
Michel Barnier, the top European Union official in charge of introducing tougher rules for trading, pledged limits on speculation in food commodities. “I find speculation in agricultural commodities where it exists to be scandalous,” the ex-French agriculture minister told journalists in Brussels.
U.S. wheat futures rose to a new 29-month high on Thursday as buyers scrambled for supplies amid harsh weather in major producing countries like Australia and Russia.
Street protests in Egypt — in part kindled by surging prices — ran into a third day on Thursday following unrest in Algeria and in Tunisia, where President Zine al-Abidine Ben Ali was deposed earlier this month.
Imad Fakhoury, Jordan’s minister of state for mega projects, said the Middle East, which imports most of its food, was struggling with rising prices and a rapidly expanding population.
“We are trying to improve the supply of water and energy and make it more home-grown to minimize the vulnerability to international global prices and imports,” he said, adding that governments were also helping the poor afford essentials.
GOVERNMENTS ALSO SPECULATE
Nils Andersen, chief executive of the Danish shipping and oil group A.P. Moller-Maersk, said banning speculation was not the answer, noting there were many players behind price increases in commodity markets.
“You can say that if it is done by speculators, it is unfortunate. But it can also be done by governments trying to secure food supplies for their population. And it is really hard to criticize that,” he said.
Peter Braback, chairman of the world’s biggest food group Nestle, said governments should stop promoting the use of biofuels, which he said caused a 2008 jump in food prices and would entail a tripling of global food production to meet targets.
“There is one very simple solution: no food for fuel,” he said. “It is not about every-day speculations. It’s about fixing the fundamentals, which is … reducing food for biofuels.”
Australian Trade Minister Craig Emerson said the way to deal with food price inflation was by opening up agricultural markets further to remove supply constraints.
Meanwhile, Ngozi Okonjo-Iweala, managing director at the World Bank and a former Nigerian finance minister, said the best solution was more support for African farmers. “We have to be careful about overregulation. We need some regulation but not a heavy hand,” she said.
“We’re not going to see cheap food prices again because this is a long term phenomenon … We need more investment in Africa because more than 50 percent of arable land in the world today is in Africa.”
For full coverage, blogs and TV from Davos go to www.reuters.com/davos
(Additional reporting by Dmitry Zhdannikov, Jonathan Lynn in Davos, John O’ Donnell in Brussels; editing by Mark Heinrich)
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