French President Nicolas Sarkozy said Tuesday he wants the world's group of 20 rich industrial nations and major emerging markets to set up a shared central database of food prices to help control market volatility and keep commodity speculators in check.
Access to food in many areas will likely become more precarious over the next decades, and the markets will have to be more tightly regulated to avoid massive shortages, Sarkozy told an international conference on commodities and raw materials.
"Speculation, panic and lack of transparency have seen prices soaring," he asked. "Is that the world we want? France is saying quite clearly it is not."
Sarkozy currently holds the presidency of the G-20 group, with which he wants to push through a plan for more transparency in agriculture commodity market networks. He said it would go a long way toward taming the extreme food price volatility of past years. The G-20 takes up the issue of food prices at a meeting of farm ministers next week.
He said a comparison of farm market prices over the last five years compared with the 15-year period of 1990-2005 shows that price volatility for cereals has doubled, tripled for sugar and is now 4 times as high for rice, "the basic staple for a quarter of humanity."
"Is this right, is this acceptable? can we put up with this for longer?," Sarkozy asked.
Sarkozy insisted something had to be done about the many hedge funds and specialized financial institutions that have joined the traditional trading houses on the market floor, driving up prices.
"It is time for the G-20 to take its responsibility," he told the conference. He said it was the same lack of regulation now visible in the commodities and raw materials markets that drove the financial markets "to the edge of the abyss" during the 2008 global financial crisis.
"Will we have the same disaster in the world of commodities and raw materials? It is a pretty simple question. We have got to tackle it — now. And not put it off," he said.
To improve transparency and oversight in market movements, Sarkozy wants a centralized register for data transactions in derivatives. He wants trading data to be better available to boost food security and stable markets by cutting out the uncertainties of excessive speculation.
He said the Food and Agriculture Organization of the United Nations could collect and hold all the data, including those on private stocks.
Rising food prices were also blamed by the FAO in a Tuesday report on food shortages in the Horn of Africa, where over 8 million are in need of emergency aid.
"Very high food and fuel prices are adding to the difficulties of poor households in accessing food across the region," the FAO said in a statement.
In Somalia, for example, April prices of red sorghum were between 150 to 180 percent higher than a year ago. In Kenya, wholesale maize prices in May in main urban markets of Nairobi and Mombasa were between 60 and 85 percent higher than in 2010, according to the report.
This year, high food prices have already helped spur unrest in the Middle East and forced families to cut back on food from Bolivia to Indonesia. The crisis in Libya has sent oil prices higher, which could further impact on the price of agricultural produce.
With the global population soaring to 9 billion in 2050, food demand will rise by 70 percent, and production will not be able to keep up.
"Even if we all pull out all the stops, we may not be able to achieve what we have to achieve to feed 9 billion people in 2050," Sarkozy said.