Working Document
Chairman’s conclusions and recommendations from the seminar: "How to achieve food security: a major challenge for policy coherence", Luxembourg, 21-23 March 2005

Date of release : 04-04-2005

Policy area : General Affairs and External Relations

A. Introduction

From 21 to 23 March 2005, the Ministry of Foreign Affairs, in collaboration with the Ministry of Agriculture, organized a seminar on the theme: "How to achieve food security: a major challenge for policy coherence". The seminar took place within the framework of the Luxembourg Presidency of the EU Council. Is has been prepared in cooperation with a steering committee including European Center for Development Policy Management, International Center for Trade and Sustainable Development and Collectif Stratégies Alimentaires

The seminar was opened by Jean Louis Schiltz, Minister for Cooperation and Humanitarian Aid, and by Fernand Boden, Minister for Agriculture, Viticulture and Rural development.

Over 120 participants took part in this seminar, among whom were representatives of the Ministries for Agriculture, Foreign Trade, and Development Cooperation from 18 EU Member States, the European Commission, representatives from several developing countries, including India and Indonesia, as well as international and regional organizations, including FAO, EBRD, African Union, ECOWAS, UEMOA, ATC and the Sahel Club, parliamentarians, research centers, NGOs and farmers’ movements from North and South.

On the first day, high-level panels of experts and policy-makers in the fields of agriculture, development and international trade made presentations on the challenges of food security. Other presentations were made to introduce the discussions which took place in the 3 workshops the second and the third day. The results of these discussions are exposed hereafter.

B. Background

Over 840 million people in developing countries suffer from hunger. Objective 1 of the Millennium Development Goals aims to halve the number of those suffering from hunger by 2015.

In order to ensure food security, resources must be made available to cover humanity’s food requirements, both in terms of quantity and quality, and in the medium and long term. The major challenge for the international community today remains not only to increase agricultural and food production, but also to ensure that agriculture produces sufficient income for the poor and contributes to the sustainable use of natural resources.

C. General conclusions

1. The seminar has allowed to forcefully underline the relevance of the chosen subject: food security and policy coherence.

2. The idea of gathering around the same table representatives from several ministries concerned by the topic was welcomed.

3. The sustainable and multifunctional character of agriculture was recognized given its economic, social and environmental aspects. Agriculture is characterized by specificities distinguishing it from other economic sectors.

4. Family farms deserve a particular attention.

5. Achieving food security implies the respect of several fundamental human rights: equality of all human beings in dignity, right to life, right to food.

6. The seminar has allowed to:

•  Better understand the challenges related to food security
•  Improve information and understanding regarding policy coherence in food security, and more precisely regarding the mechanisms of global agricultural economy
•  Specify the responsibilities of the different political and economic actors for the development and the implementation of true and coherent food strategies
•  Explain the conditions and means allowing to strengthen the policy coherence of the different actors, and finally
•  To formulate the following set of coherent recommendations

D. Recommendations

1. Food Security Strategies

With 63% of the world population and 73% of the poor living in rural areas, agriculture plays a central role in poverty eradication strategies. Altoough food prodution continues to increase globally, the number of hungry people is not decreasing.

a) Prioritization of agriculture for developing countries and regional organizations

It has been recommended that:

• developing countries consider agriculture and food security a priority in the national Poverty Reduction Strategies
• they develop and implement these strategies in collaboration with the civil society, and in particular with farmer’s organizations
• they reflect those priorities in their national budget
• the Member States of the African Union implement its recommendation inviting them to reserve 10% of their national budget for agriculture
• they reflect this priority in the National and Regional Indicative Programmes (NIP and RIC) concluded with the EU
• they support the formulation of common agricultural policies at regional and sub-regional levels
• they create regional agricultural markets by the implementation of existing policies (UEMOA, ECOWAS)
• they adopt provisions, especially legal ones, in order to facilitate farmers’ access to land, credit and other economic resources

b) The Donors’ Role

It has been recommended that the donors should:

• grant priority to agriculture in their development cooperation policies, including at EU level
• increase substantially their aid for agriculture
• strengthen their support for research and development in technical agricultural services
• support the regional integration and the development of regional and sub-regional organizations and support the implementation of common agricultural policies of these organizations as well as the development of regional agricultural markets

c) Price Stabilization Policy

The world market prices of the main products of agricultural trade – corn, wheat, soy, cotton and rice – have fallen by over 40% since 1996. A similar phenomenon can be observed regarding other important export products, especially within certain of the least developed countries. Thus, within the last 20 years, prices of coffee, cocoa, sugar and palm oil have decreased by over 60%.

Poverty of peasants in developing countries is the result of the existence of an agricultural price formation system which leads to a decrease of these prices and in consequence a collapse in the revenue and the purchasing power of this population.

This situation is rendered even more alarming by the fact that the governments of these countries are not able to grant subsidies to their farmers.

It was noted that Africa is already integrated in international markets, but lacks local, national and regional markets. Africa therefore depends on world markets and world prices that do not reflect the cost of production but rather of surplus production elsewhere.

Over the last 20 years, many of the instruments for public intervention in agricultural commodities such as state marketing boards have disappeared as structural adjustment programmes cut government spending and reduced the possibilities of states to regulate.

Taking into consideration that the elimination of subsidies under the current WTO Agreement on Agriculture will not result in a price increase and not even to their stabilization, a more active role of the concerned states is urgently required with regard to management of excess production capacity through, inter alia, acreage set-asides, inventory reserves, or price support systems as the most effective way to hold prices within a band that is reasonable for both producers and consumers.

Fair prices and price stability are crucial issues as they directly affect farm incomes and, hence, food security.

Fair prices allow producers to

• renew their very modest work capital
• modernize this capital and increase productivity
• provide to the basic needs of their families and be less dependent on development aid

Such a price stabilization policy is of a nature that helps to reduce food shortages.

It therefore has been recommended that:

• the major export countries of agricultural products cooperate in order to ensure price stabilization, including through a better management of the offer
• developing countries, with the support of donors, set up price policies: that ensure fair prices for producers and integrate the production cost in these prices according to the laws of market economy

d) Respecting the Competition Law

Over the last 20 years, concentration of agro-businesses through mergers and acquisitions has significantly built up. In coffee and cocoa, 4-5 multinational process 60-70% of world production. Globally, for any single commodity, only some 300-400 buyers make key purchasing decisions, not millions of consumers -and farmers have no leverage to negotiate profitable prices for their products.

It was therefore recommended that:
Industrialized countries ensure respect of the competition laws with regard to companies holding a dominant position on the agro-food market

e) Consumer Interests

In industrialized countries, the farm gate price has small incidence on the retail price paid by the final consumer. This is also the case, to a lesser extend, in developing countries. ncreasing food prices can be politically difficult for developing country governments to implement as it can hurt the poor urban population. Governments should put in place measures and safety nets to ensure the urban poor are not negatively affected by rising farm gate prices. If the rural population cannot obtain a decent price for their products, they will migrate (rural exodus) and add to the pool of urban poor. 

It has been recommended that:
Appropriate mechanisms are established allowing to ensure a minimum purchasing power to poor urban people

2. International Trade Relations

a) Doha Round

The reform of global agricultural policies currently under negotiations at the World Trade Organisation (WTO) and, concurrently, in the context of a series of regional and bilateral agreements, can play a role in enhancing food security. Over the past 15 years, world agricultural trade has grown almost twice as fast as production.

However the works of the Doha Round should take into account the ever increasing gaps between the productivity of agricultures of the North and of a limited number of developing countries on the one hand and the majority of developing countries on the other hand. This productivity ratio was at 1 to 10 at the beginning of the 20th century and stands now at 1 to 1000, if not more.

It has been recommended that:

• Negotiations take into account these productivity gaps
• In the framework of the chapter on "Special and Differential Treatment", adequate provisions are defined allowing the poorest countries and their regional and sub-regional organizations to ensure an efficient regulation and protection of their national market within the framework of their food security strategies
• All safeguard mechanisms have to be easy to use
• Agricultural reference prices include production prices
• A differentiation between developing countries is ensured
• Export subsidies, as well as internal aids having a dumping effect, are eliminated
• Developing countries take care that  bilateral trade agreements respect the advantages offered to them by the WTO rules
• A discipline regarding food security, which should be fully untied, is created, including a clear definition of a 'legitimate' food aid

b) Economic Partnership Agreements (EPA)

It has been recommended that:

· EPAs should be conceived as true development instruments and not for further market liberalization, taking into account that such a liberalization is not compatible with the level of development of most ACP countries

· At the European Commission level, the cooperation between DG Trade and DG Development is strengthened

· The negotiation mandate is to be clarified if required

· ACP regions are allowed, if they wish, to organize a community preference for their markets similar to the one that the EU has applied since the origin of the Common Agricultural Policy

· A specific agriculture group is established within the framework of the EPA negotiations

3. Policy Coherence and Capacity Building

a) Policy Coherence

The new European Constitution* enshrines policy coherence among the different areas of external action and other policy areas, and states poverty elimination as the principle objective of development cooperation. Furthermore, it mandates taking into account development objectives in the implementation of all policies affecting developing countries.

The importance of a clear political will for the implementation of policy coherence has been stroked out, considering the contradictory interests.

It has been recommended that:

• the EU Member States, their relevant Ministries and Parliaments, as well as the European Institutions, regularly examine the concept, range and implementation of policy coherence
• those Member States which do not yet have mechanisms able to ensure policy coherence, establish these mechanisms 
• the EU collaborates with other international organizations in order to establish a greater coherence between its agricultural policy and that of these organizations
• the European Commission makes regular progress reports on policy coherence, and thus renders visible the cost of policy incoherence

It was recognized that the Doha Round negotiations could lead to progress favoring the implementation of food security strategies. However, the participants felt that that progress is jeopardized by the unilateral liberalization policies the World Bank and IMF introduce in developing countries. Participants therefore ask donor countries to take up their responsibility within these agencies to reconsider these policies that affect food security towards developing countries.

It has been recommended that:
WTO and Bretton Wood Institutions intensify their collaboration in the commercial field

b) Capacity Building

It has been recommended that :

• Developing countries strengthen the capacities of their national and decentralized administrations, in particular their statistical and analytical capacities in agriculture
• They increase investment in long-term education
• They strengthen the training of managers, agronomists and rural economists
• They favor the strengthening of the civil society, in particular of farmers organizations
• They carry out studies, in collaboration with their national institutions, to better measure the impact of liberalization on food security
• Donors strengthen their cooperation with developing countries in the domain of capacity building, including at the university level
• They adapt the technical assistance programmes in trade matters to the requirements of national food security strategies

4. Follow-up

These conclusions and recommendations will be circulated to the participants. They will also figure on the Luxembourg EU Presidency website. Finally they will be distributed to Fernand Boden, Minister for Agriculture, Viticulture and Rural Development, Jean-Louis Schiltz, Minister for Cooperation and Humanitarian Action, and Nicolas Schmit, Minister Delegate for Foreign Affairs and Immigration.

The Presidency reserves itself the right to come back on other aspects of follow-up of the seminar at a later stage.

*the articles III 292 para 3 et III- 316 para 1 of the constitutional treaty form the common reference