General Assembly: Minister Counsellor Silberberg on "Price Volatility in Food and Related Financial Commodity Markets"

Apr 11, 2012

(Statement by Minister Counsellor Silberberg in the Plenary of the General Assembly during the Thematic Debate "Addressing Excessive Price Volatility in Food and Related Financial Commodity Markets")

Mr. President,

Excellencies,

dear colleagues,

let me first of all align myself with the statement held by the representative of the EU on behalf of the EU and its Member States earlier this day. In addition I would like to share with you the following remarks:

The German government takes the problem of hunger, which affects more than one billion people in so many regions of the world, extremely seriously and undertakes every possible effort in solving this problem, both through its commitment at international level and through its many bilateral projects in affected countries.

Food, which lays the ground for people's livelihood, is a particularly sensitive commodity. Food price in the long term is driven by fundamental market factors, inter alia the growing world population, changing consumer behaviour in emerging economies, climate change and increasing demand for bio-fuels. Due to these foreseeable developments of fundamental factors the price level will rise in the long term.

In addition, volatility of food prices will continue. In recent years the agricultural commodity markets have seen strong price fluctuations with extraordinary peaks. Their effects on agricultural markets and the food situation have become a serious problem, in particular in the least developed countries.

A strong and effective governance framework in the area of food security can contribute to limiting the effects of extreme price peaks on the population. That is why my government raised the issue of speculation with food at an early stage, e.g. at the Global Forum for Food and Agriculture in January 2011.

But we also need to facilitate more global food security through increased agricultural production and productivity, through enlarged public and private investments, through responsible governance of land tenure, fishery and forests.

Since markets for agricultural commodities and their derivatives are becoming increasingly international, it would be desirable to establish internationally binding and harmonised general conditions. The German government therefore strongly backed the G20 move to make the issue one of its priorities in 2011 and 2012. In addition, FAO – and with regard to the effects on global food security in particular the Committee on World Food Security – as well as other organizations like the OECD are addressing these issues in great detail. My government remains actively engaged in all of these discussions.

The German government stresses that functioning financial markets are a useful instrument in hedging the exposure of both producers and consumers of agricultural commodities to risks associated with physical production and price uncertainty. The G20 found that transparent and appropriately regulated agricultural financial markets are key for having well-functioning physical markets and risk management.

Therefore the G20 decided that supervisory authorities worldwide should get the competence – in addition to other possibilities of intervention – to limit the positions of individual traders at a futures market, in particular in order to support a sufficient liquidity level, to prevent market abuse and to contribute to orderly pricing and billing conditions.

Another decisive step is to improve transparency at futures exchanges and on physical markets. Furthermore, strengthened national or regional commodity exchanges can play an important role to better hedge against price, or weather risks.

Complementary to its engagement for well-functioning agricultural commodity markets, my government supports the implementation of the G20 action plan for an increase in sustainable reliable agricultural production and a comprehensive set of risk management instruments.

My government supports the G20 initiative to regulate the trading of global commodity futures more strictly and curb any excessive price fluctuations on commodity markets that are not backed by fundamental market developments.

Thank you very much!

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