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Groups Discuss World Grain Reserve

Setting up a world grain reserve is a realistic option that would reduce the risk of food shortages and shield farmers from big price shocks, a senior official with the U. S. National Farmers Union said March 19.

The proposal to create global cereal stocks topped the agenda of a meeting of farmers’ unions from the Group of Eight industrialized countries in Rome aiming to come up with a common position on food security ahead of a G8 summit in Italy in July.

“We should have a world food reserve, a world grain reserve to protect against times when there are food shortages,” Robert Carlson, the NFU’s director of international relations, told Reuters in an interview.

“Also, from a farmers’ perspective… it would function as something of a price floor, allowing to take grain off the market and put it in the reserve when production is high and prices are low,” he said on the sidelines of the meeting.

World cereal prices soared to record highs in 2007 and in the first half of 2008, fuelling spikes in food prices that triggered riots in some developing countries. Grain prices have fallen back since because of large crops last year, but in many domestic markets, food prices have remained high.

Carlson said it would take “a lot of study and a lot of discussion” to figure out how the global reserve would work but called it a realistic option.

“I think it’s more realistic than the current free trade agenda,” he said, adding that the stalled Doha round of negotiations on international trade needed to be recalibrated to take into account the importance of agriculture.

“They tend to treat agricultural goods as if they were manufactured goods, but wheat and corn are different from toasters and record players,” he said.

Participants at the Rome meeting generally called for mechanisms to protect farmers and consumers from market volatility and speculation although not all were in favour of creating a global grain reserve.

Meurig Raymond, deputy president of the British National Farmers Union, told Reuters his group backed negotiations with big food retailers “so that everybody in the supply chain can have their margins,” rather than large intervention stocks.

The meeting’s final statement simply called for a better management of global stocks and urged governments to invest more in agriculture to cope with growing demand.

“An unregulated market would create unacceptable social costs for agriculture businesses,” it said.

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