EC Responses to Soaring Food Prices Philip Mikos – DG Development Policies for the Sustainable management of natural resources

Contents Setting Food Price Developments Political Scenery EC Response Communication COM321 Developing Countries: Non-Paper Response Instruments Humanitarian Instrument FSTP EDF 10 – B-envelope Food Facility

Setting

Food Price Developments

Political Scenery

EC Response

Communication COM321

Developing Countries: Non-Paper

Response Instruments

Humanitarian Instrument

FSTP

EDF 10 – B-envelope

Food Facility

Setting – Price Developments

Setting – Political Scene UN HLTF FAO Conference 3-5 June EP Resolution 22 May Council Conclusions 20 June G8 Leaders 7-9 July UN GA, 22-25 Sept

UN HLTF

FAO Conference 3-5 June

EP Resolution 22 May

Council Conclusions 20 June

G8 Leaders 7-9 July

UN GA, 22-25 Sept

EC Response – COM 321 ‘ Tackling the Challenge of rising food prices. Directions for EU action’ On causes, prospects and impacts (EU and global) Elements for EU response: Actions to mitigate the effects of price increases in the short-medium term (intra-EU) Actions to enhance agricultural supply in the long term (intra-EU) Actions to address the crisis at international level: DDA conclusion Scale up humanitarian contribution Providing development support

‘ Tackling the Challenge of rising food prices. Directions for EU action’

On causes, prospects and impacts (EU and global)

Elements for EU response:

Actions to mitigate the effects of price increases in the short-medium term (intra-EU)

Actions to enhance agricultural supply in the long term (intra-EU)

Actions to address the crisis at international level:

DDA conclusion

Scale up humanitarian contribution

Providing development support

EC Response – DEV Non-Paper Proposes EU response strategy with aim to significantly reduce the negative effects of the food price rises on the poorest consumers in developing countries, while at the same time encouraging a positive supply response from farmers in these countries. Short, medium and long term actions, including: Short: humanitarian response, financing of consumer needs, policy dialogue Medium: expansion safety nets, rapid provision agricultural inputs Long: agricultural investments, sustainable safety nets, risk management

Proposes EU response strategy with aim to significantly reduce the negative effects of the food price rises on the poorest consumers in developing countries, while at the same time encouraging a positive supply response from farmers in these countries.

Short, medium and long term actions, including:

Short: humanitarian response, financing of consumer needs, policy dialogue

Medium: expansion safety nets, rapid provision agricultural inputs

Long: agricultural investments, sustainable safety nets, risk management

Instruments – Humanitarian Assistance Upfront mobilisation of resources Additional allocation of € 140 million for food assistance -> € 363 million for 2008 To cover additional costs related to increase in food prices (and transport costs) Working through International Organisations and NGOs

Upfront mobilisation of resources

Additional allocation of € 140 million for food assistance -> € 363 million for 2008

To cover additional costs related to increase in food prices (and transport costs)

Working through International Organisations and NGOs

Instruments – FSTP 2008 First response from development instruments through reallocation of 2008 funds (€ 50 million) Allocated to 12 priority countries Coverage: Safety nets/ social transfers Agricultural production measures DCI Committee July; Commission Decision August

First response from development instruments through reallocation of 2008 funds (€ 50 million)

Allocated to 12 priority countries

Coverage:

Safety nets/ social transfers

Agricultural production measures

DCI Committee July; Commission Decision August

Instruments – EDF 10 B-envelope Up to Euro 200 million; additional allocation 30 countries Highly vulnerable Hit by food price increases (Balance of Payments effect) Mainly used for ‘fiscal compensation’ and urban safety nets Budget support or project support (range of possible actors) EDF Committee of 24 September -> Commission Decision in course of October

Up to Euro 200 million; additional allocation

30 countries

Highly vulnerable

Hit by food price increases (Balance of Payments effect)

Mainly used for ‘fiscal compensation’ and urban safety nets

Budget support or project support (range of possible actors)

EDF Committee of 24 September -> Commission Decision in course of October

Instruments – Food Facility ? EC proposal, adopted by Commission 18 July Co-decision procedure Parliament: Mitchell Report with amendments voted on 7 October Discussions ongoing in Council Main Issues Budget Heading Comitology Implementing Organisations

EC proposal, adopted by Commission 18 July

Co-decision procedure

Parliament: Mitchell Report with amendments voted on 7 October

Discussions ongoing in Council

Main Issues

Budget Heading

Comitology

Implementing Organisations

Food Facility - Objectives and Scope Aim: rapid and direct response to the increased food prices in developing countries Primary objectives: Encourage a positive supply response of the agricultural sector Support activities to respond rapidly and directly to mitigate the negative effects of high food prices in line with food security objectives

Aim: rapid and direct response to the increased food prices in developing countries

Primary objectives:

Encourage a positive supply response of the agricultural sector

Support activities to respond rapidly and directly to mitigate the negative effects of high food prices in line with food security objectives

Food facility – Key features of EC Proposal Short-term: in-between emergency and long-term development cooperation Time-bound: operational in two years (2009 and 2010), using 2008 and 2009 budget commitments € 1 billion; Focus on agricultural supply response; in some countries safety nets (preferably productive) Contracts with International and Regional Organisations

Short-term: in-between emergency and long-term development cooperation

Time-bound: operational in two years (2009 and 2010), using 2008 and 2009 budget commitments

€ 1 billion;

Focus on agricultural supply response; in some countries safety nets (preferably productive)

Contracts with International and Regional Organisations

Food facility - Implementation List of target countries Differentiated approach, dependent on development contexts and impact of soaring food prices in target countries Eligible activities: Improve access to agricultural inputs and services Safety net measures (aiming at maintaining/improving agricultural productive capacity, and addressing the basic food needs of the most vulnerable populations) Activities per country identified in collaboration with International and Regional Organisations

List of target countries

Differentiated approach, dependent on development contexts and impact of soaring food prices in target countries

Eligible activities:

Improve access to agricultural inputs and services

Safety net measures (aiming at maintaining/improving agricultural productive capacity, and addressing the basic food needs of the most vulnerable populations)

Activities per country identified in collaboration with International and Regional Organisations

Food Facility - Indicative Time-schedule Assumes successful discussions EP- Council-COM in weeks to come September – December : technical preparations for Commission Decision December: Adoption Regulation by co-legislators, entry into force Regulation Late December: implementing Commission Decision Early 2009: contracting and start implementation of first measures

Assumes successful discussions EP- Council-COM in weeks to come

September – December : technical preparations for Commission Decision

December: Adoption Regulation by co-legislators, entry into force Regulation

Late December: implementing Commission Decision

Early 2009: contracting and start implementation of first measures