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EC Responses to Soaring Food Prices


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Presentation given by Philip Mikos (DG Development) at the 7th Brussels Development Briefing - Brussels, 16 October 2008 -

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EC Responses to Soaring Food Prices

  1. 1. EC Responses to Soaring Food Prices Philip Mikos – DG Development Policies for the Sustainable management of natural resources
  2. 2. Contents <ul><li>Setting </li></ul><ul><ul><li>Food Price Developments </li></ul></ul><ul><ul><li>Political Scenery </li></ul></ul><ul><li>EC Response </li></ul><ul><ul><li>Communication COM321 </li></ul></ul><ul><ul><li>Developing Countries: Non-Paper </li></ul></ul><ul><li>Response Instruments </li></ul><ul><ul><li>Humanitarian Instrument </li></ul></ul><ul><ul><li>FSTP </li></ul></ul><ul><ul><li>EDF 10 – B-envelope </li></ul></ul><ul><ul><li>Food Facility </li></ul></ul>
  3. 3. Setting – Price Developments
  4. 4. Setting – Political Scene <ul><li>UN HLTF </li></ul><ul><li>FAO Conference 3-5 June </li></ul><ul><li>EP Resolution 22 May </li></ul><ul><li>Council Conclusions 20 June </li></ul><ul><li>G8 Leaders 7-9 July </li></ul><ul><li>UN GA, 22-25 Sept </li></ul>
  5. 5. EC Response – COM 321 <ul><li>‘ Tackling the Challenge of rising food prices. Directions for EU action’ </li></ul><ul><li>On causes, prospects and impacts (EU and global) </li></ul><ul><li>Elements for EU response: </li></ul><ul><ul><li>Actions to mitigate the effects of price increases in the short-medium term (intra-EU) </li></ul></ul><ul><ul><li>Actions to enhance agricultural supply in the long term (intra-EU) </li></ul></ul><ul><ul><li>Actions to address the crisis at international level: </li></ul></ul><ul><ul><ul><ul><li>DDA conclusion </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Scale up humanitarian contribution </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Providing development support </li></ul></ul></ul></ul>
  6. 6. EC Response – DEV Non-Paper <ul><li>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. </li></ul><ul><li>Short, medium and long term actions, including: </li></ul><ul><ul><li>Short: humanitarian response, financing of consumer needs, policy dialogue </li></ul></ul><ul><ul><li>Medium: expansion safety nets, rapid provision agricultural inputs </li></ul></ul><ul><ul><li>Long: agricultural investments, sustainable safety nets, risk management </li></ul></ul>
  7. 7. Instruments – Humanitarian Assistance <ul><li>Upfront mobilisation of resources </li></ul><ul><li>Additional allocation of € 140 million for food assistance -> € 363 million for 2008 </li></ul><ul><li>To cover additional costs related to increase in food prices (and transport costs) </li></ul><ul><li>Working through International Organisations and NGOs </li></ul>
  8. 8. Instruments – FSTP 2008 <ul><li>First response from development instruments through reallocation of 2008 funds (€ 50 million) </li></ul><ul><li>Allocated to 12 priority countries </li></ul><ul><li>Coverage: </li></ul><ul><ul><li>Safety nets/ social transfers </li></ul></ul><ul><ul><li>Agricultural production measures </li></ul></ul><ul><li>DCI Committee July; Commission Decision August </li></ul>
  9. 9. Instruments – EDF 10 B-envelope <ul><li>Up to Euro 200 million; additional allocation </li></ul><ul><li>30 countries </li></ul><ul><ul><li>Highly vulnerable </li></ul></ul><ul><ul><li>Hit by food price increases (Balance of Payments effect) </li></ul></ul><ul><li>Mainly used for ‘fiscal compensation’ and urban safety nets </li></ul><ul><li>Budget support or project support (range of possible actors) </li></ul><ul><li>EDF Committee of 24 September -> Commission Decision in course of October </li></ul>
  10. 10. Instruments – Food Facility ? <ul><li>EC proposal, adopted by Commission 18 July </li></ul><ul><li>Co-decision procedure </li></ul><ul><li>Parliament: Mitchell Report with amendments voted on 7 October </li></ul><ul><li>Discussions ongoing in Council </li></ul><ul><li>Main Issues </li></ul><ul><ul><li>Budget Heading </li></ul></ul><ul><ul><li>Comitology </li></ul></ul><ul><ul><li>Implementing Organisations </li></ul></ul>
  11. 11. Food Facility - Objectives and Scope <ul><li>Aim: rapid and direct response to the increased food prices in developing countries </li></ul><ul><li>Primary objectives: </li></ul><ul><ul><li>Encourage a positive supply response of the agricultural sector </li></ul></ul><ul><ul><li>Support activities to respond rapidly and directly to mitigate the negative effects of high food prices in line with food security objectives </li></ul></ul>
  12. 12. Food facility – Key features of EC Proposal <ul><ul><li>Short-term: in-between emergency and long-term development cooperation </li></ul></ul><ul><ul><li>Time-bound: operational in two years (2009 and 2010), using 2008 and 2009 budget commitments </li></ul></ul><ul><ul><li>€ 1 billion; </li></ul></ul><ul><ul><li>Focus on agricultural supply response; in some countries safety nets (preferably productive) </li></ul></ul><ul><ul><li>Contracts with International and Regional Organisations </li></ul></ul>
  13. 13. Food facility - Implementation <ul><li>List of target countries </li></ul><ul><li>Differentiated approach, dependent on development contexts and impact of soaring food prices in target countries </li></ul><ul><li>Eligible activities: </li></ul><ul><ul><li>Improve access to agricultural inputs and services </li></ul></ul><ul><ul><li>Safety net measures (aiming at maintaining/improving agricultural productive capacity, and addressing the basic food needs of the most vulnerable populations) </li></ul></ul><ul><li>Activities per country identified in collaboration with International and Regional Organisations </li></ul>
  14. 14. Food Facility - Indicative Time-schedule <ul><li>Assumes successful discussions EP- Council-COM in weeks to come </li></ul><ul><li>September – December : technical preparations for Commission Decision </li></ul><ul><li>December: Adoption Regulation by co-legislators, entry into force Regulation </li></ul><ul><li>Late December: implementing Commission Decision </li></ul><ul><li>Early 2009: contracting and start implementation of first measures </li></ul>