G20 awaits September grain report before plans on food

Thu Aug 23, 2012 12:57pm EDT

* G20 waits for mid-Sept report for data on supplies

* South Korea urges G20 action on grain prices

* Main talking point is avoiding unilateral trade barriers

By Sybille de La Hamaide

PARIS, Aug 23 (Reuters) - Senior figures from G20 countries will discuss alarm bells raised by food price rises and how to combat volatility next week, but any decisions are unlikely before a mid-September report on grain supply, an official said on Thursday.

The third price surge in four years after drought in the United states and poor crops from Russia and the Black Sea bread basket has stirred new fears about food supply and inflation.

France, the United States and G20 president Mexico will hold a conference call on Monday to consider whether an emergency international meeting is required, aiming to avoid the food price spike that triggered unrest in poorer countries in 2008.

Ahead of the call, South Korea's President Lee Myung-bak sent a letter to G20 members calling on them to step up joint action to stabilize international grain prices, his office said.

But a French farm ministry official told Reuters the G20 will wait for the next release of a report by the Agricultural Market Information System (AMIS) in mid-September that should yield a clearer picture of grain supply.

"This conference call is to take stock of the situation," the official said.

"The AMIS report will not be available for another two weeks so we would rather take a decision at government level and in our role as coordinator of the G20 (farm) system between Sept. 10 and Sept. 15," he added.

AVOIDING UNILATERAL MOVES

South Korea's Lee suggested five measures including proposals that G20 countries work together to ease export controls on food items, impose more regulation on market speculation and modify biofuel policies to cushion supply shocks.

A mix of high oil prices, growing use of biofuels, speculation on commodity markets and export restrictions pushed up prices of food in 2007/08, sparking violent protests in countries including Egypt, Cameroon and Haiti.

A report on Thursday from the International Grains Council showed a worsening picture for crop output with global stocks of corn and wheat seen at multi-year lows.

But G20 leaders have very few tools available to control prices and nothing decisive is expected to happen soon. The main talking points will include ways to avoid unilateral trade restrictions.

Russia, a key global wheat supplier, introduced a grain export ban in 2010 after drought ravaged crops and sent prices rocketing. Another spell of dry and hot weather this year has raised concerns of a similar move.

"First it is to avoid unilateral actions which would be a solution for one state but would worsen the rise in prices, for example moves to ban exports or to tax exports or imports," the official said.

But France's Agriculture Minister admitted controlling grain prices would be difficult.

"We will think about ways to control food prices," Stephane Le Foll told French television i>tele. "For cereals, it is harder, they are ruled by the market."

(Reporting by Sybille de La Hamaide; editing by Veronica Brown and Keiron Henderson)

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