EU summit to discuss soaring food prices
BRUSSELS (Reuters) - European Union leaders will discuss the impact of soaring world food prices at a summit next month in a sign of political anxiety over "agflation", which Brussels blamed partly on speculators.
The Slovenian EU presidency put the issue on the agenda of the June 19-20 Brussels meeting, a spokeswoman said, after anger over the rising cost of staple commodities sparked protests from Mozambique and Cameroon, to Egypt, Vietnam, Haiti and Peru.
The European Commission said on Tuesday commodity market speculators must bear at least some of the blame and their activities needed to be monitored carefully.
"There has been increased activity by speculative investors in commodity-related financial markets to hedge price risk or use excess liquidity in the wake of the financial market crisis," a report endorsed by the EU's executive arm said.
"These activities lead to increased price movements and volatility on futures and spot commodity markets and have amplified the underlying price movements," it said.
The report analyzed recent price rises in key commodity areas such as cereals, meat and dairy, where markets notched up two-digit or even three-digit price increases in under a year.
In Europe, the impact has been felt in wage negotiations as trade unions seek to claw back purchasing power lost to higher energy and food costs.
"The European Council will assess developments as regards rising food prices and discuss policy implications for the European Union across the board, including possible consequences for development policy, trade policy, the common agricultural policy (CAP) and energy/climate change," a draft summit agenda circulated to member states and seen by Reuters said.
EU officials said development aid may need to be redirected towards food production, trade policy used to combat export tariffs that curb or distort trade in commodities, but the most controversial issue is whether higher producer prices call for an overhaul of the EU's lavish farm subsidy system.
Finance ministers of the 27-nation bloc will discuss on June 3 the implications of "agflation" for reforming the CAP, a massive spending program that swallows more than 40 billion euros ($62.28 billion) of taxpayers' money a year.
Economically liberal nations such as Britain and Sweden want to dismantle the subsidies, arguing that food price rises have put more money in farmers' pockets.
France, the EU's biggest farming power, says the need to increase food production and food security are a further justification for maintaining the system.
The European Commission's farm chief told agriculture ministers on Monday that global food prices were likely to ease after recent record highs for cereals and dairy products.
Mariann Fischer Boel said adverse weather over several seasons that had hit supply were now returning to normal, but higher food prices were due mainly to increased demand and were not a temporary phenomenon.
"Prices are likely to fluctuate in the medium term around a level that is higher than what we have seen in recent decades," she said. "But we do not think that the record levels reached in recent months are likely to persist."
($1=.6423 euro)
(Editing by Ben Tan)
