Thu, 06/23/2011

G20 agriculture ministers from around the world came to a final consensus in embracing launch the Agriculture Price Risk Management (APRM), a tool that will help producers and consumers offset potential losses and communicate more directly to others in agricultural markets. A $4 billion investment in the APRM is meant to provide protection for farmers, food producers and consumers in developing countries.  This tool will be  facilitated by the IFC (the World Bank's private sector source) and JP Morgan, hoping to be the remedy for price volatility around the world.

World Bank chief Robert Zoellick said, "with this new tool, we can help farmers, food producers, and consumers protect themselves against price swings, strengthen their credit position, and increase their access to finance."  He believes that with "sensible financial engineering," it will mean the betterment of the world's poor.  Since 2008, and the global food crisis, the World Bank has scaled up their agriculture spending 50% from $3 billion to $6 billion each year.

The commodities that will be monitored are cattle, cocoa, corn, milk, rice, soybeans, sugar, and wheat.

Research is key

"Annual growth in the wheat and rice yields in developing countries is down from 3% in the 1970s to about 1% today, but agricultural production will need to rise 70% to feed some 9 billion [people] by 2050, and it takes 5 to 10 years to develop new seeds and get them to farmers.  So, we are urging more support for the Consultative Group for International Agriculture Research (CGIAR),"  Zoellick concluded.