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Viewing cable 08LONDON1176, UK FOOD SUMMIT HIGHLIGHTS PM BROWN'S CONCERN

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Reference ID Created Released Classification Origin
08LONDON1176 2008-04-25 16:40 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy London
VZCZCXRO8337
RR RUEHAG RUEHBZ RUEHDF RUEHDU RUEHGI RUEHIK RUEHJO RUEHLZ RUEHMA
RUEHMR RUEHPA RUEHRN RUEHROV RUEHTRO
DE RUEHLO #1176/01 1161640
ZNR UUUUU ZZH
R 251640Z APR 08
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC 8393
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHSS/OECD POSTS COLLECTIVE
RUEHMO/AMEMBASSY MOSCOW 2614
UNCLAS SECTION 01 OF 04 LONDON 001176 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID EAGR PGOV UK
SUBJECT: UK FOOD SUMMIT HIGHLIGHTS PM BROWN'S CONCERN 
 
 
1. (SBU) Summary: At an April 22, PM Brown-hosted meeting to 
address increases in food prices, participants disagreed 
about future trends and the impact of biofuels, agreed that 
action needed to be taken both for immediate social 
protection and longer-term agricultural investment, and that 
care should be taken not to talk up a "crisis." The UK press 
release following the meeting included a broad range of 
proposed actions that the UK plans to pursue both 
domestically and internationally, ranging from increased 
assistance to a WTO trade deal and improved World Bank and 
IMF effectiveness.  DFID also announced a new GBP 455 million 
($910 million) five-year assistance package.  In DFID's view, 
the current crisis is being caused by high and rising food 
prices, not a shortage of food.  End Summary. 
 
2. (SBU) On April 22, PM Brown hosted a one and a half hour 
meeting to discuss ways the international community could 
respond to the growing global food price crisis.  Overseas 
Development Institute (ODI) Director Simon Maxwell, who was 
called on to set the stage at the meeting, told us he was 
surprised that the meeting, which was originally intended to 
be a small private event, was publicized and expanded to 
include more international players.  Participants included UK 
government ministers, international organizations such 
Josette Sheeran from the World Food Program, business, 
academics and others. For the full list, see paragraph 16. 
 
3. (SBU) PM Brown opened the meeting, introducing the list of 
action areas he had asked the Japanese Prime Minister to put 
on the G8 agenda, including short tern measures to deal with 
immediate hardship and long term structural measures as 
outlined in paragraph 13.  (see also 
www.number10.gov.uk/output/Page15321.asp).  UK Development 
Secretary Douglas Alexander concluded the meeting by 
 
SIPDIS 
emphasizing the need for the international architecture to 
keep up. He noted that this had been a key theme at the World 
Bank Development Committee in Washington earlier in April. He 
also expressed surprise there had not been more discussion 
about concluding a WTO trade deal as a means to address food 
price concerns. 
 
Food Prices and Biofuels 
------------------------ 
 
4. (SBU) Participants disagreed about likely food price 
trends and the impact of biofuels.  UK Environment Secretary 
Hilary Benn noted that the futures market for wheat showed 
the price falling more than 25 percent from current levels by 
next year.  Cargill's Ruth Rawling predicted that wheat 
prices would come down quite quickly, noting that there is a 
harvest somewhere on the planet every sixty days, except for 
rice.  ODI estimated that prices would fall back from their 
current peak to roughly what they had been in the early 
1990s. (See ODI's discussion paper on the topic at 
http://www.odi.org.uk/publications/briefing/ 
bp37-april08-rising-food-prices.pdf) 
 
5. (SBU) On the other hand, Stefan Tangermann from the OECD 
Trade & Agriculture Directorate said their modeling showed 
maize prices for the next ten years would be 60 percent 
higher than during the past decade and that half of this 
increase was due to biofuels.  Joachim Von Braun, Director 
General, Inter Food Policy Institute Research (IFPRI) 
suggested a moratorium on maize for biofuels. Their modeling 
showed it would reduce maize prices by 20 percent immediately 
and wheat prices by 10 percent, with further reductions 
because it would discourage speculation. 
 
6. (SBU) Others defended biofuels. Benn wanted to see hard 
facts and analysis on biofuels. Mike Bushell, from 
agri-business company Syngenta, argued against demonizing 
biofuels.  Rawling argued against rigid mandates and in favor 
of buy-out clauses for biofuels.  She also noted that 
flexibility is essential since biofuel targets are fixed in 
terms of fuel markets not food markets, and 2.5 percent of 
the fuel market can represent as much as 20 percent of a food 
market. 
 
Causes and Remedies 
------------------- 
 
7. (SBU) Maxwell told us the headline messages about social 
protection in the short run and agricultural investment in 
the long run were clear to the participants, but everything 
else about causes and remedies was contested.  Paul Collier, 
Oxford University, argued that the main cause was growth in 
China, which no one wants to reduce. He also pointed to 
"follies" that he wanted to undo, specifically U.S. biofuels 
subsidies, and the EU refusal to accept genetically modified 
 
LONDON 00001176  002 OF 004 
 
 
crops.  Collier wanted to see large-scale farming in Africa 
along the lines of the Brazilian model. (For details, see 
Collier's April 15 article in the Times: Food Shortages: 
Think Big. www.timesonline.co.uk) On April 24, Malcolm Bruce, 
MP and chairman of Parliament's International Development 
Committee (IDC), speaking at an IDC evidence session 
dismissed Collier's suggestion that African countries adopt 
the Brazilian model as a "professorial point of view, not a 
politician's." 
 
8. (SBU) At the meeting, Maxwell stressed that the crisis had 
macro-economic as well as humanitarian dimensions. Low Income 
Food Deficit countries face import bills some $20bn higher 
this year, and food price increases are resulting in 
double-digit inflation in many countries. Donald Kaberuka, 
President, African Development Bank, also focused on 
macroeconomic impacts, as governments could respond to higher 
prices by increasing subsidies and wages, which would lead to 
higher budget deficits. 
 
9. (SBU) Josette Sheeran, World Food Program (WFP) director, 
made a case for the importance of the humanitarian case load. 
 She said the additional cost of maintaining WFP,s 
operations this year has now risen to $700 million, compared 
to $500 million in February. (WFP has had to pay up to $1000 
per ton for rice).  She raised concerns about low planting in 
poor countries, constrained in part by high input costs (e.g. 
planting in Kenya is one third down).  She also said WFP is 
transitioning from being an agency that deals only with food 
aid logistics to one that addresses the broader causes and 
remedies to address hunger itself, a project which is slowly 
gathering donor support.  Jacques Diouf, UN Food and 
Agriculture Organization, talked about the Food Summit he is 
convening from 3-5 June in Rome. He said the priority was the 
current growing season, and endorsed Sheeran,s points about 
the negative impact of high fertilizer and seed prices. 
 
10. (SBU) Several participants focused on the need for 
immediate social protection for those in need.  Phil Bloomer 
from Oxfam argued against food subsidies for and in favor of 
targeted social protection for those in need.  David Mepham 
from Save the Children talked about the need to scale up 
existing social protection programs (e.g Ethiopia), but noted 
that there are countries where the issue is building programs 
rather than scaling them up.  Bruce was also concerned that 
small farmers would buy more inputs because food prices were 
high, and then be unable to cover these costs if prices fell. 
 He wanted to see some kind of insurance to prevent this 
outcome. 
 
11. (SBU) Kaberuka said the regional development banks were 
working on a harmonized approach to support agriculture. 
Speaking in a Parliamentary committee meeting on April 24, 
DFID Parliamentary Secretary of State Gillian Merron outlined 
DFID views on the African Development Bank's role to address 
the food crisis.  She praised Kaberuka's participation in the 
summit, noting that it showed a willingness to adapt the 
AfDB's role to fit the situation.  She stressed that the AfDB 
is not set up to lend directly to farmers, nor should it be, 
but there is the potential for AfDB to play a role in 
agricultural infrastructure projects.  She said DFID would 
work with AfDB toward this goal. 
 
Messaging 
--------- 
 
12. (SBU) Maxwell urged participants to get the messaging 
right, so as not to talk up a  crisis, and instead present 
this as a manageable problem with short and long term 
solutions, with implications for the international system. 
Tangerman endorsed the point about messaging and said there 
was a danger of talking up the bubble.  He pointed to recent 
unhelpful remarks from IMF Managing Director, Dominique 
Strauss-Kahn, about prices going even higher. 
 
UK Food Crisis Announcement 
--------------------------- 
 
13. (U) A UK statement -- apparently not coordinated with the 
other participants -- following the meeting said it had 
addressed the short and longer-term factors causing increased 
food prices at home and abroad and possible policy solutions. 
 It noted the following issues were discussed at the meeting: 
-- We will work in the G8 for an international strategy. An 
international strategy will need to include: more and better 
support for agricultural and rural development in the poorest 
countries; more and better research into methods for 
increasing yields and productivity; a review of the wider 
economic and environmental impacts of biofuel production; 
 
LONDON 00001176  003 OF 004 
 
 
commitment to increase social protection programs which take 
people out of long-term dependency on food aid; consideration 
on how to maximize the effectiveness of IMF and World Bank 
support; and reform of relevant international institutions. 
 
-- We will increase support to the poorest. In addition to 
the GBP 50 million per year we already spend on social 
protection and safety net programs in Africa, the UK has 
today pledged an extra GBP 30 million to support the World 
Food Program, and extra GBP 25 million to Ethiopia for their 
national safety net program. We will work to encourage other 
donors to make additional humanitarian assistance available 
and monitor the need to step up support. 
 
-- We will work together to address domestic price rises. The 
Government has called on consumer groups, food producers, 
manufacturers and retailers to consider how we can 
collectively meet the challenges posed by the global food 
crisis. 
 
-- We will increase research into improving yields. The UK 
has today announced new funds for agricultural research over 
the next five years. This will be critical if agricultural 
production is to keep pace with increased demands for food. 
 
-- We will work to achieve a successful WTO deal, including a 
substantial 'aid for trade' package to help build the trading 
capacity of the poorest countries. The WTO round offers a 
major opportunity to increase trade flows in agricultural 
(and other) goods, particularly for developing countries. We 
want a WTO deal which reduces significantly reduces 
agricultural tariffs and trade distorting subsidies. High 
transport costs also push up local food prices and restrict 
trade in Africa. 
 
-- We will work within the EU to further reform the EU's 
Common Agricultural Policy (CAP), through the CAP Health 
check and the EU budget review. It is estimated that the CAP 
costs UK consumers GBP 3.5 billion (2005) through higher 
prices. Reductions in EU agricultural tariffs and CAP reform 
would reduce the cost of food to EU consumers and increase 
the capacity of developing countries to produce and export 
agricultural commodities. 
 
-- We will review our approach to biofuels. We need to look 
closely at the impact on food prices and the environment of 
different production methods and to ensure we are more 
selective in our support. If our UK review shows that we need 
to change our approach, we will also push for change in EU 
biofuels targets. 
 
DFID Assistance 
--------------- 
 
14. (U) Also on April 22, DFID announced a GBP 455 million 
($910 million) five-year aid package to address rising global 
food prices. The package is designed to address both short 
term needs and long term solutions.  The UK aid package 
includes: $60 million in support of recent appeals by the 
World Food Programme for countries most at risk; $800 million 
(GBP 400 million) over five years devoted to agricultural 
research, that will double DFID's current spend and help poor 
countries grow more food for themselves; and $50 million (GBP 
25 million) this year to boost the incomes of the poorest 
people in Ethiopia. 
 
15. (U) In DFID's view, the current crisis is being caused by 
high and rising food prices, not a shortage of food.  The 
solution is to improve access to food for poor people. Prices 
are rising because of increasing demand for food due to 
population growth, and increasing oil prices and their impact 
on the cost of food production, processing and distribution. 
 
16. (U)  Participants at the April 22 event were:  Prime 
Minister Gordon Brown; Rt Hon Douglas Alexander MP, Secretary 
of State for International Development; Rt Hon Alistair 
Darling, Chancellor of the Exchequer, Rt Hon Hilary Benn MP, 
Secretary of State for Environment, Food and Rural Affairs; 
 
SIPDIS 
Rt Hon Malcolm Bruce MP, Chairman, International Development 
Committee; Prof John Beddington Chief Scientist; Phil 
Bloomer, Oxfam; Dr Mike Bushell, Syngenta; Paul Collier, 
Oxford University; Professor Ian Crute, Rothamsted Research 
Institute; Jaqcues Diouf, Food and Agricultural Organisation, 
UN; Andrew Dorward, School of Oriental and African Studies; 
Lawrence Haddad, Institute of Development Studies; Paul 
Hodson, European Commission Transport & Energy; Donald 
Kaberuka, African Development Bank; Reijo Kemppinen, Head of 
Mission, EC Rep of the UK; Peter Kendall, National Farmers 
Union; Justin King, Sainsbury's; Simon Maxwell, Overseas 
 
LONDON 00001176  004 OF 004 
 
 
Development Institute; Jill Johnstone, National Consumer 
Council; David Mepham, Save the Children; Kanayo Felix 
Nwanze, Vice President ) IFAD; Ruth Rawling, Cargill plc; 
Josette Sheeran, World Food Program; Stefan Tangermann, OECD 
Trade & Agriculture Directorate; Goran Trapp, Morgan Stanley; 
and Joachim von Braun, Director General IFPRI Inter Food 
Policy Institute Research. 
 
17. (SBU) Comment:  Brown's hastily arranged "summit" had no 
other government leaders represented.  It came at a time of 
unremittingly bad political news for the PM and offered him a 
chance to assert leadership on a widely supported 
international issue. 
Visit London's Classified Website: 
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