|Grains Trade and Food Security Cooperation|
The current Grains Trade Convention, 1995 (GTC) is the latest in a long series of multilateral cooperation instruments, in operation since 1949. The GTC applies to trade in wheat, coarse grains, (maize (corn), barley, sorghum and other grains) and rice. It seeks to further international cooperation in grains trade; to promote expansion, openness and fairness in the grains sector; to contribute to grain market stability and to enhance world food security. These objectives are sought by improving market transparency through information-sharing, analysis and consultation on grain market and policy developments. The Convention also establishes the IGC as an intergovernmental forum for cooperation in grains trade matters.
The IGC consists of all parties to the Grains Trade Convention. It holds two regular sessions each year, usually in June and December. Its functions are to oversee the implementation of the GTC; to discuss current and prospective world grain market developments; and to monitor changes in national grain policies and their market implications. With effect from 1 July 2009, the GTC’s definition of grains was expanded to include rice. At its 35th Session on 8 June 2012, the Council also decided to include oilseeds under the GTC with effect from 1 July 2013. It may develop and sponsor grains-related projects in member countries for financing by the Common Fund for Commodities.
The Council normally reaches its decisions by consensus, although voting procedures are provided. Each member is designated as an importer or an exporter on the basis of its average trade in grains. Its Chair and Vice-Chair are elected annually, the posts alternating between exporting and importing members. The operations of the Council are financed by annual contributions from its members, which are proportionate to their shares of world grains trade. The budget in fiscal 2012/13 was set at £1.71 million.
Executive Committee consists of a maximum of 14 members, 6 exporters and 8 importers. Most of its functions, with effect from 1 July 2012, were transferred to a new Administrative Committee established at the Council’s 35th Session on 8 June 2012.
Administrative Committee consists of a maximum of 16 members, with members holding 50 votes automatically entitled to election. The remaining seats are elected by the Council. It will meet twice a year between the regular Council Sessions to discuss administrative and financial matters and make recommendations to the Council.
Budget Committee consists of a maximum of 10 members and carries out a preliminary review of the Secretariat’s budget proposal for the following fiscal year.
Market Conditions Committee (MCC) keeps the global grain market situation and outlook under close review. It is open to all members of the Council and meets twice a year, between the regular Council Sessions. On the basis of independent information and analysis prepared by the Secretariat, in particular the monthly Grain Market Reports, members of the MCC discuss and consult on market and policy developments, consider the short and medium-term grains outlook, and review progress with the Secretariat’s work programme. The MCC also examines developments in ocean freight rates.
The IGC Grains Conference, held annually in conjunction with the June Council session, is a high-level public forum where senior private sector representatives and government policy-makers discuss topical issues affecting the global grains and oilseeds industry. Participants can obtain and exchange first-hand information and assessments, and establish contacts with major players in the world grain markets.
MEMBERSHIP (as of July 2012)
Algeria, Argentina, Australia, Canada, Côte d’Ivoire, Cuba, Egypt (Arab Rep.), European Union, India, Iran (Islamic Rep.), Japan, Kazakhstan, Kenya, Korea (Rep.), Morocco, Norway, Pakistan, Russian Federation, Saudi Arabia, South Africa, Switzerland, Tunisia, Turkey, Ukraine, United States, Vatican City.
The IGC Secretariat provides administrative services for both the International Grains Council and the Food Assistance Committee (previously Food Aid Committee)*. It provides an independent source of authoritative information and analyses of world grain and oilseed market developments, and monitors operations under the the Food Assistance Convention, (previously Food Aid Convention, 1999)*.
The Secretariat, with a staff of 17, is headed by an Executive Director, appointed by the Council.
THE FIRST WHEAT AGREEMENTS
Institutionalised multilateral grains cooperation goes back at least to 1934, when a comprehensive International Wheat Agreement was negotiated between a number of exporting and importing countries in response to persistent problems of oversupply and low prices, and spreading agricultural protectionism. Its ambitious “economic provisions” could not be made to operate effectively, but the Wheat Advisory Committee (which became the International Wheat Council in 1942) remained in being as a focus for discussions and negotiations and a clearing house for information.
After several attempts, a new International Wheat Agreement was brought into effect in 1949. Price stability and assurance of supplies to importing countries were its major objectives, reflecting the post-war background of shortages and high prices in world wheat markets. This Agreement took the form of a multilateral contract between wheat exporting and importing countries, involving mandatory price ranges and supply and purchase commitments. However, unlike the 1934 agreement, it placed no limits on members’ exports or production. The seat of the International Wheat Council (IWC) was established in London.
Similar Wheat Agreements were successively implemented in 1953, 1956, 1959 and 1962. When surpluses reappeared in the mid-1950s, major exporting countries insulated their mounting stocks from the market to keep prices within the limits specified under the Agreement. They also sought to expand sales on special terms to countries not yet able to finance large commercial imports. But in the mid-1960s, when repeated monsoon failures in the Indian sub-continent led to a sudden increase in trade and an unexpected drop in exporting countries’ stocks, the threat of shortage awakened international concerns about world food security.
1967 - THE FIRST FOOD AID CONVENTION
The International Grains Agreement, 1967, negotiated in the context of the GATT Kennedy Round, reflected the tightening grain markets and the wish of existing food aid donors to share their efforts with other countries. It consisted of two legally separate but linked instruments: a Wheat Trade Convention (WTC) with substantive economic provisions and the first Food Aid Convention (FAC).
Shortly after the entry into force of the Agreement, surpluses reappeared on wheat markets and export prices fell below the specified minima. The mechanisms provided in the WTC to deal with such a situation could not be made to work effectively. The major exporting countries then agreed between themselves on steps, including planting reductions, to bring supplies into better balance with demand. The economic provisions under the WTC were suspended in 1969, and the successor Wheat Trade Convention of 1971 included none.
The FAC, 1967 involved a pledge by its members to provide annual food aid totalling 4.5m. tons of grain to developing countries. Commitments were expressed in tonnages, guaranteeing minimum food aid levels even if scarcity forced up world grain prices. Donors were free to decide how to distribute their aid, but the FAC encouraged them to channel some multilaterally. From the outset, FAC food aid has been an important resource for the World Food Programme in support of its various projects. The FAC was renewed with little change in 1971.
Massive, unexpected purchases by the Soviet Union in the mid-1970s caused world grain stocks to fall to exceptionally low levels and prices to soar. Many developing countries became concerned about the security of their future supplies, and a UN World Food Conference was convened in 1974, in response to what became known as the “world food crisis”.
The Conference resolved that at least 10m. tons of grains should be provided annually as food aid, and urged governments to discuss establishing grain reserves, located at strategic points. Wheat stocks were the focus of an unsuccessful conference in 1978-79 which attempted to negotiate a new Wheat Trade Convention. Differences over the appropriate price levels to trigger stock actions, and other technical points, could not be overcome. The WTC, 1971 was extended unchanged to 1986.
THE 1980s AND EARLY 1990s
During the 1980s and 1990s, the international trading environment moved away from regulatory-type commodity agreements, with increasing privatisation, deregulation and decentralisation of grain production and trade activities. The IWC’s information, analysis and consultation functions were strengthened and more attention was given to maize (corn) and other coarse grains, which, in 1986, were formally incorporated under a new WTC. Inauguration of annual IGC Grains Conferences in 1992 provided enhanced opportunities for contacts between governments and world grain industry leaders.
Under the FAC, 1980, minimum obligations of donor members were raised to a total of 7.6m. tons, as part of a joint effort of the international community to meet the World Food Conference target. Rice was brought within the coverage of the Convention. The FAC was renewed in 1986.
In the changing trading environment ushered in by the WTO Agreement, a new International Grains Agreement came into force on 1 July 1995, with two linked Conventions concerning grains trade and food aid matters. Under the Grains Trade Convention, 1995 (GTC), the International Wheat Council (IWC) became the International Grains Council (IGC), giving recognition to the full coverage of coarse grains and their products in its activities. The IGC’s Market Conditions Committee was given a firmer institutional basis to monitor all matters affecting the world grain economy and analyse supply and demand developments and policies. In 2004, its meetings became full-day dialogue forums, including expert presentations on specific topics.
During the past decade, the IGC Secretariat has expanded its information services to include rice and oilseeds. With effect from 1 July 2009, the definition of “grains” was formally expanded to include rice and its products, representing another milestone in the Council’s long history.
The Food Aid Convention of 1995 added pulses to the list of products which could be supplied. This Convention was subsequently renegotiated and replaced by the Food Aid Convention of 1999*, which considerably broadened the list of eligible products.
The Food Aid Convention, 1999 expired on 30 June 2012 and a new Food Assistance Convention entered into force on 1 January 2013. The new Food Assistance Convention is a separate legal instrument, independent of the GTC. At the 35th IGC Council Session in June 2012 members approved a request that the IGC Secretariat continue to provide administrative services to the new Food Assistance Committee.
2013 - THE FOOD ASSISTANCE CONVENTION**
The negotiation of a new Food Assistance Convention began in early 2011. The text of the Food Assistance Convention was adopted on 25 April 2012 by the negotiating Parties, endorsed by the Food Aid Committee and opened for signature on June 11, 2012 by the United Nations. It entered into force on 1 January 2013.
The new Food Assistance Convention expands the traditional focus of previous Food Aid Conventions to include all forms of food assistance that will protect and improve access to food for those most in need. The new Convention includes a new commitment structure, a broader toolbox of eligible activities and food assistance products, as well as a commitment to improved transparency and accountability.
All IGC information and analytical services are provided without charge to member governments. Some are available on subscription to other users. IGC’s information services include:
Grain Market Report (monthly): comprehensive online information and analysis of global market and policy developments: trade, prices, production, consumption, stocks and ocean freight rates. It includes the latest detailed estimates and forecasts, and special notes on major topical issues. Coverage includes wheat, coarse grains, rice and oilseeds. Also available to subscribers (with hard copy option).
GMRPlus (weekly): additional electronic service for Grain Market Report subscribers, consisting of Grain Market Indicators (see below) and weekly GMR statistics updates.
Grain Market Indicators (weekly): the latest market information for wheat, coarse grains, rice and oilseeds (included in GMRPlus subscription).
Ocean Freight Rates (weekly): also available on subscription
IGC Rice Market Bulletin (weekly): available to IGC members only.
IGC Oilseeds Market Bulletin (weekly): available to IGC members only.
IGC Monitor (daily): a one-page summary of world grain and oilseed market developments (available to IGC members only).
IGC Daily Rice Brief (daily): a summary of world rice market developments, together with a news update and latest statistics (available to IGC members only).
IGC Daily Oilseeds Brief (daily): a summary of developments in markets for oilseeds and their products, together with a news update and latest statistics (available to IGC members only).
World Grain Statistics (annual): a compendium of time series for wheat and coarse grains, rice and oilseeds (online, also available by subscription).
Grain Shipments (annual): details of commercial and non-commercial trade (online, also available by subscription).
Food Aid Operations (annual): based on reports submitted by members of the Food Aid Committee.
Fiscal Year Reports: IGC and FAC activities (1 July to 30 June).
An extensive online member information system: including market information, statistical database documents and national policy updates (available to members only.
Ref: IGC brochure January 2013