Commission bows to French pressure on food-price paper

The European Commission is acceding to French demands to rewrite a strategy paper on food prices – at the risk of irritating Germany.

The strategy paper was initially billed as being about industrial raw materials and was to be released yesterday (26 January). But the launch was delayed after Commission officials decided late on Monday to redraft a section on commodity prices in the face of French pressure.

The French government was unhappy that the draft paper did not establish a strong link between financial speculation and the volatility of food prices.

On Monday (24 January), setting out France’s agenda for its G20 presidency during 2011, President Nicolas Sarkozy called for action to curb speculation on commodity markets, which he said was driving up food prices. He said: “How can it be explained that it is normal to regulate financial markets, but on the other hand, we must abstain from any regulation of financial products derived from agricultural commodities? It makes no sense.” A failure to act, he said, risked more food riots in developing countries.

The delay has caused frustration in the Commission’s enterprise and industry department, which was responsible for drafting the sections of the paper on industrial raw materials – minerals, metals, wood and rubber.

Late addition

Agricultural commodities were a late addition to the paper, which was originally conceived of as an answer to intensifying global competition for industrial resources, especially valuable rare earth metals found almost exclusively in China.

Earlier this month, Rainer Brüderle, Germany’s economics minister, wrote to the Commission to protest that mixing the discussion on industrial raw materials with agricultural commodities would be “counterproductive”. In a letter seen by European Voice, he wrote: “It is with great concern that I see considerable delays to the implementation of the raw materials initiative being caused by this discussion process [on commodities] and the European raw material sourcing and processing industry running into the danger of losing international competitiveness.”

Karl-Heinz Florenz, a German centre-right MEP, also expressed opposition to expanding the scope of the paper to natural resources. “All of these things [agricultural raw materials] are important resources. But for industrial raw materials we are faced with quite different problems, which are much more urgent.”