A new strategy was unveiled in Brussels yesterday aimed at trying to keep a lid on the spiralling cost of commodities.
The rising price of commodities on international markets, including agricultural products and natural resources, is eating away at the purchasing power of EU citizens and contributing to political instability in various parts of the world.
Malta has been feeling the pinch as much if not more than other EU countries, being almost totally dependent on imports for its commodity needs, such as petrol, gas and raw materials for food, including sugar and cereals. Fuel, gas, milk and bread have all recently gone up in price.
The European Commission expressed serious concern about the unprecedented rise in commodity prices across the world and said it wanted to tackle the issue urgently together with the big world powers under the G20 umbrella, currently presided over by France.
It proposed a number of measures aimed at gaining more control over the situation, being exacerbated by market speculation. One of the key proposals is to improve the integrity, transparency and stability of commodity derivatives markets through a review of the EU directives on market abuse and markets in financial instruments.
Brussels also wants to monitor access to critical raw materials with a view of strengthening the EU’s trading strategy. It proposes to pursue “raw material diplomacy” to address its priorities in this area in bilateral and multilateral frameworks and dialogues. It wants to develop bilateral cooperation with African countries in the area of raw materials, based on promoting governance, investment and geological knowledge and skills.
The Commission would also like to work closely with member states and other stakeholders to improve the regulatory framework for sustainable extraction within the EU.
Commission president Josè Manuel Barroso said that to secure the supply of raw materials for European industry in coming years, the EU needed to link the policy with other reforms of the regulatory framework for financial markets.
“Better understanding the synergy between the two will ensure supply of commodities and raw materials matches demand in a resource-efficient way, contributing to sustainable growth in the European Union,” he said.
According to the latest Food Price Index, issued every month by the United Nations Food and Agriculture Organisation, global prices reached a peak in December.
The index, which tracks the wholesale cost of several agricultural commodities, including wheat, corn, rice, oilseeds, dairy products, sugar and meats, rose by 32 per cent over July, the highest since 2008 when the world also faced a similar global price crisis.
The situation on the international markets is not expected to improve in the coming months as, according to many forecasters, droughts, the spell of cold weather and floods hitting harvests across the world are expected to push food prices further up.
In the fuel sector, a major expense to Maltese families, the turmoil in the Middle East won’t help. Since the Egyptian unrest started, the price of crude oil has surpassed $100 a barrel.