Facility for rapid response to soaring food prices

The European Union (EU) is responding to soaring food prices in developing countries by establishing a financial facility with a budget of EUR 1 billion for the period 2008-2010. In particular, Community funds should help to support agricultural production in the affected countries.

ACT

Regulation (EC) No 1337/2008 of the European Parliament and of the Council of 16 December 2008 establishing a facility for rapid response to soaring food prices in developing countries.

SUMMARY

This Regulation establishes a financial facility for rapid response to variations in food prices in developing countries. It is an emergency measure, which accompanies medium and long-term cooperation actions.

The assistance and cooperation should:

• improve availability and access to food products for vulnerable persons in the partner countries and regions;
• support food price stability, in compliance with the world-wide objectives for food security (in particular the United Nations’ standards);
• strengthen production capacity and good agricultural governance in the partner countries.

A differentiated approach depending on development contexts and the impact of volatile food prices shall be pursued so that target countries or regions and their populations are provided with targeted, tailor-made and well adapted support, based on their own needs.

Implementation

Taking into account the specific situation of each country, supporting measures that shall be eligible for implementation are:

• access to the products and services required for agricultural production, including the availability of fertilisers and seeds;
• production capacity and satisfying food needs, through a “safety net” prioritising vulnerable people such as children;
• the use of small-scale measures aimed at increasing production, such as vocational training, microcredit, investment, equipment and infrastructure.

These measures form part of an overall plan for the use of this facility.

Eligibility

The facility resources are targeted towards a list of specific countries. In addition, the Regulation specifies the entities which can benefit from finance, where their programmes contribute to achieving the objectives of this Regulation. They are:

• partner countries or regions of the European Union (EU);
• local authorities in the partner countries;
• joint bodies comprising European members and third country partners;
• international organisations, including regional organisations, the United Nations, financial institutions and development banks;
• EU institutions, bodies and agencies, for administering the facility;
• EU Member States;
• all entities, bodies, countries or regions complying with the rules on access to the EU’s external assistance.

Financing The facility has a budget of EUR 1 billion for the period 2008-2010. Financing may take the form of:

• projects and programmes;
• budget support, where the partners’ good management of public spending enables it and the relevant geographical financing instruments allow it;
• contributions to international or regional organisations and the international funds they manage;
• contributions to national funds set up by partners and those established by donors;
• co-financing to benefit eligible entities;
• holdings in loans, risk capital, enterprise capital, contributions to guarantee funds through financing granted by the European Investment Bank (EIB) or other financial intermediaries.

The Commission shall evaluate the implementation of the cooperation actions in consultation with all the stakeholders involved and will submit a final report to the European Parliament and the Council by 31 December 2012. It will take into account the requirements of the Paris Declaration on Aid Effectiveness and the Accra Agenda for Action on trade and development.

The Commission shall be assisted by a Committee set up under Regulation (EC) No 1905/2006 on the financing instrument for development cooperation.

Context

The large increases in food prices in 2007 and 2008 have hit people in the majority of developing countries hard, and led to worsening poverty, unrest and instability. This crisis has a direct consequence on achieving the Millennium Development Goals, particularly on the first objective of food security.

The facility for rapid response to soaring food prices is coordinated with the other instruments for development cooperation and with the Cotonou Agreement. It complements the Instrument for Humanitarian Aid and the Instrument for Stability formulated to respond to crisis situations.

Last updated: 01.12.2009