G20 farm ministers were closing in on a deal on Thursday to tackle food price volatility in what was expected to be a watered-down declaration that could still back France's call for better regulation of commodity markets.
The final wording of the agreement was being hammered out by ministers in the last session of a first-ever agriculture meeting between the Group of 20 major economies.
A source attending the talks said the closing declaration would refer to regulation of food commodity markets, an issue pushed hard by French President Nicolas Sarkozy, but other sources stressed the likelihood of softly worded commitments.
There is a deal on regulation, including a reference on position limits, said the first source, who is close to the France's G20 presidency.
France, which heads the Group of 20 leading economies this year, is keen to crown agreement on areas like data transparency and policy coordination with firm proposals for regulating commodity derivatives, but partners like Britain had so far remained opposed to stringent controls on financial markets.
UK Agriculture Minister Caroline Spelman told Reuters on Wednesday that Britain backed efforts to improve regulation but said it was up to G20 finance ministers, not farm ministers, to come up with concrete measures -- casting doubt that this week's meeting would achieve much on this divisive issue.
Paris has taken a hard stance on negotiations in recent days, saying it would not sign a half-hearted agreement as it pushed for an ambitious deal that would boost Sarkozy's profile 10 months before a new presidential election.
The scope of commitments on regulation and other divisive issues like biofuels and emergency food stocks would be limited, however, other sources said.
Brazil, a major producer of sugar-based ethanol, has been staunchly opposed to suggestions biofuels contribute to rising food prices, while the United States has been skeptical on the idea of developing food stocks for humanitarian purposes.
There will be some sentences about biofuels but these will be about the need for more studies, research, not really trying to introduce a drastic new approach, said a source, who was involved in last night's discussions.
Late night talks had brought clearer progress on excluding humanitarian aid from export restrictions, a third source close to the talks said on Thursday.
I would say the biggest breakthrough was on export restrictions and information, the source said.
Last night countries agreed very late around midnight that they would no longer use export restrictions on food destined for humanitarian aid, the same source added, saying G20 members committed to getting the deal approved under World Trade Organization rules.
Consensus is also seen on proposals tabled to improve transparency in agricultural markets through a global database, although the final text may acknowledge concerns of China and India in providing data for their vast territories.
Sarkozy urged G20 farm ministers on Wednesday to adopt France's proposed action plan, including a tough line on speculators whom he blames for driving up food prices and fuelling political upheaval in some countries.
A market that is not regulated is not a market but a lottery where fortune favors the most cynical instead of rewarding work, investment and value creation, he said.
European wheat prices tumbled 7 percent on Wednesday amid signs of intense competition on export markets, giving fresh evidence of market volatility which France sees as not justified by physical supply-and-demand factors.
World food prices hit a record high earlier this year, reviving memories of soaring prices in 2007-2008 that sparked riots in developing countries, and giving fresh urgency to debate about how to improve a global food system that leaves some 925 million people hungry. (Additional reporting by Leigh Thomas; Writing by Gus Trompiz and Marie Maitre)