G20 members were on the verge of inking an agreement on Thursday to curb volatility in food prices that would likely tread carefully on divisive issues like regulation and biofuels.
The final wording of the agreement was still to be decided by ministers who were locked in a last morning session after late-night talks yielded progress at the first-ever farm meeting of the Group of 20 major economies.
France has taken a hard stance on negotiations in recent days, saying it would not sign a watered-down agreement as it pushed for an ambitious deal that would boost President Nicolas Sarkozy's profile 10 months before a new presidential election.
However, the proposed text would be weaker than initially proposed on issues like the role of biofuels and the use of emergency food reserves, several sources said.
It is agreed at the working level but ministers are ministers so they will still have a debate today, one source close to the talks told Reuters.
A source close the French G20 presidency said the wording of the G20 communique was still evolving and that ministers had several versions to review on the key sticking point of market regulation, which has notably pitched France against Britain.
The point of regulation is in the communique and the stance is tough, the French source said.
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.
PROGRESS ON AID SUPPLIES
Late-night discussions have 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.
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 fourth source, who was involved in last night's discussions.
Consensus is seen as stronger 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.
France is still keen to crown agreement on these areas with firm proposals for regulating agricultural commodity derivatives, but partners like Britain remain opposed to stringent controls on financial markets.
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.
Britain, home to Europe's biggest financial market hub, has played down the role of speculation in market upheavals, putting the focus on raising farm production and passing on the sticky issue of regulation to G20 finance ministers.
(Additional reporting by Sybille de La Hamaide and Leigh Thomas; Writing by Gus Trompiz; Editing by Eric Onstad)