A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Lower food prices (FAO), a false decline?

January 21, 2013


The FAO recently announced a seven percent drop in food prices for 2012, thus ending the soaring prices recorded during the past three years.

“The result marks a reversal from the situation last July, when sharply rising prices prompted fears of a new food crisis,” said Jomo Sundaram, Assistant Director-General in charge of FAO’s Economic and Social Development Department. “But international coordination, including through the Agricultural Market Information System (AMIS), as well as flagging demand in a stagnant international economy, helped ensure the price spike was short-lived and calmed markets so that 2012 prices ended up below the previous year’s levels.”

Based on a basket of food products, the FAO Food Price Index dropped for the third consecutive month, edging down by 1.1 percent in December 2012. The decline mostly concerned sugar (down 17.1 percent in a single year), dairy products (down 14.5 percent) and oils (down 10.7 percent), especially palm oil whose inventories are reaching record levels. For the year as a whole, grain prices fell by 2.4 percent due to a sharp price decline during the last quarter. A respite is also reported in financial markets. Following a 30 percent spike in 2012, prices of agricultural commodities are beginning to slow down.

Yet in spite of this price downturns, prices remain high as compared to previous years and are relatively stable. Thus, the Agritel Volatility Index rebounded by 2.5 percent to reach 20.8 volatility points following a five-month decline. Besides, we cannot, before the spring, really assess the outlook for the 2013 crops in the major exporters such as the European Union, the United States, Ukraine and Russia, while some observers are claiming that 2012/2013 might be worse than 2007/2008 in terms of prices.

What trend for the spring of 2013? Patrice Gollier, InVivo Chief Executive Officer, sums it up quite well when he says, “Forecasting this year’s price fluctuation is to play as Mr. Weatherman.” More precisely, explaining price fluctuation through the sole supply/demand model is now dangerous. While climatic and epizootic factors will remain aggravating risks in 2013––a continued drought in the United States as well as in Russia and Ukraine––they will not be enough to explain price hyper-volatility without including market psychology and speculative distorting practices. Indeed, no one should now ignore that a sharp and unexpected downturn can occur in agricultural financial markets.

It is now urgent to learn from past financial and food crises and not hastily analyze current agricultural realities. In fact, we must, in order to fight volatility and food insecurity, promote a global governance system based on the regulation of agricultural markets as a sine qua non condition for their development. Just as energy and water, agriculture is highly strategic and will undoubtedly be the root of conflicts and the subject of power issues.

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Paris, 18 December 2018