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

The “currency war”,
what does it mean for world agriculture?

February 25, 2013

A new meeting of the G20 nations was held in Moscow on February 15, 2013. At the close of discussions, the major economic powers committed to avoid an economic war by putting aside any aggressive monetary policy. “The world should not make the mistake that it has made in the past of using currencies as the tools of economic warfare,” said Britain’s Chancellor of the Exchequer George Osborne.

With a consistent trend of erratic exchange rate fluctuations, especially since 2007/2008, the “foreign exchange weapon” has been used as power leverage in global trade. Strangely enough, its use and impact on global agricultural trade has been downplayed in key major international discussions, especially at the WTO. While leading figures, such as Pascal Lamy, conceded the negative consequences of exchange rate fluctuations, the rhetoric is not followed by deeds, at a time when the situation might demand the implementation of pertinent tools to oversee these monetary practices.

The impact of exchange rates on agricultural competitiveness has increased in the past few years as a result of farmers’ and governments’ debt, agricultural trade liberalization and its increased financialization. As a consequence, exchanges rates are then considered as a key variable factor of agricultural competitiveness.

Yet, exchange rates are not integrated in the major international debates as factors of indirect support to agricultural competitiveness for a given country, thus distorting the reality of agricultural support.

It is specifically to remedy such situation that momagri has measured them in its SGPA (Global Support to Agricultural Production) indicator, just as interest rates that, based on market levels, can significantly alter the cost of agricultural debt for farmers and nations. Applying this to a bilateral comparison shows that, for the years 2008 to 2012, the under-valuation of the dollar against the euro leads to a yearly competitive gain of $12 to $17 billion for U.S. agriculture––the equivalent of the cost of 50 Airbus A380 in support of American farmers.

However, taking into account the impact of currency and exchange imbalances on agriculture can only be effective after new governance models have been implemented, and must be jointly addressed by the IMF, the FAO or the WTO, which will be led by a new director general next September.
Page Header
Paris, 18 December 2018