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 issue of agricultural market regulation
still under debate

July 6, 2015

The issue of the “instability of commodity markets and its implications on development policies” was discussed during a workshop organized in Paris on June 26, 2015 by the Fondation pour les Etudes et Recherches sur le Développement International (FERDI) and the think tank OCP Policy Center. Leading economists joined FERDI President Patrick Guillaumont and included Alexandros Sarris of the University of Athens, Will Martin and Maximo Torero of the International Food Policy Research Institute (IFPRI), Christopher Gilbert of Johns Hopkins University, and Philippe Chalmin of Université Paris-Dauphine.

The presentations and debates pointed out that, while agricultural prices have declined in real terms since the 1960s, a breakdown in price dynamics occurred in the mid-2000s with the rising hyper-volatility of agricultural markets.

The workshop also underscored that the changes in fundamentals––climate hazards, reserve levels, energy prices and demand––account for only half of such “excessive” price volatility. The balance stems from the two following factors:
    - First, the short-term political choices that fueled rising prices, such as the 2010 Russian embargo on grain exports. These policies to safeguard consumer food supplies have introduced market restrictions that have unsettled markets;

    - Then, the financialization of agricultural markets that disconnects prices from market fundamentals.
Lastly, most discussions and debates concerned the merit of policies to regulate agricultural markets.

As it is often the case in academic circles, some economists continue to denounce the policies to stabilize prices. They are calling for indirect interventions, for example by merely attempting to initiate institutional conditions supporting the creation of risk management tools in futures markets––forward contracts, options and swaps.

But other contributors indicated that, even if such tools might be available to most farmers (which in practice does not seem likely), hedging instruments would not minimize exposure to price volatility. It is an open question whether, in practice, they would provide farmers with a suitable improvement in forecasting their selling prices. Still, for many farming households in Northern as well as Southern nations, their vulnerability to price variation is such that hedging instruments alone will be inadequate for ensure their survival.

In conclusion, we note the words of Christopher Gilbert of Johns Hopkins University that underscore, in some cases, the virtues of stabilizing public policies, which smooth out prices without seeking to impose administered prices.

We regret that none of the economists in attendance addressed the usefulness of stabilizing price policies in developed countries, which are nevertheless producing a significant share of the world food. Agricultural market instability strikes not only farmers and consumers in Southern countries, but also those in Northern nations.

We also note that all agricultural activities are required to feed the world.

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Paris, 18 December 2018