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

Volatility: A factor that is an integral part of agricultural markets

June 2, 2014

In its latest Food Outlook report, the FAO is forecasting volatile agricultural markets during the 2014/2015 harvest, due to the combined impact of current and upcoming climate conditions––severe drought in California and the pending arrival of an El Nino threat––as well as political tensions in the Black Sea region.

The UN agency indicates a global grain production of 2,458 million tons, a decline of about 2.4 percent compared to the record year of 2013, but it estimates the level of global grain reserves as relatively adequate. Yet, the report also states that international trade could reach record levels in 2014, due to the abundant supply in exporting countries and increased demand from Asian importers.

As far as meat is concerned, the 2014 production should increase by 1.1 percent compared to the 2013 figure, and milk trade should grow by 1.8 percent to reach 69 million tons. These upsurges are showing a growing demand for meat in developing countries (LDC), and for milk in Asia.

The volatility revealed by the FAO has been an intrinsic attribute of agricultural markets since their creation. Yet, the trend has been precariously heightened due to the unregulated liberalization of agricultural trade, and to these markets’ exposure to exogenous risks––unconnected to market players and resulting to climate hazards or epizootic diseases––and endogenous risks––caused by the behaviors of market players, including farmers and speculators.

The Ukrainian powder keg and climate events, combined with the erratic and unpredictable behaviors of markets and their operators, are leading to an even more inflammatory situation.

If international organizations, such as the FAO, have included agricultural market volatility and its adverse effect on food security, it is therefore time to translate words into action, and further explore the matter: Why are agricultural prices and incomes so unstable and volatile? Why existing models do not reflect such volatility and such instability? Which governmental strategies must be adopted to confront the price hyper-volatility and global trade instability?

The momagri model thus aims to answer these yet unresolved issues by modeling the various nature or market risks to which agricultural markets are exposed in a context of growing uncertainty.

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Paris, 24 June 2019