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.
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WTO: A code of silence on exchange rates?

October 8, 2012

The WTO 2012 Public Forum ended on September 26 following a three-day debate on multilateralism. The panels of discussions provided an opportunity to address key agricultural issues in response to a crisis in multilateral negotiations. Yet, one topic was not addressed in the WTO forum discussions––the exchange rate regime in global agricultural trade.

An extremely sensitive issue––as readily admitted by WTO Director-General Pascal Lamy––the debate regarding the exchange rate regime applied to agricultural market resurfaced in 2011. It was next raised on March 27, 2012 during the WTO Seminar on exchange rates and trade. In his opening remarks, Pascal Lamy highlighted the negative impact of exchange rate fluctuations, before arguing for the implementation of tools to control exchange rates in order to prevent any misguided attempt at protectionism.

But a debate does not equal a decree. Beyond superficial arguments on the need for new rulings concerning monetary policy, the exchange rate regime does not exist in its own right as legal doctrine within WTO negotiations. An observation that is recognized by Pascal Lamy himself.

Yet, the consequences of monetary policies and exchange rates on the competitiveness of agriculture have increased in the past few years, due to farmers’ and governments’ indebtedness, agricultural trade liberalization and increased market financialization. In this context, exchange rates are increasingly becoming a decisive lever of influence.

However, exchange rates are not included among indirect support factors for a nation’s agricultural competitiveness in the various current international negotiations. This leads to a distortion of actual agricultural support.

To correct the situation, momagri assessed exchange rates in its SGPA (Global Support to Agricultural Production) indicator, just like interest rates which, depending on their levels, may considerably vary the cost of agricultural debt of farmers and nations. Applied to a bilateral comparison, we see that, for the years between 2008 and 2012, the under-evaluation of the US dollar compared to the Euro results in a competitive advantage for the American agriculture in the amount of $12 to $17 billion each year.

Still, taking into account exchange rates can only be effective if new governance systems are implemented, and should be jointly considered by the IMF, the WTO or the FAO.
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Paris, 20 June 2019