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.
Focus on issues

Disappearing price increases

Thierry Pouch,

Head of Economic Studies at the Permanent Assemblies of Chambers of Agriculture (APCA)

The global economy is on the brink of collapse. In any event, these are the signals being received from the financial markets since the beginning of 2016. Uncertainty with regards the growth of emerging countries, the slump in Chinese demand, falling commodity prices and the end of the upward supercycle, falling food prices - the lowest since 2009, major global security issues... the conjunction of all these factors creates an uncomfortable environment marked by increasingly more brutal and disproportionate financial transactions. So when will we see the next collapse?

We recommend reading the latest editorial by Thierry Pouch for the “lettre économique des Chambres d’acriculture”, which we have reproduced below
1. He examines this new configuration for commodity markets, in particular agricultural markets, a far cry from the favourable forecasts put forward since the last financial crisis. Producers today have to suffer from a fall in global demand and over-production, particularly in the dairy and cereal sectors and for the time being there is no sign of an upturn as markets are unstable and unpredictable.

momagri Editorial Board

Clearly, something is wrong with the global economy. Not so long ago, taking advantage of the subprime crisis, commodity prices started skyrocketing, this worried users of these commodities but made the producers happy, many of whom are located in developing regions. Three price spikes were recorded between 2007 and 2013. In addition to the movement of financial assets between the most promising markets there was the impact of China's growth.

By accelerating its industrialization, China was siphoning large or even colossal parts of available commodities. Petrol, industrial products, agricultural goods, most commodities underwent an upward trend which was deemed sustainable, at least in the medium term. However, the world economy has not fully recovered from the severe crisis it experienced between 2007 and 2010. IMF and World Bank forecasts were recently revised downwards, and China’s slowdown – an understatement - seems particularly worrisome for investors. Moving from a double digit growth rate - 12 to 14% which lasted several years - to less than 7% in 2015 is no small matter. It has an impact on import dynamics.

China does however continue to import, just much less. And it just so happens that on the supply side of agricultural markets, abundance reigns - grain, milk –, driving prices down. China is not the only one undergoing an economic slump. Brazil, Russia, South Africa, three emblematic countries to what until recently were still referred to as emerging and which during the crisis, along with China, made up the economies that pulled the world economy’s growth upwards.

Chinese growth represented more than a third of global GDP growth. Faced with declining commodity prices these economies accumulate less income from exports. For Russia, the fall in oil prices is bad news, to the extent where the petro-currency it derives from barrel sales and gas sales account for 40% of the national budget and nearly 50% of exports.

Other producing and exporting nations of raw materials, like Algeria, are also in difficulty, becoming as a result, the subject of particular attention with regards the socio-political risks in such a situation. Less revenue, less growth, capital flight, depreciation of exchange rates ... all factors that weaken emerging and developing economies, with effects on industrialized countries who see their markets shrink.

A vicious circle seems to be taking hold raising fears of another crisis, recession or even deflation. By unravelling as they are, commodity prices certainly reflect the end of the upward trend super-cycle that many believed was here for a while. The current drop in prices is a powerful reminder. The decline in the growth of the world economy is of particular concern because since the 2007 financial crisis, debt has continued to grow under the influence of liquidity injections made by central banks.

In the United States, where the crisis started, the total indebtedness of economic agents is now 318% of GDP, against 288% just before the crisis. Governments are up against the wall. Without foresight, without more coordination of economic policies, the world economy may fall back into a rut.

1 The entire editorial is available from

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Paris, 14 December 2018