With the year drawing to a close, many experts are looking back over the past twelve months and providing their estimates for the progression of prices on the agricultural markets in 2008. One cannot help but notice that no clear trend has emerged and that uncertainty continues to prevail.
Some believe prices will remain high, among them Mariann Fischer-Boel,1 European Commissioner for Agriculture, and Michel Barnier, French Minister of Agriculture and Fisheries. While the FAO2 shares this point of view, it has gone one step further, adding that prices on the international market, for cereals in particular, will be “high” and will “fluctuate.”
Others, on the contrary, believe prices will drop. Peter Brabeck-Letmathe, CEO of Nestlé, believes dairy and corn prices will fall due to increased production. The French National Institute for Statistics and Economic Studies (INSEE) likewise recently indicated that agricultural prices had begun to drop.
Some, finally, are ambivalent. According to Don Basse, President of AgResource, a market analysis firm, “the agricultural markets will remain volatile and robust, but unlike this year, when prices rose almost every day, a much more balanced market should take root starting in mid-2008.”
This uncertainty is troublesome not just for farmers, given the decisions they face regarding production and risk management, but also for policymakers, particularly given the current situation with the CAP health check and upcoming reforms.
This outlook requires tools that will allow for a better understanding of potential risks and the ability to prepare accordingly. Such tools currently do not exist. The NAR model, slated for release in 2008, will help fill this void.