On 11th April, the UN General Assembly held discussions on “excessive volatility” in agricultural prices1. Three key ideas emerged from these discussions.
First, the participants evoked the devastating effects on global food security and political stability caused by agricultural price volatility that Leonel Fernandez, President of the Dominican Republic, called a “human tragedy on an unprecedented scale.”
Next, the different panelists and delegations stated that the law of supply and demand of physical products could not alone explain the volatility of agricultural prices. David Hallam, Director at the Division of Marketing and Trade at the FAO, reminds us that new factors have appeared during the past 10 years, including speculation and the financialization of markets, which can destabilize the physical fundamentals of these markets.
Finally, the day was an opportunity to propose measures to increase transparency and regulation in agricultural markets by strengthening the information systems in agricultural markets, measures initiated during the agricultural G20 in 2011, or, as proposed by the representative of Germany, through the establishment of a global supervisory authority with the ability to limit speculation.
Two major lessons can be learned from the day's debates.
On the one hand, by considering the growing and uncontrolled financialization on agricultural markets as a major factor for increasing the volatility of agricultural prices, the UN General Assembly has demonstrated that this issue should no longer be obscured from ongoing discussions, as can still be the case in the current round of WTO negotiations, or in Europe as part of CAP reform.
On the other hand, by officially seizing this problem, the UN General Assembly has sent a political signal to the international community on the eminently strategic nature for global balance in the greater stability of agricultural prices, as much with regard to investment as from increased agricultural production and the fight against global food insecurity.