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

Do not let financial markets be the sole hand at the helm

November 4, 2013

The tensiometer of financial markets, especially agricultural markets, might soon panic: Are we running a risk of developing hypertension?

Increased uncontrolled financial transactions, the all-powerful OTC derivatives markets and the lack of solid and decisive regulation for financial distorting practices that are nevertheless reported and harmful… Taking a closer look at the financial and agricultural situation, the risk of destabilizing unrest is indeed real, and is worsened by the lack of pertinent solution.

An increasing number of financial institutions, especially US entities such as speculative funds and banks, are now transferring their activities to the London derivatives markets––the so-called “swaps”––to avoid the strictly enforced CFTC American legislation, which is considered exceedingly binding. These operators are therefore benefiting from a higher level of leniency from the British regulator––the Financial Conduct Authority––and from the flexibility of the European legislation on derivatives––the European Market Infrastructure Regulation or EMIR––to be implemented in 2014. In France, National Assembly members have just abandoned the imposition of a tax on High-Frequency Trade1. As a reminder, high frequency trades, which have been emulated for decades, might account for 60 percent of exchange trading in the United States and for one third in Europe.

Accordingly, all defenses are effective and routinely used to get around the rules and push further the detrimental logic of market financialization. The door is therefore wide open to the proliferation of high frequency trading and excessive speculation, or even to index investment on commodities markets… with all the devastating consequences they generated in the past.

A recent study commissioned by the French Agriculture Ministry’s Center for Studies and Strategic Foresight (CEP)2 released its findings on the consequences of transactions that are disconnected from fundamentals, especially regarding price fluctuations. Thus, “the financialization of commodity markets has spawned new investment behaviors whose externalities can be assimilated to ‘pollution’ against the key futures market players––the physical operators.”

As we face such “pollution”, the authors of the report are recommending, among other suggestions, more transparency and the implementation of harmonized regulation at the international level. Because no stable agricultural policy can exist without financial regulation, and with this in mind, momagri has designed its ten proposals to regulate speculation on agricultural commodity markets3.

With hope and determination, momagri is pleased to see that an increasing number of economists, analysts and political officials are acknowledging that the free interplay of market forces is not the ultimate antidote to crises and price hyper-volatility.

1 Transactions entailing extremely rapid buying and selling options through computer algorithms.
2 Study commissioned by the Center of Studies and Strategic Foresight of the French Ministry of Agriculture. Benoît Guilleminot, Riskelia, Jean-Jacques Ohana, Riskelia, Steve Ohana, ESCP Europe.
3 http://www.momagri.org/UK/points-of-view/momagri-s-ten-proposals-to-regulate-speculation-on-agricultural-commodity-markets_948.html
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Paris, 16 June 2019