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

Falling oil prices: What consequences for agriculture?

March 16, 2015

The World Bank recently released new figures on the fluctuations of commodity markets. For the organization, the breakneck collapse of the price of a barrel of oil––a 45 percent loss in value since June 2014––is leading and will lead to lower agricultural prices, especially for grain and oilseed crops. In fact, agricultural prices will fall by five percent in 2015, with a four percent decline for grain prices, before rising again in 2016.

The oil market thus remains a driving market and would explain the downturn powered by lower production, transportation and input costs, as well as the further development of biofuels, although the World Bank expects a lower consumption to the profit of oil.

The continued decline of oil prices might also impact the behavior of wheat major buyers, such as Egypt, Algeria and Iran, whose demand is starting to slow down.

Yet, pricing agricultural commodities––and especially wheat pricing––cannot solely be explained by the price of oil. Recent and past history has indeed proved it; agricultural markets are above all structurally hyper-volatile and uncertain, with upward and downward fluctuations. Above all, it must be noted that food security and agriculture are now more than ever exposed not only to exogenous shocks––climate hazards and macro-economic shocks––but also to endogenous risks––agricultural market financialization and market herd behaviors––that make up the specific nature of current agricultural markets.

The year 2014 proved it, and 2015 should not refute it: These markets are hence as dependent from geo-political and geo-economic events such as the Russian embargo, the crisis in Ukraine, the conflicts in the Middle East and weather events––such as the drought in Australia––as they are from exchange rate variations or continued speculative pursuits in the United States and in Europe.

While uncertainty is a given fact, it does seem irrefutable that we are seeing the formation of new global balances, where geo-political food agreements will become a key strategic weapon, as is the oil weapon with all the power and influence games and the related risks it generates.

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Paris, 16 June 2019