A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Pierre Pagesse.
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

Is the lack of governance a key factor of agricultural price volatility?

May 14, 2012


“In the forest of widespread instability”. As such, the title of the 26th edition of the CyclOpe Report published on May 9, highlights the extreme instability of markets, especially agricultural markets. According to Philippe Chalmin, Professor at the Paris-Dauphine University and Director of the CyclOpe study circle, agricultural price volatility will remain extremely high in 2012, due to the combination of structural and cyclical causes.

Considered by most experts as temporary until recently, agricultural price volatility now seems to be viewed as structural.

While the experts’ analysis are still disagreeing on the many and complex roots of volatility, Philippe Chalmin raises three causes:

    - First, the specifics of agricultural markets, in particular a low elasticity of supply and demand;

    - Second, an environment of geopolitical tension with the emergence of new players, such as China and Russia, that can drastically change supply and demand conditions in international agricultural markets;

    - Lastly, the lack of a genuine international governance system able to monitor such instability.
While these three factors are fundamental, the third one needs to be emphasized, as it implies that the free interplay of market forces will not stabilize agricultural prices at satisfactory levels. This is a crucial aspect that breaks with the vision that dominated the implementation of national agricultural policies up to very recent times.

This indeed strengthens momagri’s vision: Confronted to the structural imperfections of agricultural markets and their markedly strategic nature regarding food security, the implementation of governmental regulatory policies, to be coordinated at the international level, represents the sine qua non condition to stabilize agricultural markets.

In the United States, this went hand in hand with a reinforcement of regulation and support mechanisms. This being the case, it is imperative that CAP reforms are based on similar directions, since we might otherwise risk the deterioration all European agricultural activities.
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Paris, 23 August 2014