The issue of implementing “safety nets” for farming revenues currently looms large in international and national negotiations, as clearly shown by several examples.
First, the talks on the future Farm Bill currently held in the United States are disclosing the need not only to keep safety nets for farmers’ incomes, but also to increase their budgetary and economic effectiveness, in comparison to the system currently in force. “Even in good times, our farmers need a strong safety net,” said Secretary of Agriculture Tom Vilsack on April 13, 2012
Secondly, the discussions on the CAP reform now taking place in the European Union are also reflecting the will of many member states––France included––to set up an effective and lasting safety net for farmers, thus going far beyond the European Commission’s proposal that includes the possibility of instigating a cyclical safety net solely in case of crisis.
Lastly, in its “Global Monitoring Report 2012 on the Millennium Development Goals”, the World Bank emphasized the benefits of such a mechanism for developing countries, in our extremely uncertain economic environment.
This keen interest for the issues of “safety nets” by such various organization thus implies an awareness of the existence of a “non natural” agricultural price hyper-volatility, that involves potentially destructive consequences, and hence must be regulated. But this concern also shows that the probability of a sudden, as well as brutal, price reversal must no longer be considered as an exceptional event, quite the contrary.
This recent responsiveness of the many risks influencing agricultural markets breaks with the approach that prevailed until then, in which agricultural prices followed a slow and linear upswing.
Taking into account the more than uncertain outlook for agricultural prices, it is crucial that the future CAP includes such mechanisms, the only ones able to stabilize farmers’ incomes at lucrative levels while maximizing public budget allocations.