Price volatility on agricultural commodities is at the heart of matters at the IMF. During a conference held on 21st September in Washington, the international institution responsible for monetary and financial concerns, invited major economists on development such as Nobel laureates Joseph Stiglitz and George Akerlof and politicians from around the world to discuss the subject.
The different participants emphasized the devastating double effect generated by high prices on agricultural commodities on the one hand, and the increased volatility of these prices on the other. However, there is another devastating effect that has been forgotten: low prices that turn farmers away from production and exclude them from the economy.
Hyper-volatility on agricultural commodity prices has been particularly excessive over the past decade, with disastrous consequences for the economy and the poor populations in less developed countries.
IMF director, Christine Lagarde, has proposed a series of measures aimed at helping these countries in building-up their resilience to external shocks: limiting deficits and consolidating stocks during good periods, expanding safety nets for the poorest, diversifying production and trading partners.
The fact that the IMF has taken up this issue is symptomatic of the strategic nature of agricultural markets and their increasingly closer links to economic and financial spheres. Due to the increase in international agricultural trade, the growing role of exchange rates in determining trading terms and the increasing financialisation of commodity markets, agricultural and financial markets are now more interconnected than in the past. The IMF’s interest in agricultural issues is now more legitimate and the Fund now has a role to play in global agricultural governance, as the WTO on trade issues, the World Bank for development, or UN agencies - FAO, WFP, UNDP - for food security issues.
The convergence of these participants, all different, but with complementary skills, should encourage the creation of a platform for cooperation and decision-making aimed at the global governance of agriculture and establishing the conditions to permanently and effectively eliminating food insecurity.