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

The exchange rate,
a key variable in agricultural competitiveness

May 21, 2012

In its “Specialized Grain Board,” on 9th May, FranceAgriMer lowered its estimates for exports of French wheat to countries outside the European Union for 2011-2012. This decrease from 300 000 tonnes compared to estimates from the previous month (9 million tonnes), is the result, according FranceAgriMer, of a lack of price competitiveness in French produce vis-à-vis American produce, which benefit from a dollar undervalued against the Euro.

Thus, FranceAgriMer found that the depreciation of the U.S. dollar compared to the euro between January and April 2011, was accompanied by a surge in dollar denominated merchandise exports. Conversely, since April, the euro has depreciated against the dollar, due, in part, to the Greek and Spanish crises, who have created a certain mistrust in the euro on international markets.

What will be the consequence on the French agricultural trade balance and more widely the European agricultural trade balance?

According to economic analysts, this could lead to a rebalancing of French competitiveness, except if the United States start a new wave of “quantitative easing” to increase the country's money supply in order to maintain their competitive advantage in export.

It is therefore clear that “the exchange rate weapon” is a decisive factor in business competitiveness, especially in global and strategic markets such as agricultural markets. Yet, exchange rates are not currently included as a factor for indirect aid to a country's agricultural competitiveness in various ongoing negotiations, including those of the WTO.

To remedy this, momagri has evaluated them within its SGPA (Global Support to Agricultural Production) indicator, along with interest rates which, according to the rates put into practice, can considerably vary the cost a State’s and farmers’ agricultural debt.

The latest assessments demonstrate a competitive advantage induced by an under-evaluation of the dollar vis-à-vis the Euro, for U.S. agriculture, between 12 and 17 billion dollars over the period 2008 - 2010.

A far from negligible advantage...

Page Header
Paris, 26 April 2019