The regulation of world agricultural prices is more essential than ever

Since the beginning of the year, there has been a sustained uptrend in agricultural markets. But this improvement is not affecting all sectors in the same way and the causes of the increase differ according to the markets.

In the cereal sector, the escalation of prices – which can reach 43% compared with the former campaign in certain regions of France – has been caused by a drop in production as a result of unfavourable climatic conditions. World harvests will be reduced by 30 million tonnes, resulting in a shortage in supply.

The farmers, however, are delighted with the price rises: for example pork prices have risen by more than 8%, compared to the same period in 2005. This has not been caused by a drop in production, which has remained stable, but by export development.

However, the milk and poultry sector are experiencing a completely different situation. In spite of an improvement on 2005, these two sectors are confronted with difficult problems:
> First, bitter price negotiations with distributor groups,
> Second, repercussions from avian flu that are still present.
> Reforms undertaken within the Common Agricultural Policy (2004 implementation of direct dairy aid and a reduction in the amount of export restitutions for poultry) confine farmers to a fairly tense financial situation.
> Finally, the high volatility of prices that affect producers’ incomes.

The maintaining of market prices benefits farmers globally though disproportionately and gives them a little relief after years that have often been difficult ones. But it illustrates above all the very high volatility of agricultural prices and their subjection to numerous factors, which are often caused by the market rather than unfavourable climatic conditions. It is essential that these factors be taken into consideration in an aim to promote world regulation of prices. This regulation would provide farmers with an acceptable income and give them a certain visibility so that they can meet the challenges ahead with serenity, such as the possible CAP reform in 2013.