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

US key rates near zero: What impact for farmers?

12 September 2011



Faced with the debt crisis that grips the United States, Chairman of the Federal Reserve System Ben Bernanke indicated last month his intention to keep key rates near zero for the next two years. While up to now, the Fed had never committed to a time span for such low rates, the scope of the crisis and the level of indebtedness of American households are now calling for strong measures.

Announced with the hope of reviving economic growth, the decision will have a direct impact on US farmers. By ensuring lower key rates, the Fed will lessen the debt burden incurred by American farmers, as well as encourage and protect investment until 2013.

But the effect of the measure goes even further since, as we previously mentioned it1, the key rates set by the Fed play a strategic role in the international competitiveness of American agriculture, especially regarding the European Union. In 2009 for instance, the Fed actual key rates were slightly lower than those set by the European Central Bank, thus minimizing the indebtedness of American farmers compared to that of European farmers. The competitive edge for American farmers was estimated at $106 million, while the gap between the Fed and the ECB rates was minimal.

It is therefore very likely that such indirect support will increase in 2011 and 2012 to return to the 2008 levels, when the competitive advantage of American agriculture compared to European Union agriculture was assessed at close to $3 billion.


1 Please see momagri’s December 13, 2010 article “The impact of exchange rates and monetary policy on competitiveness in agriculture” http://www.momagri.org/UK/momagri-agency/The-impact-of-exchange-rates-and-monetary-policy-on-competitiveness-in-agriculture-_810.html
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