A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Pierre Pagesse.
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.
World Economic Forum Davos
Editorial

New approach to the economy emerges in Davos



Momagri editorial team




The 41st World Economic Forum took place from 26 to 30 January in Davos, Switzerland. It was attended by 2500 or so heads of state and government, leading thinkers, economists, businessmen, and representatives of civil society, and provided them with an opportunity to debate key contemporary issues such as the European debt crisis, the currency wars, the place of emerging countries in the new world economy, the resumption of the Doha Development Round, as well as the pressing need to regulate agricultural markets.

Several points of consensus emerged on this last issue, with a few proposals being put forward.

All those attending Davos accepted that agricultural markets are undergoing a period of great turbulence at the moment and that agricultural commodity prices are excessively volatile. The President of the World Bank, Robert Zoellick, declared that instability in agricultural markets and food inflation are "a major preoccupation". Other experts also sounded the alarm that rising food costs could impact on the price of other goods, leading to general inflation worldwide. Nouriel Roubini, the economist who foresaw the 2008 financial crisis, also expressed concern about the spike in food prices and the negative consequences this could have on political and economic stability in developing countries.

Nevertheless, despite unanimous agreement as to what is happening, there was no such agreement when it came to proposals as to how to remedy it. There was considerable divergence in opinion and only two proposals were put forward:
    - Greater transparency in agricultural commodity markets, especially relating to food stocks;
    - Limiting the role speculators play in agricultural commodity markets, for example by closing markets when prices exceed a certain level.
Whilst these present the merit of addressing the two "facets" of agricultural markets – both the physical markets and commodity futures – they fall far short of what is required given the scale of the problems to be addressed.

In the opinion of the President of the World Bank, Robert Zoellick, these measures will basically be inoperative given the rapid changes occurring in financial markets: “whatever new financial regulations you put in place, they'll probably not be suited to the next crisis,” he stated.

There is some truth in Robert Zoellick’s declarations.

The world we live in has undergone profound changes. Up until now it is the traditional economic approach that has dominated, according to which market stability is the rule and crises the exception. The risk assessment tools and economic models employed in the world of finance are based largely on this "simplistic" logic of a world in which risks are identifiable, quantifiable, and poolable.

Recent events have shown up the limitations - and dangers even - of such an approach. What was deemed unthinkable yesterday not only might occur tomorrow but also be repeated the following days. Markets are in fact structurally unstable, even though they can sometimes go through brief periods of calm, as they operate in a context of general uncertainty.

What is required is a new way of apprehending the future, in which regulation is established as a prerequisite for the proper functioning of markets.
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Paris, 24 November 2014