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.
Pierre Pagesse

Uncle Sam’s golden handshakes

Pierre Pagesse, chairman, momagri

article published in revue Paysans1

American farmers now have a new farm bill for the next ten years. So, what are the key elements of this Bill which is entirely focused on production and economic balance for farms?

1 - Climate insurance that covers 70% of the average farm yield with the possibility of repurchasing 10 or 15% of the excess for a total of about 30 dollars per hectare.

2 - A system of guaranteed minimum prices for the three major crops, called “price loss coverage.” These floor prices are settled at:
    - 202 dollars per tonne of wheat,
    - 146 dollars per tonne of corn which reflects the US’s competitive advantage,
    - 309 dollars per tonne of soybeans.
    All this for 85% of the farm’s production volume.
These aids, qualified as countercyclical, will be paid if the producer’s price is between the intervention price “loan rates” and the guaranteed price. Optionally, if the price descends below the “loan rates”, it is the “marketing loan” that takes over, that is to say, another type of aid which offsets the additional potential difference.

In absolute terms and to stretch a point, if world market prices descend to 0, farmers will make their turnover from the aid they receive on the basis of the guaranteed prices mentioned above.

3 - “Gross margin” insurance that can be purchased based on the farm’s gross margin history, at a moving average, if this is more advantageous than the “price loss coverage” which in any event will always take precedence in the event of a market downturn. Again, the guarantee may not exceed 85% of the present gross margin.

4 - For milk, a gross margin guarantee based on the average price of a dairy cow feed ration that will serve as protection to breeders.

With their already huge competitive advantage (farm size, access to innovation of all types and adjusted taxation), US agriculture is well equipped to face the inherent instability of world markets for negotiating a free-trade agreement with Europe.

Officially, this system will be implemented with resources in slight decline, that is to say, as much as necessary and in full compatibility with WTO rules...

From this perspective, it is the interests of European farmers, our food industry and, ultimately, our citizens that are being challenged.

What will become of our food security which is already limited? I shall not even get into the the CAP’s unrealistic debate on decoupling (completely abandoned in the United States) or convergence or cross-compliance, green payments and their new restrictions and all their French variations.

Our PAC is on a suicidal course. Our farms will close one after the other and our food processing will fall into great decline and following in its wake its loss of value added and loss of employment; there will also be losses to the French balance of payments.

After de-industrialization, there will be “de-agriculturation”, territories will be void of substance, there will be rising unemployment and certain poverty.

At a time when the future of Europe is being debated, it is urgent to give our agriculture a geostrategic role rather than restrict it to merely environmental or social functions, which it will be unable to assume if its economic and nurturing role is no longer at the heart of regulation and policy making.

Our inherent strengths and our expertise could reinstate our European and international influence which is what we are sorely lacking today.
We just have to want them and to share our willingness.
We just have to initiate the best methods to achieving and implementing them.
America and Uncle Sam have shown us the way. Let us learn our lessons before it is too late.

1 Read the full article of Pierre Pagesse in the 345th issue (may-june 2014) of the magazine “la revue Paysans.
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Paris, 16 June 2019