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.
Focus on issues

Financial Stability and Agricultural Markets Stability as Global Public Goods?


We are reaching the end of the year and, with it, annual reports season. The year 2008 will, to say the least, go down as a chaotic and critical one on strategic and economic standpoints. We faced two major global emergencies––the food crisis and the financial crisis––and we are still experiencing their aftermath today. The great financial “scare” has marshaled political powers to prevent an economic collapse, to such extent that consequences were felt worldwide. The food crisis is generating less attention from the media and international decision-makers, as shown by the commitments made by last June’s FAO Food Summit in Rome, which only account for 0.3% of the sums earmarked to deal with the financial crisis. Nevertheless, if nothing is undertaken, the risks incurred will be far more serious and devastating on a global scale.

That is the reason why we must highlight and examine one of the solutions to curb the financial crisis––elevate financial stability to the level of Global Public Good. It includes two essential concepts––noteworthy by their absence in the current crisis––in a capitalistic liberal economy: the addition of non-trade factors and the development of ethical behaviors. But, because of reciprocal consequences between the food crisis and the financial crisis, it also leads us to ask a fundamental question: Should we not first manage agriculture and food as Global Public Goods? In fact, long-lasting turmoil can more severely besiege the international community than a financial crisis, whose cause can mostly be found in virtual speculative deals that can be regulated.



Turning Financial Stability into a Global Public Good, A Pertinent Goal…

The current international financial crisis is unique. As cause, consequence, or maybe both at the same time, the hyper volatility of prices seen in international markets testifies to the crisis’ scope and the worldwide threats it inflicts. These reached beyond the mere financial orbit: the economy as a whole is affected and the national security of some countries is jeopardized by the breakdown of entire segments of their economies, such as in Iceland for instance.

Because of this crisis, the international community has become aware that the belief according to which financial markets are self-regulatory is both flawed and dangerous: the “laissez-faire” practice regarding trade and market handling––or market “invisible hand”––does not lead to the best possible economic and strategic situation. Numerous non-trade elements, although crucial to the national security of nations, are not taken into account by the market and, far from regulating it, international finance behaviors and developed products generate turmoil and volatility. Claude Bébéar, Chairman of the French insurance group AXA, indicates that “in the end, the stock market serves to adjust the derivatives markets…. which were originally set up to allow protection against natural fluctuations. Therefore, we must not think that the derivatives markets are blameless.” And to quote Olivier de Schutter, UN Special Rapporteur on the Right to Food, “the invisible hand is the problem, not the solution.”

As a result, it is essential to regulate financial markets to prevent, as much as possible, the rise of non-ethical behaviors only geared to immediate profits (with returns on investments averaging 15%) and to take into account non-trade and strategic goals, such as financial stability. The extensive damages triggered by the crisis, because of the disorders it produced, illustrated the perils of a quasi-virtual hyper volatility of prices and the weight of international cooperation to ward off the implosion process.

There lies the appeal of the proposal made by Jan Peter Balkenende, Prime Minister of The Netherlands, and Wouter Bos, its Minister of Finance: elevate international financial stability to the level of Global Public Good. This would undeniably allow to:

> Program international financial stability as an objective;
> Encourage ethical behaviors in markets;
> Make the international community aware of financial stability benefits for global equilibrium (peace, economic development...);
> Oversee markets without interfering in their operations. This “righteous cocktail” is the foundation of the work recently conducted by the G20 Summit in Washington, DC, on November 15, 2008.

… But Let’s Keep in Mind that it is Also a Pertinent Goal for Agriculture and Food

Elevate financial stability to the level of Global Public Good is an attractive approach, but will it be enough to rein in the current international crisis by itself? Indeed, we must not forget that beyond the financial crisis or the food crisis, we must cope with massive uncertainty concerning the development and implementation of a new transnational regulation.

We must therefore put together a comprehensive response that will be specific to each industry, as advocated by many officials, such as Former President Bill Clinton, IMF Director-General Dominique Strauss-Kahn or René Ricol, who drafted the report on the financial crisis for French President Nicolas Sarkozy.

The two crises are intertwined and we will not reach a solution to one issue without dealing with the other. As Bill Clinton explains, “the financial crisis must not be used as an excuse to avoid dealing with the issue of escalating hunger, and agricultural self-sufficiency is the only long-term solution if we want to curb world hunger and prevent future financial woes.”

It is thus imperative to elevate the stability of agricultural markets, together with the financial stability, to the level of Global Public Good1. Besides the fact that price instability is an inherent component of agricultural markets, agriculture’s specific nature and strategic dimension naturally lead to such unsteadiness, as shown by the four assumptions listed below.

First, agricultural commodities prices, which represent income sources for over 45% of the world population, are historically and structurally volatile and suffer from the unpredictability of other financial products. As an example, we have seen that the “sub-prime” lending effect deeply perturbed some commodities markets, such as cocoa or coffee. This hyper volatility upsets the existence of farming activities and, more globally, the food security of nations worldwide.

Secondly, agriculture is naturally tied to other Global Public Goods, such as the environment or natural resources (externalities). Agriculture even results from their use.

Thirdly, agriculture and food play a major role on the societal level and rest at the core of most objectives fixed by the international community in these fields: fighting poverty, food security and the right to foodstuff.

Lastly, a nation’s ability to feed its population is a decisive factor for its power, as stated by President Charles de Gaulle: “A nation that cannot feed itself is not a great nation”, or more recently by President George W. Bush: “When we speak about agriculture, we are really speaking about a national security issue.” Consequently, the stability of agricultural commodities prices assumes a major strategic and geopolitical character.




As we ponder exit strategies to the international crisis, elevating the stability of agricultural markets and the financial stability to the level of Global Public Goods is fundamental. It would allow the re-introduction of wisdom and ethics in markets that have so far been governed by behaviors––qualified as “bloody” by Lord Keynes––while not distressing the market forces that are indispensable to a global economy. The G20 Summit held on November 15 has brought about a basis for proposals in the form of instructions to the finance ministers. It will be several months before we see concrete measures. Let’s take advantage of this timetable to understand the urgent need to regulate agricultural markets and to start dealing with under-development issues that keep worsening each year.

In 1996, the international community expected to reduce poverty by half by 2015. In 2008, at the Rome Summit convened to address the food crisis, most heads of states audaciously committed … to reduce poverty by half by 2015! Nothing has therefore been achieved. momagri’s International Agricultural and Food Policy recommends solutions to the problem. It will be presented to the FAO next December 9. Its basic principle: To consider agriculture and food as Global Public Goods.

by momagri’s Jacques Carles, Executive Vice President, and Bastien Gibert, Economic Advisor



1 Jacques Carles, Executive Vice President of momagri, expressed similar thoughts in his article “Managing Agriculture as a Global Public Good” published on October 15, 2007 in the “Editorials” section of our website.
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Paris, 24 April 2014