| Enhancing the momagri Model
The momagri model, which we started drafting in 2006, provided its first results in March 2008. Unlike most international experts and decision-makers who thought that agricultural commodity prices would continue to slowly increase, we showed that unexpected price instability could occur in the short term and that unregulated agricultural markets would be accompanied by an increase in price volatility, due partly to growing speculation on term markets.
Current events proved us right: several months later, most agricultural commodity prices recorded a significant drop––over 50% for some of them. Thanks to the accuracy of its forecast and the definition of previously neglected factors, such as speculation, the momagri model generated quite an interest in France, as well as in the international arena. As we strive to bring ongoing improvements to the momagri model, we initiated a new simulation campaign, whose results will be brought to light at the next International Agricultural Show in Paris.
The first results presented in March 2008 were achieved with a lighter version of the momagri model that included the “Central” and “Risk” modules for the four zones incorporated in the model. The improvements we wanted to bring to the momagri model consisted of:
> Expanding the number of zones from the four previously considered to ten;
> Clarifying certain equations, notably concerning unemployment and speculation by including inventories;
> Including the “Consequences on Income” module.
Transition from four to ten zones
The initial version of the momagri model included four zones: G-8, G-20, Less developed nations and Rest of the world. We decided to expand the number of zones taken into account to ten, according to the following divisions: North America/Mexico, South America, EU’s 27, China, India, Africa, Russia/Ukraine/Kazakhstan, North Africa/Near and Middle East, Rest of Asia and Rest of the world.
The goal of this new classification is to allow measuring the real consequences of the liberalization of agricultural markets for each zone, while taking into account their own specificities in terms of risk exposure, so that we can determine winners and losers.
Introduction of certain equations in the “Central” and “Risk” modules
The transition to ten zones required modifying indexes in most of the equations that constitute the “Central” and “Risk” modules to incorporate new obtainable flows, in particular trade flows between various zones and those within each zone.
We also decided to activate the equation concerning unemployment and to include a specific spending function (known as the Stone Geary function) that permits identifying the irreducible spending level below which households cannot subsist on.
Lastly, some equations concerning the “Risk” module have been enhanced, in particular the one dealing with speculation, by including inventories as one of the explanatory variables. Indeed, we noticed that a low level of global inventories was one of the grounds for the high volatility recorded on markets.
Addition of the “Consequences on Income” module
The goal of the new “Consequences on Income” module is to observe the results of economic policies or external crises on the revenues of players in a given zone, be they producers, consumers or governments. To achieve this goal, we decided to split into two categories the private entities (producers and consumers) present in labor accounting templates in each zones: “agricultural private entities” on one hand and “non-agricultural private entities” on the other.
The momagri model is the first multi-national model to shun the representative element device, which dictates that all consumers in a certain zone are identical regarding subsidies, preferences and spending patterns. We will thus be able to assess who benefits first from agricultural trade liberalization: households, whose income is based on agriculture, or others?
This module is therefore crucial to policy decision-making, especially in the framework of the WTO negotiations since it has now become unthinkable, following the 2008 food crisis, to examine concerns related to agricultural trade liberalization independently from their consequences on poverty and inequalities within the world’s various regions.
Toutes ces améliorations ont été apportées et formalisées, et nous procédons actuellement aux simulations sur la base de ces changements. Nous serons donc en mesure de disposer des premiers résultats d’ici quelques semaines. Nous procédons par ailleurs à la rédaction de notes de recherche qui détaillent, pour le monde scientifique, le fonctionnement « technique » du modèle, ses résultats et implications. Destinées à être publiées dans des revues académiques internationales, ces notes de recherche seront par ailleurs présentées lors d’un colloque international que nous tiendrons à Paris à la fin du premier semestre 2009 pour présenter à la Communauté scientifique notre modèle et nos résultats.
Bastien Gibert, conseiller de momagri | |
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