At the launch of the 2013 CAP reform, what can you tell us about the situation of global agriculture?
Up until the middle of the 20th century, basically every human being, every country was concerned about self-sufficiency. Most of the population lived in rural areas. Self-production and the proximity of producers to consumers enabled people to experience and understand the ups and downs of production.
Migration to cities has broken the link between man and nature.
Developed countries have, in different ways, of course, ensured the growth of their agriculture sectors out of concern for food self-sufficiency. Like Europe, they have become exporters and competitors on the global market. This new situation has contributed to low global prices that are far below production costs and carryover stocks in these countries that are inversely proportional to their "effectiveness" on the global surplus market.
During this period, public opinion has been alerted over and over about cereal stocks and mountains of butter, and about subsidies for farmers in developed countries that are strangling subsistence agriculture. Of course, the situation needed to be corrected, but no political leader ever explained that the CAP had successfully guaranteed consumers access to a sufficient quantity of high-quality food products, 365 days a year. Let's not forget that from 1960 to 2000, the percentage of the household budget allocated for food was cut in half!
Why do you advocate the creation of a World Agriculture Organization?
There is no international organization mandated to ensure food self-sufficiency and, due to the absence of global governance, there is no global food strategy. Agriculture was included in the 1984 international negotiations. Successive rounds of the GATT and the WTO have focused on eliminating the distortionary aspects of global trade (export subsidies, direct support, tariff protection, etc.) as opposed to seeking to meet the primary need of humankind: nourishment.
Second, the Heads of State validated these approaches, which are built on Anglo-Saxon prospective analyses based on ill-adapted economic models (FAPRI, WTO, World Bank). I should say here that we at momagri have built an unprecedented economic model that takes into account the unique characteristics of agriculture, as well as its strategic dimension. The results obtained from it offer many lessons.
Finally, the third reason is the free-market premise – unfortunately supported by the WTO Director-General – stating that prices are regulated by the "invisible hand" of the market, which is a completely utopian idea for agriculture.
Why do you say that it is utopian to try to regulate the prices of agricultural raw materials by the "invisible hand" of the market?
Because agriculture is a very unique economic sector.
Harvest variations are structural because they are linked with natural uncertainties (the vagaries of weather, diseases, etc.). They also depend on the individual behavior of each producer, who can vary crop rotation; all of these individual behaviors taken together magnify surpluses or shortages, without any possible safeguards. The fragmentation of production itself also contributes to supply-demand imbalances and, even worse, increases volatility.
And let's not forget rapid urbanization, either, which is completely independent from agriculture. Urbanization affects supply by exacerbating variations in production by changing the use of the land that is often most fertile. Quite a failure for land management policies!
Global demand is relatively predictable because it evolves with population growth and changes in dietary habits. Generally speaking, the greater the purchasing power, the higher the demand for meat and the higher the volume of plant products necessary to feed both people and animals.
However, demand varies little in response to price changes, an inelasticity that is tied to the need to eat every day. One might very well wonder, while listening to our fine free-market thinkers, if some of them don't envision solving the supply-demand problem by rationing demand and, therefore, food!
Furthermore, the current economic context of financialization of the economy, where short-term concerns dominate, goes against the original objectives of agriculture, which can only be met by a medium-term approach. Agricultural production requires a volume of capital similar to that of heavy industry. The investments required in terms of land and material in particular can only be made with an outlook of continual returns in the medium-term. Farmers are therefore the only entrepreneurs to run a triple risk every year– on prices, quantity and quality. Quantity and quality are linked to natural elements (the weather, the sun, parasites and diseases, etc.)
In a caricaturized vision, we can imagine an extreme case in which a farmer would have nothing to sell in a year when prices rise and, on the contrary, would be rolling in surpluses without a market. This explains in large part why agriculture is not viable in countries that do not have an agricultural policy.
The theory of comparative advantage cannot be cited, either, because no country, not even the most competitive country in the world, can feed the entire planet alone.
Do you think, then, that the current global food crisis, which will be the focus of the Rome Summit on June 3 to 5, can be attributed to the strategies carried out by the international organizations?
Such poor results! What a waste to have thought that eliminating all the barriers to global trade in agricultural goods would help development!
And the leaders of the international organizations – the WTO, IMF and FAO – have been so dogmatic in their insistence on continuing with this error. The very same ones who, yesterday, condemned countries that subsidized their agriculture, accusing them of strangling subsistence agriculture, are now pointing their fingers at countries that are blocking their exports despite their belief in the free market, and at biofuels, which have been blamed for the skyrocketing prices and economic problems in importing countries!
As for the first argument, it is understandable that no Head of State would want to risk throwing his fellow citizens into famine or raising the cost of food in his country by exporting the country’s own production. And for the second, in South America in particular, biofuels are primarily produced from sucrose, and the price of sugar is the price that has been the most stable!
Production of corn-based ethanol has developed essentially in the United States, where corn prices have also remained very stable, and the volume of corn exported by the U.S. has even increased by 20 percent.
After 24 years of international negotiations and deregulation, apostles of the free market are now suggesting we start distributing the loaves and the fishes!
It is time for political leaders to react because:
› Guaranteeing food means ensuring production, particularly in countries where food needs are the most crucial
› Ensuring production implies "organizing" supply
› "Organizing" supply means implementing regulatory tools (stocking, limiting production in the case of a surplus, etc.)
In other words, it means having a bona fide agricultural and food policy in each major economic zone.