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.
Personal accounts

The financial crisis isn’t over yet



Interview of Dominique Strauss-Kahn,
General Manager of the IMF



What should be done to avoid a repetition of the financial and food crisis? This is the question which all experts and decision-makers on the planet are trying to answer, given the high risk of a transmission of the financial crisis to the real economy, at a time when international food security is threatened by the hyper-volatility of agricultural prices. While many proposals are made to dam up the financial crisis, few are put forward in the agricultural area since the last FAO summit in Rome last July. Now, it looks as though beyond these two crisis, we are actually going through a regulatory crisis, or rather, an absence of regulation on strategic and imperfect markets. This is why we recommend reading the interview of Dominique Strauss-Kahn, Head of the International Monetary Fund, published on the European Parliament’s website which we here-after copy in its entirety1, For, apart from stressing the systemic nature of the current crisis, he insists on the need to dam up the food crisis through the introduction of adequate regulation policies.

The head of the International Monetary Fund Dominique Strauss-Kahn told MEPs on that the impact of the financial crisis would continue to be felt for some time. He said he thought the crisis itself had passed its nadir, although to avert new dangers renewed global financial regulation was needed. In a Q&A on 15 May with the Economic and Monetary Affairs Committee he also voiced fears about the impact of high food prices and its impact on growing children. Here, in his own words, are his views.



The Momagri editorial team

Strauss-Kahn on the spread of the financial crises

It is a new type of crisis, which means we don't know what type of crisis we will have in the coming years. Housing prices in the USA are still going down. There is no sign of stabilisation. If the causes of the crisis are still there, then so are the consequences: bad debts, problems in the financial system and transmission from the financial systems to the real economy.

Neither Europe nor the emerging markets are de-coupled from the US economy and cannot therefore avoid the impact of the US slowdown. Though in the case of China and India, growth will still be huge, if slower than before.

And his forecast for the near future

Is the worst behind us - the worst of what? If we mean the worst of the financial crisis itself, than it may be the case. It was once famously said of the consequences of the French Revolution that it is too soon to tell. The same is true of this financial crisis. Nevertheless there is good reason to believe that the largest part of disclosure in financial institutions has taken place, especially in the USA but also in Europe. So the worst news is behind us.

The main problem is the linkage between this financial crisis and the real economy. And this is not behind us. These linkages are protracted - the influences on consumer and investment behaviour, the possible credit squeeze in different parts of the world. Optimists say until the end of this year, pessimists say until mid-2009. Nobody knows exactly.

His views on supervision of the financial markets

What can we do to avoid this crisis coming returning? The Financial Stability Forum has produced a very comprehensive report. They make recommendations for enhancing the resilience of markets and financial institutions, for example: strengthened prudential oversight of capital, liquidity and risk management, enhancing transparency and strengthening the authorities’ responsiveness to risks. But how to implement these and how make sure they are implemented?

It is not enough to implement them correctly just in developed countries, because of globalisation. If you do not have the same supervision elsewhere, you achieve almost nothing.

To implement this kind of practise you need a universal institution, like for example the IMF, to deal with this. We need to disseminate what has been done by the Financial Stability Forum all over the world and then the IMF should try to control or at least to supervise the implementation of these kind of new regulations or supervision practice.

Food crisis - "people are starving"

High food prices are a huge humanitarian problem. People are starving and children are having lack of food when they are young so they have the consequences for their whole life.

We all believe the market will solve the question ultimately, but when will that be? We don't want to wait so long. We need to do something. A very good example is Malawi, where agricultural production has more than doubled in two years because a rational policy was implemented, e.g. the use of fertilizers. We really need policies that are directed to this kind of questions. We need to implement correct agricultural policy.

1 http://www.europarl.europa.eu/news/public/story_page/042-28766-133-05-20-907-20080513STO28757-2008-12-05-2008/default_en.htm
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Paris, 02 October 2014