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.

Point of view

Presentation of the issues debated at the conference

“World agriculture in search of a strategy – How to combine liberalism and development?”

WOAgri (World Organization for Agriculture) is a French initiative with an international vocation founded in December 2005 in response to the following observations: The current systems and tools for decision-making (economic models, methods and foundations for the WTO negotiations…) no longer correspond to the stakes that agriculture represents for the future of humanity in terms of satisfying the increasing needs for food and non-food products, the fight against poverty and the independence and sovereignty of States.

Because even if the World Bank and the WTO believe that these goals can be met by the liberalization of international agricultural exchanges which is the aim of the Doha agreements, and the application of Ricardo’s comparative advantage theory, no one today can defend a theory that is so obviously dubious:

> It can lead to the ruin of the poorest countries that will not be able to (and already cannot) keep up with the harshest world competition;

> At the same time it can favor countries that receive unwarranted earnings (vast territories, nonexistent social protection, weakening of the environment) and which alone will never be able to respond to increasing demands for food.

In order to respond to these needs and threats, several public figures from the world of agriculture and other sectors joined Pierre Pagesse in creating WOAgri because the principles he defends and the missions he has undertaken correspond to universal values:

> To promote a regulatory system for agricultural markets on a world scale while respecting economic, social and environmental balance.

> To promote the development of exchanges providing that they contribute to improve conditions for all farmers, notably those in developing countries and to optimize the security of supply for all countries.

> To reinforce the potential for research, the capacity for investment, productivity and employment in the agriculture and the food sector with the aim of constantly improving the satisfaction and the security of consumers.

> To fight against speculation and abusive subsidies that distort the functioning of the market to the detriment of sustainable development by creating and maintaining a model for alerts and the evaluation of risks.

> To develop all activities that increase information and awareness and enable international institutions and national governments to take the necessary measures to regulate the world markets of agricultural products.

The conference on October 19th 2006, that is entitled “World agriculture in search of a strategy – How to combine liberalism and development?”, in which you are going to take part, is an opportunity to present the role and the strategic stakes of agriculture and to make new proposals in terms of world governance of agriculture while remaining open-minded so that all views and options can be debated.

The program of the day has been designed in this spirit around four round table discussions that deal with the ideas defended by WOAgri:

> The first idea: “Agriculture is specific and strategic”, is developed during the first round table:

What are the stakes for world agriculture?
Establishing a link between the Doha Round, the Millennium Round and the Rio Conference

> The second idea: “A liberalized agricultural market without any rules is like a democracy without any laws: it’s dangerous for countries throughout the world and the future of mankind” will be developed during the second round table:

New economic instruments to assist political decision-making

> The third idea: “A liberalized agricultural market without any rules is like a democracy without any laws: it’s dangerous for countries throughout the world and the future of mankind” , will be discussed during the third round table:

Regulated liberalism for sustainable globalization

> The fourth idea: “We must invent a new framework for action to meet the challenges of our century and create a World Organization for Agriculture”is discussed in detail during the final round table:

For world governance in agriculture

I. “Agriculture is specific and strategic”:

First round table:
What are the stakes for world agriculture?
Establishing a link between the Doha Round, the Millennium Round and the Rio Conference

The challenges facing world agriculture are numerous because it is at the crossroads of three goals set by international bodies to improve the future of humanity and achieve balanced peace throughout the world:

> Economic growth and development within the framework of the Doha round;

> The fight against poverty and the satisfaction of growing needs for food the terms of which are outlined in the Millennium Round;

> Sustainable development and environmental conservation promoted by the Rio Conference.

The WTO considers that these objectives can be achieved through the liberalization of international agricultural exchanges, which is the goal of the Doha agreements, and the application of Ricardo’s comparative advantage theory.
Yet, if the contribution to collective well-being achieved through free trade and the virtues of competition is undeniable, we must admit that, if all regions of the world were to reap the benefits and for all the resulting effects to be compatible with the other objectives that have been set, an international cooperative organization in favor of common regulations must be set up because agriculture is strategic and specific.

Agriculture is strategic because:

> More than 43% of the world’s population depends directly on the agricultural sector.

>It is the foundation of civilization and a factor of independence and sovereignty. No country in the world has experienced sustainable economic development without prior growth of its agricultural sector.

> World peace is achieved first through the food security of populations.

> Demographics and world needs in food are growing dramatically, notably in developing countries. The world population will reach seven billion by 2010 and exceed nine billion in 2050, which is an increase of 40% compared to current levels. And most of this growth will be concentrated in the developing countries (responsible for 95% of this growth) that are characterized by important needs in food and poorly developed local agricultures. The planet therefore needs all of the world’s agricultures.

> Access to food and water is the greatest problem. World supplies of grain, which represent 70% of the world’s food, have been declining for the last seven years in all the regions of the world. And access to water will be one of the strategic stakes of the 21st century. Food security for all the regions of the world therefore depends on these dominant factors for the future.

> Poverty is on the rise in many LDCs and causing increased rural migration to urban areas.

> It is responsible for regional planning, the maintenance of a rural social fabric, rural development and management of the environment.

> although it represents a partial alternative to fossil fuels, from both an economic and environmental point of view, this is marginal and must not lead us to forget the central role of food for a planet where half the inhabitants suffer from poverty and malnutrition.

Agriculture is also specific:

> World prices for agricultural raw materials are highly volatile and totally virtual. There is no comparison between speculation in this area and the industrial sector: we can observe fluctuations of 1 to 35 for sugar and 1 to 14 for tomatoes. Moreover, they are not based on any economic theory that translates the price structure, supply and demand: they result entirely from a strategy of the lowest bidder on a world scale aligning on the lowest prices.

> The adjustment between supply and demand is structurally out of sync due to the length of production cycles, climatic variations, reduced supply, the perishability of agricultural goods, storage problems and financial speculation.

> The main production factor (the land) cannot be delocalized, or extended infinitely (geographic barriers) but production can be, hence the risk of a double desertification of our countryside and rural areas in poor countries.

Reducing agriculture, which satisfies the vital needs of mankind, to a segment of the traditional economy where unregulated international trade reigns is a major risk for the future of humanity.

II. “The current models skew international decisions”

It is necessary to construct a new model adapted to the specific and strategic character of agriculture

Second round table:

New economic instruments to assist political decision-making

International negotiations are based on simulations provided by global economic models. It has become standard practice to believe that the simulations produced by these economic models are the Gospel and experts have become the new messiahs. But these models are often incomplete, simplistic and even totally divorced from reality. This is why, for several years now, and once again during the breakdown of the Doha round, the media has reported with great conviction that gridlock in the WTO negotiations would be extremely harmful for poor countries.

In fact, and we have been demonstrating this for months, the World bank model, and its successor the Carnegie model, are so imperfect that they lead to this universal idea which is both false and highly dangerous: the total liberalization of agricultural markets would produce a collective gain for all the countries of the world and in particular the developing countries who would receive the lion’s share.
Moreover, the results put forward (less than 1% of world GDP) are too small to rid these countries of poverty, all the more so in that the margin of error for these models is greater than 5% of world GDP.

This is why we have decided to build a forecasting model dedicated to agriculture that is more realistic and more credible, the NAR model (New Agricultural Regulations), while respecting a commitment to truth and transparency that is much more demanding. It will therefore be an asset for negotiations, not only for Europe, but for all the countries of the world.
Unlike the traditional economic models currently in use, it will take into account the specificities of agriculture and, to represent these faithfully, is based on innovative construction principles that use the most recent developments in economic theory and, most notably, game theory.

It will therefore be an asset for negotiations, not only for Europe, but for all the countries of the world and, by using an “open source” approach, similar to Linux in computing, it will be totally transparent. Experts worldwide, in developed as well as developing countries, will be able to participate in its improvement under the supervision of a scientific committee.

The NAR model is based on a modular architecture, i.e. it is made up of a central economic module around which gravitate seven satellite modules that correspond to the seven criteria that any balanced international agricultural model must respect, but which none of the current models take into account.
A “Politics-Economics-Finance” module will be used to take into account political data, exchange rates and all exchange barriers as well as exports and imports.

The seven criteria that will enable the NAR model to take into account the specificities of agriculture are:

>Reliance on foreign countries
>Climatic and market risks
>The effects on poverty
>Growth and effects on future generations
>Taking innovation and intellectual property into account
>The link between the environment and market stability
>Sustainable growth and the future of the planet

In order to model these specificities, just like the numerous imperfections that prevent the smooth functioning of agricultural markets, WOAgri’s economists have defined innovative construction principles1 that make the NRA model very original compared to standard agricultural models.

They have decided to use three premises:

>Supply does not adjust instantly according to demand.
>Demand is not very elastic in relation to prices.
>The agricultural sector interacts directly with the environment (energy, health, environment, innovation, poverty …).

And therefore, using the construction principles they have defined, to respond to the demands of the resulting seven criteria which constitutes a real innovative break with the traditional construction of economic models.

Indeed, the NAR model will take into account, among other factors:

>price volatility, which is one of the main specificities of agriculture, by including risks and market structures, errors in anticipation on the part of producers and climatic factors.
>segmentation of consumers (rich and poor consumers) in order to evaluate the effects of the liberalization of exchanges on poverty.
>the coexistence of two types of agriculture on a world scale: traditional agriculture and modern agriculture.
>the behaviors of farmers when confronted with risks in terms of price, quantity, and quality by using Cumulative Prospect Theory.
>government systems of support that affect the competitiveness of a product and even a whole sector.
>- the capacities for innovation and the different regulations concerning intellectual property because they directly affect the potential gains from the liberalization of international agricultural exchanges.
We will proceed during the first semester of 2007 with calibration and tests of the model in order to be able, starting in mid-2007, to provide our first estimates in the form of figures.

III. « A liberalized agricultural market without any rules is like a democracy without any laws »

It’s dangerous for countries throughout the world and the future of mankind

Third round table:

Regulated liberalism for sustainable globalization

Liberalism, which is both a philosophy and an economic doctrine, implies today the construction of international relations. Yet, we have to admit that it has many definitions and how its effects are perceived can vary a great deal: there are those who are violently opposed and those unconditionally in favor of them.

Liberalism is in fact a complex and unstable state and, if its potential benefits are undeniable, the conditions required to obtain them are difficult to achieve.
Though liberalism is based on three pillars which are private property, individual freedom and responsibility, we can observe today that the commitment of Institutions in charge of promoting the liberalization of agricultural exchanges is often sacrificed on the altar of a theoretical vision of growth.

By dismantling support policies and protection tools without measuring the consequences on the stability of nations, the WTO continues to pursue a process whose only justification is an act of faith rather than a convincing demonstration of an improvement in well-being worldwide.
It is undeniable that international institutions have demonstrated their usefulness in the past but they must now adapt to a constantly expanding world (9 billion people in 2050 compared to 3 billion in 1960) characterized by the emergence of new powers and create the necessary support instruments for political decision-making.
That is why it is essential to start a fundamental debate on the optimal conditions in order for “responsible” liberalization to develop while respecting the three main challenges which are the fight against poverty, the expansion of exchanges and sustainable development.

Moreover, if “responsible” liberalization of international agricultural exchanges cannot exist except within the international regulation of markets, the essential question is which organization will be in charge.
The WTO, whose mission is to liberalize international commercial exchanges, cannot be “both judge and jury”, regulating and promoting liberalization at the same time.
Concerning the FAO, which is dedicated to the fight against hunger throughout the world, it works downstream by contributing to fight imbalances due to poverty alongside the IFAD and the UNDP without a mandate to intervene upstream in the regulatory phase.

It is therefore necessary to consider the creation of another Institution that would be in charge of regulating agricultural markets in order to promote “responsible liberalism” and complete the missions of the WTO and FAO.

IV. « We must invent a new framework for action to meet the challenges of our century and create a World Organization for Agriculture »

Fourth round table:
For world governance in agriculture

Constructing and implementing a world governance for agriculture are objectives that WOAgri has made its priority. It deems this endeavor necessary in order to face the challenges that have been discussed throughout the day. To this end, WOAgri has defined three pillars that will enable us to reach these objectives while respecting the requirements of transparency, credibility, and responsibility that such an undertaking implies.

1. The NAR model, the first pillar for the future world governance of agriculture, will provide a decision-making tool, adapted to agriculture, for all negotiators and international policy-makers because:

> It will take into account the specificities of the agricultural sector and, by using innovative and appropriate construction principles, represent the realities of agriculture in a more faithful and credible manner.

> It will be built on a modular architecture which will make it more responsive and upgradeable: its forecasts will be more credible than those of models currently in use.

> Finally it will use an “Open source” approach: it will be totally transparent and all experts worldwide, in developed as well as developing countries, will be able to participate in its improvement under the supervision of a scientific committee.

2. The international evaluation and grading agency (NAR Agency), the second pillar of world agricultural governance, will be created in 2007, and will work to increase awareness on the part of governments and public opinion of the dangers of drifts in agricultural markets.

On the same footing as financial, social, environmental or ethics grading agencies, it will develop a methodology based on the NAR model and will provide key indicators for different agricultural markets that will serve as the basis for the three objectives it has been assigned: simulate, evaluate, grade and advise.

All these indicators will contribute to the setting of an equilibrium price, but also to grade different countries in terms of agricultural and environmental policies in the same way as certain large private international institutions.

To achieve this objective, the NAR agency will be made up of a board of international experts, grouping together committees of regional experts. It will be backed by a totally independent Collège des Sages composed of high-profile international public figures (former heads of State, moral leaders…).
The committee of experts will meet regularly to define the level of these indicators, advise and grade the different players involved (regions, countries, companies) in terms of agricultural, environmental and development policies.

Thus, for example, if competition in a region is detrimental to the environment, regulatory action will be recommended, and the cost for the community of the deterioration of the environment will be provided. In this way, with tools developed by the NAR agency, the World Organization for Agriculture and national and international institutions will be able to take the necessary measures in the future to restore market balance on an international level.

This assessment and grading process will make the NAR agency a real regulatory tool and a continuous source of information in order to provide an improved framework for international negotiations.

3. The principles of governance, the third pillar of world agricultural governance, is a preliminary approach to what the World Organization for Agriculture could be.

There are two types of principles:

> general principles that are organized around the definition of equilibrium for the agricultural sector.

> organizational principles for each agricultural sector, that group together the main producing countries but also that ensure the representation of consuming countries.
1 The construction principles are at the heart of the strategy of a model. They consist in economic hypotheses and theories that economists use to represent reality as faithfully as possible
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Paris, 19 June 2019