Jacques Carles, Executive Director of momagri, will join Xavier Beulin, President of the French Federation of Farmers’ Unions (FNSEA), for the regional assembly of the union. How can farmers be protected from price volatility? Must we adopt a system similar to that of the American Farm Bill? Jacques Carles addresses these issues and is not overly kind with the current CAP and the European Commission!
What is your analysis of the current CAP?
Europe’s 28 member countries no longer have any long-term agricultural policy, and do not have any strategic course! We have a system that has become incomprehensible, and whose implementation is incredibly complicated. The second pillar accounts for 12 or 13 billion, but it is a fragmentation of measures. The CAP is a windfall, but in line with the pressure of the moment, it will benefit someone or another. The Commission has become a besieged fortress. Two thirds of the European funding is not linked to the economic reality of agriculture.
What are your plans?
Our objective is to make the Commission aware of the need to propose a mid-term review of the CAP. But, it will not freely do so, unless a serious crisis disturbs all agricultural activities and most member-states, which no one hopes for.
That is why we are convinced that the French agricultural organizations have a leading role to play. France has tremendous advantages in agriculture. It is up to France and to French agricultural businesses to regain the leadership in Europe to give a new strategic course to the CAP.
If we refer to manufacturing for example, the Germans have always assumed the leadership to support this industry in Europe.
At the same time, it is indispensable to re-involve the members of the European Parliament in the CAP, and assist them to become again a driving force. Our ambition for 2016 is to achieve an own-initiative report that includes the components of a new CAP adapted to international challenges.
Which proposals are you putting forward?
momagri advocates another CAP still based on two pillars, but whose larger part of the first pillar budget earmarked for basic and greening payments would be reallocated toward management tools for agricultural markets and toward farmers’ incomes, according to a counter-cyclical rationale.
This plan has been enforced for two key agricultural commodities: grain and milk. The difficulties generated by the scattering of per-hectare subsidies, leading to the convergence provisions, would thus be resolved.
We are proposing the establishment of tunnels of free market price fluctuations around equilibrium prices per product or group of products. I will present the details of this proposal later today.
What about the WTO rules?
The Americans are blatantly ignoring the WTO rules. The Farm Bill includes a reference price that protects farmers from the instability of agricultural markets.
The Brazilians have implemented bidding systems with reserve prices that are activated in case of falling agricultural prices.
In evaluating the different agricultural policies, we see that all major powers benefit from various systems to protect their farmers, going from indirect mechanisms––subsidized loans and food aid––to direct methods––administered prices, counter-cyclical subsidies and insurance provisions. The Chinese farmers, for instance, can profit from advantageous administered prices.
momagri also indicates that forecasting models must be redesigned.
What are you referring to?
Today, we are still adapting industrial forecasting models to agriculture. They are based on the principle that production adjusts to demand. But agriculture has nothing to do with that. One cannot turn back when production––livestock breeding and sowing among others––is initiated. Farmers will make production decisions based on past market conditions. Of course, climate factors will also play a role, and a third component will also intervene: Speculation. None of the World Bank or the OECD forecasting models is assimilating these facts. They are all considering that demand adjusts to prices. But this is wrong.
There has been a mass influx of speculation in agricultural markets. Supply practically never exactly adjusts to demand, and this is one of the causes of speculation. These models always give linear projections. Based on such forecasts, Europe has dismantled the CAP. Prices were supposed to stabilize at high levels, and therefore there was not need for intervention. Consequently, major mistakes were made.
At momagri, we have designed a totally new predictive model that simulates price volatility.
The results are very close to reality. We are currently in a low phase regarding price volatility. But we live in a chaotic and very tumultuous world. As a result, we need public intervention tools to prevent the market instability that threatens our farmers and our production abilities.
You are putting your hopes in an agricultural cooperation system.
We are advocating the implementation of a global Food Security Council on the model of the UN Security Council. With nine or ten billion people in the world, food crises are bound to become the major causes of conflicts. It is now urgent to set up an international cooperation system and prevent future agro-food clashes. Common principles, tools and indicators must be designed!
1 Remarks reported by Jean Dubé - the entire article is available from