Agriculture and food are a good illustration of the shortcomings highlighted in the Stiglitz report.
The measurement of performance and functioning in agricultural markets is flawed and political decisions are being distorted and can even endanger global food security.
According to momagri, a think tank specialized in food and agricultural enquiries; a new speculative bubble is already forming. Urgent steps must be made to establish appropriate methods to anticipate and regulate!
The report on the measurement of economic performance and social progress, chaired by Joseph Stiglitz and submitted to the President of the French Republic is an outstanding source of reflection on the fragility of the indicators and instruments used for governance in our societies.
He declares that "if performance measurements are flawed, then so will be the conclusions we make for economical policy."
Since 2005, momagri has been underlining the inadequacy and excessive use of existing models for agriculture.
This is one reason why the Doha Development Round is stuck on the false idea that the unregulated liberalization of global trade benefits the poor.
Traditional models (World Bank, OECD) which were not built to simulate agricultural price volatility, are to blame and give the illusion that freeing markets will:
- stabilize prices: the very high volatility of increasing or decreasing prices for agricultural commodities in recent years should bring the experts down to reality. Another assumption is that a policy of unregulated liberalization in global agricultural trade will improve the lives of the poor. This is an illusion because these models do not distinguish the poor from the rich.
- and that agricultural production of these countries will open markets by lowering customs duty in rich countries, even though they do not produce enough to feed their own population.
These instruments are “used” for proselytizing and the press is beginning to divulge the manoeuvres of investment funds that, according to our analysis, will be the winners of the Doha Round. Their massive land acquisitions have been revealed, particularly in Africa. In a fully liberalized world, they will be able to export, with virtually no laws, to countries that have abandoned their farmers giving them sufficient power to influence world prices.
An understanding in agricultural markets shows that the international trade of agricultural products only accounts for 7 to 8% of world production; differences of 1 to 2% of production generate huge price variations.
With the primary activity of these new land investors being finance, they will be at the forefront to fuel speculation.
Fundamental strategic issues hide behind these models: agricultural power and food security.
It is urgent to reintroduce reliable measures if we want to see the emergence of global governance for agriculture and prevent it from being used as a weapon in the same way energy has.
This is why Momagri has created new support tools for making policy decisions:
- Firstly, the momagri economic model, which assesses the impact of liberalization policies, particularly in terms of price volatility and evolution in income. It is nearing completion, with the most recent impact modules on innovation and environment. An international workshop validated the founding principles and a detailed presentation document will be sent shortly to the international scientific community. The SGPA (global support to agricultural production) indicator, designed to offer an alternative view to the OECD PSE indicator.
- Next, in early 2010, a rating agency will be created. Two indicators are under development.
Indeed, this indicator which is supposed to measure the influence of subsidies for agricultural production in each country is biased because it does not account for certain aids (counter-cyclical payments in the United States, food aid and export credit). It also makes reference to international dumping prices, as for milk. Consequently, other countries and chiefly Europe, stigmatized by an insufficient indicator, find themselves in a weak position in international negotiations.
This is why we are building a common typology of budgetary interventions at an international level, in order to accurately measure the impact of public policy, to conduct reliable comparisons and to create the foundations for a genuine international dialogue.
The OSE (optimum between economic efficiency and food security) indicator will, as its name indicates, assess the optimum between food security and economic efficiency. This type of assessment should, ultimately, guide investment choice in favour of innovation, support measures that respect open trade and aid policies for development.
Our objective is for this measure to break the dialogue of the deaf between proponents of unregulated liberalism which is supposed to be the main source of well-being and those who insist on food sovereignty, which can propagate into sterile protectionism.
When the Pitot probe, which measures aircraft speed is defective, it is changed on all aircraft.
It is now urgent to replace the compasses (models and indicators) that distort international negotiations and confuse political choices.
If not, there is a risk of another bubble forming, with a potentially much higher number of casualties than the one we just experienced.