BRUSSELS, Belgium, April 9, 2008 /Xinhua-PRNewswire/ -- Pierre Pagesse, Chairman of momagri, a Paris-based think tank, today announced the initial results of momagri's economic model to the European Parliament. Unlike models currently used in international negotiations, it is the only model that accounts for the specific character of agriculture.
Presented by Bertrand Munier, momagri Chief Economist, momagri's model demonstrates that free trade will not stabilize prices but will increase instability. Indeed, simulations based on the assumption of complete market free trade in 2008 show that large-scale crops and grains will see price volatility rise sharply, while cattle prices will collapse.
In addition, unregulated free trade, by increasing the participation of financial speculators, will further intensify price volatility. This was demonstrated by a new groundbreaking indicator that links the percentages of financial speculators to the increasing volatility of agricultural prices. Based on these simulations, one can no longer claim that increased free trade paired with a sustained demand would ensure that prices remain stable at profitable levels.
"To obtain a regular, linear increase in agricultural prices over the coming years -- as simulated by current models -- events would need to conspire in a way that defies probability laws. This utopian scenario assumes that there are no speculators, that farmers can fully anticipate the future and that climate conditions are ideal," noted Jacques Carles, momagri Executive Vice President. "The premises on which international negotiations, the CAP and the WTO are basing their decisions do not reflect reality, but rather an ideology that has been severely questioned by simulations using the momagri model."
Pierre Pagesse pointed out "that in simulating the impact of the Falconer proposal to the WTO, the model demonstrates that increasing price volatility was very close to the scenario of complete free trade. Consequently, a multilateral decision to reduce customs duties, national incentives and export subsidies would not benefit the poorest countries and would, in fact, have the opposite effect. Farmers cannot survive in a market that has become highly chaotic. Without an international agricultural policy, any dismantlement undertaken outside the framework of international cooperation could threaten food safety in our countries."
This is why for momagri a World Agriculture Organization must be established to ensure free markets through appropriate regulations at the international level.
http://www.momagri.org
