Advocating a new policy on agricultural prices
Posted on June 18th, 2009 in Uncategorized
On the occasion of the 14th Rendez-vous de la mondialisation organized today in Paris by the Center for Strategic and Cepii devoted to agricultural challenges, we publish the views of Marcel Mazoyer.
In 2007 and 2008, the tripling of international prices of key agricultural raw materials has caused hunger riots in several developing countries. These high prices have been falling into chronic malnutrition (hunger almost daily) about 75 million poor. Meanwhile, investors of all kinds (private funds or sovereign, or other food companies) are trying to seize large tracts of land in the low-wage countries where land tenure is not firmly established.
These events are not new. They were very predictable. Since the mid-nineteenth century, outbreaks of this kind of price are held every twenty to thirty years on international markets for basic food crops. Furthermore, these events are in a context where, for decades, hunger, and chronic silent, affects about 850 million human beings, the vast majority of farmers in developing countries impoverished by the downward trend very important and real agricultural prices.
Indeed, from 1950 to 1970, the contemporary agricultural revolution was in full swing in developed countries. This revolution was based on the use of tractors and machines ever more powerful, mineral fertilizers, concentrated feed for livestock, pesticides, plant varieties and animal breeds highly selected, and the specialization of farms . It caused a big increase in productivity and a sharp decline in real agricultural prices in the countries concerned. In addition, some of these countries have exportable surplus increasing to decreasing prices. Thus the price of wheat on the Chicago market, which serves as a reference to international prices, has fallen from 600 dollars per tonne in 1947 to $ 180 in 1971.
Consequently, many farmers in developed countries have disappeared and tens of millions of farmers in developing countries, impoverished by competition from imports of low price, have migrated to towns and slums. Growth in production slowed while consumption continued to increase, global stocks fell in 1972 below the safety threshold, or 15% of annual consumption. At this point, traders rushed to buy, prices rose beyond the usual variations, speculators flocked and in 1973-1974, the price per tonne of wheat tripla, dating from around 600 dollars.
Investors of all kinds then began to modernize large agricultural areas, several thousands or tens of thousands of hectares in Latin America, southern Africa. Drawing on the experience gained by the family farmers of the North with the contemporary agricultural revolution, and South with the green revolution, they formed large agricultural enterprises employing workers paid about $ 1 per day. After some time, these companies have proved so productive that the family farms the most efficient North, but with production costs much lower, partly because labor costs are 20 to 30 times less. The stocks were replenished and prices on international markets for food crops started to decline. At the point of reaching around 100 dollars per tonne of grain in the early 2000s.
However, this price is below production costs for the vast majority of farmers in the world, including most of the farmers in North America and Europe, which could not keep their share of domestic and foreign markets if they did not receive their state aid to compensate for the difference between production costs and international prices. A fortiori, these prices are below production costs farmers less productive, especially 500 million of them working only with hand tools, without fertilizers or pesticides, which produces around 1 tonne cereals by farmer per year.
Thus the decline in agricultural prices has depleted to the hunger of hundreds of millions of farmers around the world and the peasant population, which constitutes approximately 40% of the world’s population is largely poor, in under-consumption.
Ultimately, the decline in agricultural prices massively reduced the overall demand. And a huge savings overall, which can be used for productive investments, redemptions of short asset bubbles and credit doubtful debts soon. Until the abyss. In these conditions, the liberalization of agricultural trade, by increasing competition between agriculture extremely unequal and the instability of prices, can only aggravate the situation.
In 1945, many leaders, educated by a century of crises and world wars, the countries engaged in policies of full employment and wage indexation on gains in productivity, as well as in agricultural pricing policies that enabled farmers to expand production and generate income comparable to those of other categories. It is high time to put these policies on the agenda and to extend the benefit to the whole world. Are we going to do? “Yes we will. “
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