The G20 Seoul Summit: How do Monetary and Currency Imbalances Undermine European Agriculture?By Momagri, PRNE
Monday, November 8, 2010
A Comparative Analysis Between the United States and the European Union Shows an Economic Benefit Equal to "50 Airbus A380" in Favor of American Farmers
PARIS, November 9, 2010 - According to momagri(c), a think tank advocating a new vision
for global agriculture, the international community is not fully taking into
account the impact of monetary and currency imbalances on agricultural
Yet, in an environment of food, financial and budgetary crises
and in proportions unknown till now, the currency exchange rates and key
rates set by Central Banks have become crucial variables for agricultural
competitiveness. A comparison between Europe and the United States
illustrates this point:
- The under evaluation of the dollar versus the Euro has been an indirect but effective financial support for American agriculture for he past two years. This support has been assessed at $17.8 billion in 2008 and $14.4 billion in 2009; - The more advantageous interest rates of the American Federal Reserve (the Fed) than those of the European Central Bank (ECB) result into a support for American farmers of $2.9 billion in 2008 and $106 million in 2009.
This represents a total of $20.7 billion in
2008 and $14.5 billion in 2009, or 6.5 and 5.0 percent of the value of
American agricultural production.
For Christian Pees, momagri(c) Vice President, "All who
experience these imbalances are subjected toconstant burdens that are all the
more exacerbated in periods of high price volatility."
According to momagri(c)President Pierre Pagesse,"It is
essential to consider these currency exchange and monetary variables starting
with the up-coming G20, since agricultural markets–now more unstable because
of speculation–are harbingers of a new financial and food crisis.Not to
mention thatthe threat of unregulated liberalization of international
agricultural trade is still existing at the WTO."
This analysis, which concerns the genuine nature of support
provided by governments to their agricultural activities, was conducted by
momagri(c) in the framework of its project to develop a Rating Agency for
agriculture and its issues at stake.
A first report on comparisons between the United States and
France will be published in mid-January 2011.
It will allow determining the direct (agricultural policy
budgets) and indirect (financial and monetary policies, food subsidies…)
support measures to agriculture that are implemented in the world's two major
A new international budgetterminology to facilitate
comparisons between national budgets has been designed to that end.
momagri(c)'s comparative studies will continue to be carried
out in 2011 and will concern Brazil, Canada, China and India, before
involving all major producing nations. It will then be possible to benefit
from useful data for economic and trade negotiations, since it will be based
on indisputable public policies.
momagri(c)'s approach supports the need to command common
standards that are adapted to economic reality, which is precisely the theme
of the next Davos Forum to be held on January 26-30, 2011.
Contact: Dominique Lasserre, +33(0)1-56-58-51-57, dominique.lasserre at momagri.org
Tags: Europe, momagri, November 9, Paris, United States of America