The G20 Seoul Summit: How Do Monetary And Currency Imbalances Undermine European Agriculture?

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9th November 2010, 09:24am - Views: 9713






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MEDIA RELEASE PR42064


The G20 Seoul Summit: How do Monetary and Currency Imbalances Undermine European Agriculture?


PARIS, Nov. 9 /PRNewswire-AsiaNet/ --


     

    - 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


    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

activities.


    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

producing regions.

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    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.


    SOURCE: momagri



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