AGRICULTURAL POLICY :

1

• AGRICULTURAL POLICY
• CONTEXT,
• LEGITIMACY,
• NECESSITY

2

• AGRICULTURAL PRODUCTION ACTIVITY
• ?
• COORDINATION BY MARKETS,
• BUT . . .

3
AGRICULTURAL ACTIVITY PARTICULARITIES

• ? produces vital goods
• ? utilizes nature
• (land, water, plants, animals,)
• Consequences 1st human activity, disperse
  geographically,

4

• C O N S E Q U E N C E S
• OF PARTICULARITIES OF AGRICULTURE
• ? for populations
• Expectations of populations !
• ? for markets
• Supply / Demand

5
PARTICULARITIES OF AGRICULTURE
EXPECTATIONS OF POPULATIONS

• - Vital goods ? Food security
• (quantity, quality, access,)
• - 1st human activity, ? Social balance
• geographical dispersion, (family farming,
  employment, incomes,)
• - Nature ? Environment
• (land use respectful of the environment)
• NB Changing priorities.

6
TAKING IN CONSIDERATION THE EXPECTATIONS OF
THE POPULATIONS?

• By the market ? No.
• Externalities
• ? Out of market!
• Equity (ex access to food, to land,)

7
PARTICULARITIES OF AGRICULTURE SUPPLY /
DEMAND

• - Vital goods ? Non-elasticity of demand !!
• - 1st human activity, ? Weak position on the
  markets
• geographical dispersion, (oligopoly strong
  position of multinationals buying from
  farmers)
• - Nature ? Non-elasticity of supply
• (in the Short Term),
• Variability

8
GENERAL CHARACTERISTICS OF AGRICULTURAL MARKETS

• Non-elasticity,
• Unpredictability !
• Prices Amplitude of variations !
• (Downward pressure)
• ? Imperfect functioning of agricultural markets

9
AGRICULTIRAL MARKETS AN IMPERFECT MECHANISM

• ? Incapacity facing the expectations of the
  populations
• ? Imperfect functioning (unpredictable prices,)
• ?
• COMPLEMENTARY ROLE OF PUBLIC AUTHORITIES !
• (Agricultural policy)

10
LEVEL OF ACTION OF PUBLIC AUTHORITIES ?

• ? level at which they are organized
• ? national
• (or comparable UE,)

11
GLOBALIZATION, LIBERALIZATION OF TRADE,...

• Aspects
• - Aspects public authorities overwhelmed
  because mainly active at national levels when
  markets behave at the international level !
• Risk Current dogmatism
• ? Hypothesis Perfect markets
• Solution Free-trade and Laisser-faire
  (on international markets)

12
IMPERFECTION OF WORLD MARKETS

• World markets are not less imperfect.
• On the contrary !
• ? Incapacity facing the expectations of the
  populations
• and the diversity of situations
• ?Very imperfect functioning

13
World markets Very imperfect functioning
WHY ?

• ? General characteristics of agricultural
  Supply/Demand
• (non-elasticity,)
• ? Market-oriented national policies (from non-
  to anti- cooperative)
• ? bis Priority to exportation
• ? Intrinsic factors to international markets
• a) Residual markets (residual in the sense
  that internationally only 5 to 10 of the
  agricultural production is meant for exports
  tropical products such as cacao or coffee are
  exceptions)
• b) Inequality of incomes
• ? Currency

14

• O B S E R V A T I O N S
• - World markets
• - TOT
• - Agricultural incomes,...

15
WORLD MARKETS OBSERVATIONS

• ? Volatility of prices
• ? Low level of prices, on average
• ? Downward trend of prices

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WORLD MARKETS VOLATILITY
17
WORLD MARKETS

• Low level of prices
• Coffee, 1986 - 2001 producer -86
• consumer 30
• Sugar - Average cost of world production
• 2 x world price
• - For 80 of producers cost gt world price

18
DOWNWARD TREND OF PRICES INCREASED
AFTER 1980
19
EVOLUTION OF THE TERMS OF TRADE (TOT)
pi
ped
20
EVOLUTION OF AGRICULTURAL PRICES

• Since 1960, the indexes of Prices
• of agricultural commodities has
• more than halved
• (Comm., 2002)
• EVOLUTION OF THE TERMS OF TRADE (TOT)
• Africa
• -155 /inhabitant

21
RURAL POVERTY, AGRICULTURAL INCOME,...

• Developing countries rural poverty
• rural areas 63 of the population
• 73 of the poor
• Belgium Agricultural income,
• as of Comparable Income
• 70
• ( from 50 to 92 depending on regions)