Jorge Nunez-FerrerCEU

Master course Economics

Markets, prices and perceptions

Subjects

How are they interlinked?

1Drivers to demand changes

2Prices –Winners and

losers 3The future?

DRIVERS IN THE AGRICULTURAL MARKETS 1

BASICS

DRIVERS OF PRICES AND PRODUCTION ARE:• Population growth• Population wealth and change in food preferences• Production technologies• Market structures• Politics• Trade barriers, trade agreements• Climate

Partial, bad, badly communicated analysis

• Lobbies, groups, even analytical institutes confuse cause and effect and often contradict each other

• Big temptation for researchers is to forget that correct analysis is not to find evidence that reinforces your convictions, but to test your hypothesis against facts – all facts. It is even better to search for evidence agaist your hypothesis.

IMPACT OF PRICES>>> is there a crisis???

YES……. OR

Not really

Even longer timescale

Europe is interesting

Alarm bells….. In all cases

• FAO: 2005: “The long-term downward trend in agricultural commodity prices threatens the food security of hundreds of millions of people in some of the world's poorest developing countries where the sale of commodities is often the only source of cash.”

• (IFPRI): “In 2007, longstanding disruptions to the world food equation became widely evident and rapidly rising food prices began to further threaten the food security of poor people around the world. … The current food-price crisis can have long-term, detrimental effects on peoples’ health and livelihoods, and can contribute to the further impoverishment of many of the world’s poorest people.”

We are always miserable….

More….Bread of the world institute:

Before 2007

2007-2008

Changes in demand and production

Impacts of climate change

3

Changes in consumption

Productivity growth… and more possible

But more Needed!

MAIN IMPACTS…. Richer… more…. FAT (France)

Meat intake driven changes 1961-63, 2003-5

Changes EU 15

Food chain lossesFeed to animal conversion of 2,9

Something missing?Retail product standards?

Emissions is a problem with livestock

18% becauseOf livestock

Overweight health care costs

Is there a role for agricultural policy??

• Difficult debate…• Is diet an issue for agricultural policy… does

policy affect diets?• How can we analyse this?

Closing debate on food: Common beliefs

The Bio debate, your opinion on statements?Bio products are saferBio products are healthierBio products can combat obesityAccording to definition GMOs cannot be bio productsBio products fetch a higher priceBio products ensure smaller farms are viable and

supports family farmsLabelling informs consumers

Safety• Safety is not higher, but even be lower. • Bio products may only be safer because farmers have

performed more stricter controls, but as bio expands ….?• Pathogen risk should be higher in bio• EU checks safety strongly of ALL products Health• Not clear. Maybe as residues of some products lower.

Produce may be of better quality• A bad pizza is bad, even if organic components are in.

GMOs incompatible with BIO…. Why?

• Why? The labelling on GMOs is on a technological process, not the product. Most products are genetically modified in one way or another. Should we look at process or product?

• This is not a globally accepted rule, but generated by lobbyist. It is not in line with the original FAO definition which only focuses on soil protection and fertility. Some GMOs are proven to be less damaging than conventional farming to the environment.

• One of the most common bio pesticides in Europe is a toxic genetically modified dead bacteria, but that degrades better and is less damaging.

• Wheat is an unnatural product, did not exist so long ago.• Most products are coming from genetic manipulation of

various types• An approved biotech mechanism, not labeled as GM, is, for

example, particle bombardment to cause mutations or chemical treatments safer? Probably not, thus what are we regulating?

• By focusing on a technique and not on the products we are causing considerable damage, wasting public money and ignoring worse techniques and constant technological change.

Bio fetches higher price• While production is limited, yes, but much of it has

technologically developed and matches normal farming in yield. Prices then fall.

• Big retailers are selling large and cheaper• Some bio products are sold as conventional to keep prices

up of bio labelled products (Austrian milk case for example). Bio fosters small farms• False: Bio needs more land and the bigger the better, and

farm sizes are increasing.• Smaller farms need more intensive production to survive or

a strong brand name (bio is however becoming banal)

Bio is better

Labelling

• People confuse labelling with a food safety warning. Food safety standards are the same for all products.

• Border controls cost millions to detect GMOs… but techniques only detect known GMOs, mainly approved ones, GM products with non registered genes go through.

• The EU wanted to label Biofuels from GM plants….? Where is the DNA in the biofuel???

• Other oils from GM plants are labelled, but oil contains no DNA and is not distinguishable… so what are we labelling?

• On the other hand, cheese processed with modified bacteria is not labelled GMO.

EU biotech policy

• Follows mini-max approach leading to a religious rejection of a technological process rather than the product. Despite strong food safety standards GM technology is blocked also for products with environmental and health value (chemical use in Europe much higher in many products)

• Environment, health and food safety are confused and open discussions impossible

• But this is human nature: A Friend of mine travels to Poland by car from Brussels, because she is scared of dangers of plane and train travel……….. and is a chain smoker….

We are very spoiled… and very confused/manipulated

Avaaz