Brussels, 20/09/2010 (Agence Europe) - In a backdrop to the informal meeting of agriculture ministers on Sunday 19 and Monday 20 September near Brussels, Dacian Cioloº announced that the European Commission would be making proposals to put an end to “significant price variations” on the agricultural markets. The objective is not to put an end to high prices, which often benefit farmers (but not always consumers). The services of Dacian Cioloº, the European commissioner for agriculture, and those of his counterpart in charge of the internal market, Michel Barnier, have been working over recent weeks to prepare the proposals for making the derivatives markets more transparent and safer, including those for primary agricultural materials (see other article above).
In periods of speculation, the number of contracts increases, which is often the case on the cereals market. The commissioner for agriculture explained to the press that “this is a problem, which needs to be monitored because it has an effect on those who work the land and who must obtain appropriate prices for living from it”. The commissioner added that “we will be proposing other instruments so that farmers can better manage this price variation”.
During the public hearing on Tuesday 20 September in Brussels on the review of the directive on financial market instruments (MiFID), Cioloº declared that wheat prices had increased by 70% over a two-month period. The scale and swiftness of this rise is a “serious threat to all wheat subsidiaries” (particularly for the pork subsidiary). He pointed out that milk producers “felt impotent during the 2009 crisis… we must give them new prospects. This is why by the end of the year I will be presenting a package of specific measures for the milk sector”.
Farmers, those involved in the processing industry and consumers throughout Europe are demanding one thing: visibility. The commissioner explained that “long-term markets can contribute to this visibility”. According to the commissioner, the role of long-term markets is to provide instruments for anticipating and managing volatility and helping to establish a balance between supply and demand. Cioloº asserted that these markets must be a tool at the service of all actors involved in the supply chain. He also pointed out that: 1) “We must enhance transparency by shedding light on the positions of the different categories of actors in these markets”; 2) “We must move forward, particularly today, on the question of limiting excessive volatility”.
In conclusion, the commissioner said that “we must keep the instruments that we now have and which have proved their worth”: direct support for incomes and market management mechanisms. Furthermore, “new crisis prevention mechanisms are necessary”. (L.C./transl.fl)