Speaking at the euro 2bn turnover company’s visitor centre near its headquarters in Chappes in the Auvergne region of France last month, chief executive Daniel Chéron, called for international regulation to smooth extreme price fluctuations that cause pain to farmers when the prices fall below the cost of production and to consumers when prices soar.
Chéron said Limagrain was lobbying politicians in France and elsewhere in the EU to introduce a stabilisation mechanism or price “tunnel” from 2020 to prevent such damaging volatility. Compared with five years ago, he was optimistic that politicians were now more receptive to such change.
‘Big difficulties’
“My feeling is that, little by little, [politicians] are understanding that agriculture is very important and if we don’t have stability in agriculture we are facing big difficulties in the long run,” said Chéron. He was confident agreement in the EU would eventually be reached.
“We are trying to convince our political people that we have to put in place a worldwide organisation to better manage the volatility of the products.” To achieve this it would be necessary for better management of grain stocks on an international level, he added.
Chéron said the EU should adopt a system similar to that used in the US where farmers are guaranteed a minimum price each year for their main crops, such as maize.
“In Europe, we don’t have the same situation. We have a fixed subsidy and if the price is very high we have the same subsidy as if the price is very low,” said Chéron. “This is not a good system. The European policy, from our viewpoint, is a bad policy.”
Global challenges
To ensure the objective of “feeding the world” against the global challenges it faces, it would be necessary for each region across the globe eg, Europe, the US and Canada, South America and China to embrace different types of agricultural policy that were right for them, he added.
“In Europe we would probably try to develop the concept of a ‘tunnel’; that means that we have a mechanism with freedom inside the tunnel and when the price is too high or too low, we put in place a mechanism to correct this price.”
Last year, Jack Watts, lead analyst for cereals and oilseeds at the UK Home-Grown Cereals Authority, suggested farmers should deal with volatility by using more effective price risk management tools.