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(en) France, Union Communiste Libertaire - UCL Economy Working Group: Towards a major crisis in agriculture ? (fr, it, pt)[machine translation]

Date Wed, 13 May 2020 09:11:08 +0300

On the program of this economic bulletin at the time of the coronavirus: a focus on the crisis in agricultural production, a look at savings through the case of booklet A, and an analysis on "economic patriotism". ---- In the last economic outlook, we mentioned the drop in economic activity sector by sector. We reported a drop in activity of around 13% for agriculture. But for what reasons ? ---- Disrupted global and local production chains ---- With the limitation of international trade and massive containment decisions in many countries, globalized production chains have been affected: delivery delays, the absence of imported goods such as packaging, or even the absence of international demand, as for agricultural raw materials (MPA) intended for animal feed (feed barley, corn) [1]have greatly weakened the agricultural sector. We see the same thing in the French linen sector, where the textile processing industries (scutching) have been even stopped for health reasons and where exports have slowed considerably. In the same way, the milk sector, which depends on 37 % of export, viticulture or meat production are concerned. Thus, during the first month of confinement, exports of young live and French cattle to Spain were reduced by a third.

Consequences of this lack of outlets: stocks accumulate on products where it is possible, occasionally causing infrastructure problems. But above all, this drastically lowers prices: the price of milk and its derivatives for example (lean powder -28%, butter -26%) or the kilo of beef which is currently trading for 1 euro less than its production cost. [2]

In the horticultural sector, the closure of florists has had a major impact on plant and flower producers. A telling illustration: for thrush, which it is currently the season, it is estimated that 70% of the harvest could be lost, [3]which will obviously have a direct impact on producers and probably for months / years to come, on seasonal jobs in horticulture.

Unforeseen changes in food consumption
The crisis has also brutally changed eating habits in France. [4]For basic necessities, during the first four weeks of confinement, the sale of flour increased by 168%, that of sugar by 50% and that of eggs by 40%, according to the Nielsen Institute.

Regarding the milk sector, prepackaged products are selling well, but protected designation of origin products are in free fall, with 25 to 60% less demand. Beef is also experiencing contrasting trends: veal consumption drops from 30 to 35% while that of minced steaks increases by 33% for fresh food and by 75% for frozen food. Overall, we can see that the most noble pieces, usually sold in restaurants, are neglected.

The closure of food places has consequences for the consumption of potatoes, which were mainly used for processing into fries. Stocks now reach 600,000 tonnes. The brewery market also suffers from severe social constraints and the closure of cafes and restaurants. Kronenbourg notably alerted to historic losses (-30 to 40%) in its 2020 financial year [5]which jeopardizes a whole section of the economy in the East. Far from being anecdotal, this already has a direct impact on cereal producers, who largely destock malting barley on the animal feed market, as feed barley. [6]

Cyclical weather uncertainties
Add to all this relatively poor weather conditions. In cereal production, the end of winter was difficult and the plants are not sufficiently rooted enough. A large water deficit ensues, reinforced by the virtual absence of rains in April, which has helped to worry the markets (on the buyer side) and to maintain the soft wheat prices [7]historically high, by maintaining fears over the decrease in the quality of the next harvest and therefore on a possible tension in supply [8](less supply = high prices), even if other factors are taken into account.

Over the last ten days in April, the return of the rain over the whole of France and over a good part of Europe "allayed a lot of fears" and helped bring prices down somewhat, even if "doubts about 2020 yields" persist. [9]

Employment in the agricultural sector
The closure of the borders had several consequences. In particular, it blocked 50% of foreign seasonal workers in their countries, jeopardizing the harvest of fruit and vegetables in France. [10]Several platforms, governmental ( https://mobilisationemploi.gouv.fr/ ), or emanating from trade unions like the FNSEA ( https://desbraspourtonassiette.wizi.farm/ ) have been created for volunteers (280,000 people registered) . In certain sectors, notably in the organic sector, volunteers flock, which has the direct consequence of limiting hiring, but for workers who will not benefit from training; volunteers are simply assigned to picking. Farmers are still looking for between 70,000 to 80,000 qualified people per month. [11]

An expensive wheat
At the start of containment (around March 20), common wheat experienced a sharp increase (+ 12% in a little over a week), even though world stocks are estimated at 4 and a half months of reserve [12](although it would seem that announcements from China in this area, which claims to have around 150 Mt in stock, or just over half of world stocks, are questionable). [13]This sudden increase has been interpreted by sector analysts as the result of precautionary purchases from importing countries, notably China and Morocco, [14]in the face of the extension of confinement to an ever larger part of the world population and in the face of the protectionist policies of certain giants of the sector, in particular Russia and Kazakhstan. [15]An article dated March 27 thus twice evokes the specter of the hunger riots that shook certain countries after the 2008 crisis. [16]

The weather uncertainties already mentioned above helped to maintain a high price throughout the month of April (between 195 and 200 euros per ton). In Europe, other more cyclical reasons have played a role: the trade war between the United States and China has apparently transferred Chinese buyers to the European market [17] (increased demand = high prices), while in the United States, the trend is rather down. Even if, once is not custom, the US market followed the European increase at the end of March. However, it seems to be in more difficulty, with less demand (human and animal food) and a consequent delay in sowing. [18]

Over the last ten days of April, the return of the rain over the whole of France and over a good part of Europe "allayed many fears" and helped to bring prices down somewhat. [19]But other factors, whether technical (closure of the month) or political (Russian decision to suspend exports) have also tended to maintain short highs. Indeed, Russia "world's largest wheat exporter and one of the leading producers and exporters of cereals in the world, will suspend its exports of wheat, rye, barley and maize until 1 stJuly." [20]This Russian movement follows export restrictions announced in March-April, already mentioned above, which aim to ensure the stability of the national market in the context of the Covid-19 pandemic.

Biofuels follow the price of oil
On the MPA market for energy (for biofuels), the crisis continues despite a slight rebound in recent days, the price of rapeseed and, to a lesser extent, corn (rather in the USA) following the price of oil. "The market continues to question the state of demand in the medium term while the end of the health crisis is still as vague." [21]

Savings and health crisis: the case of passbook A
The health crisis is not without consequences for individual savings behavior: we have observed a considerable increase in investments in passbook A accounts in recent months: in March, 2.71 billion euros were deposited. However, the rate of return on the livret A has never been so low since its creation in 1818, [22]since it pays 0.5%, against 0.75% in January 2020 and ... 2.25% in January 2013. [23]

How to explain that savings are so high there when it is an investment that has paid at a rate below inflation for years ? [24]In general, the Livret A does not know many competitors who are much more advantageous for taking such a low risk. [25]And quite simply because household confidence in the future of the economy has, not surprisingly, fallen sharply as a result of the crisis. They therefore fall back on this investment, which is perceived as safe. Consequently, in the current economic climate, major expenses are deferred [26]and the remaining income is therefore saved. This is obviously done at the expense of demand, which puts the economy in a delicate position, but we can not blame people for keeping the little money they have on their passbook A in such unstable capitalism and irrational.

As a reminder, the passbook A rate is set by the State according to inflation and short-term interest rates that are in force between banks. [27]But this rule is not entirely automatic: generally, it is the Governor of the Banque de France who recommends to the government and in particular to the Minister of the Economy to modify the rate. However, the government rarely misses an opportunity to reduce it, because it allows it to spend less money on social housing (which the livret A partly finances) and encourage small savers to switch to more affordable products. risky, including investments in private companies.

It can thus partly discard, in the context of austerity policies, of its own role of stimulating the economy through public spending, by forcing poor households (those who save the most on a livret A [28]) to take more risks. Since booklet A is used to finance social housing, the government can invoke this noble motive to serve this much less noble objective. [29]The Minister of the Economy has also complained about the influx of the last few months towards the Livret A booklet on the grounds that it did not finance the investment. [30]A fine way to recall the inability of the bourgeois state to cushion the economic crisis we are going through...

Will economic patriotism save us ?
"Economic patriotism". This notion claimed by the RN as by the sovereignist left is taken up from time to time by Macron and his ministers. It consists in claiming to favor French companies and their employees. It therefore underlies the idea of a convergence of interests between employees and employers ; and the idea that the interests of workers in other countries may have to be sacrificed to protect ours. While our fellow citizens are shocked by discovering the consequences of the industrial dependence of our country for products that have become precious (masks, tests etc.), Macron displays not only a possible temporary nationalization of certain "strategic" companies but also possible relocations of productions. What about the facts?

Nationalizations ? The gifts distributed by the billions to support the flagships of the CAC 40 have not caused any rise by the State in the capital of the companies concerned. However, with the collapse of their share prices, the opportunity for massive redemptions presented itself. As for the relocations of production, nothing concrete appears and bourgeois economists dissertate on a different concept: the approximation of relocations. Clearly, if it is necessary to leave from countries at low cost, it is to install the productions in countries less demanding politically than China and whose costs can even be lower and the governments more obedient: Eastern Europe, the southern Mediterranean. But not the national territory as it is true that the law of the market makes the law !

Foreign investment control ? The State supervises and can stop non-European investors (private funds or sovereign funds [31]) who want to invest in a French company [32]beyond 25% stake. Macron not only lowers the control bar to an equity stake of 10%, but he notoriously widens the list of sectors concerned by this control, including biotechnology.

Simple conclusion: There is patriotism only for the benefit of the holders of French capital. For workers, unemployment can soar ! At UCL, our strategic axis is based on the idea of local production autonomy, [33]self-management, within the framework of a federalism putting an end to competition between workers organized by multinationals in the context of globalization. liberal.

This note was produced by the Economic Working Group of UCL, aiming to synthesize essential data on the economic situation that we are going through with the coronavirus crisis. It has evolved in the form of a newsletter, structured in several articles of various sizes. It is as sourced and factual as possible, and aims to link the main data on the economic situation with more general political and social analyzes. However, it was carried out by activists who are not economic professionals. Do not hesitate to make any constructive feedback.

You can view the previous note here .

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[1] https://www.agri-mutuel.com/cotations/mais/ & https://www.agri-mutuel.com/cotations/orge-de-printemps/ weekly analyzes, pages may have changed between time (last visited on 1 stMay evening)

[2] https://www.parismatch.com/Actu/Economie/Coronavirus-La-grande-destabilisation-du-monde-agricole-1683041

[3] https://www.parismatch.com/Actu/Economie/Muguet-les-maraichers-nantais-crainent-le-pire-1682827

[4] https://www.parismatch.com/Actu/Economie/Coronavirus-La-grande-destabilisation-du-monde-agricole-1683041

[5] https://www.capital.fr/entreprises-marches/biere-le-confinement-risque-de-plomber-les-ventes-avertit-kronenbourg-1368787

[6] https://www.agri-mutuel.com/cotations/orge-de-printemps/ weekly analysis already cited

[7] . Main valuation value on the agricultural financial markets, because the majority in volumes + important data since it is the most consumed cereal, for the preparation of bread and pasta in particular

[8] https://www.agritechtrade.com/actualites/matieres-premieres/le-prix-du-ble-sous-pression-en-europe-soit-a-loppose-des-etats-unis

[9] https://www.agri-mutuel.com/cotations/ble-tendre/ analyzed weekly, visited for the last time on 1 stMay evening

[10] https://actu.fr/nouvelle-aquitaine/marmande_47157/agriculture-emplois-saisonniers-etrangers-font-peser-danger_33331072.html

[11] https://www.terre-net.fr/actualite-agricole/politique-syndicalisme/article/coronavirus-mesures-urgence-didier-guillaume-reconnait-une-deception-vis-a-vis-de-l -ue-205-168425.html

[12] https://www.agritechtrade.com/actualites/matieres-premieres/avec-le-covid-19-vers-une-une-reduction-de-loffre-et-une-hausse-des-cours-du-ble

[13] Jean-Pierre BORIS, Traders, true masters of the world: survey of the raw materials market, Tallandier, 2017, p.41.

[14] https://www.agritechtrade.com/actualites/matieres-premieres/avec-le-covid-19-vers-une-une-reduction-de-loffre-et-une-hausse-des-cours-du-ble and https://www.reussir.fr/grandes-cultures/les-exportations-francaises-de-ble-tendre-parties-pour-un-record-historical

[15] https://www.agritechtrade.com/actualites/matieres-premieres/avec-le-covid-19-vers-une-une-reduction-de-loffre-et-une-hausse-des-cours-du-ble

[16] Ibid

[17] https://www.agritechtrade.com/actualites/matieres-premieres/le-prix-du-ble-sous-pression-en-europe-soit-a-loppose-des-etats-unis

[18] https://www.agri-mutuel.com/cotations/ble-tendre/

[19] Ibid.

[20] https://www.bfmtv.com/economie/la-russie-suspend-ses-exportations-de-cereales-jusqu-au-1er-juillet-1901904.html

[21] https://www.agri-mutuel.com/cotations/colza/ weekly analysis, visited for the last time on 1 stMay evening

[22] https://www.lemonde.fr/argent/article/2020/02/17/quelles-alternatives-au-livret-a_6029808_1657007.html

[23] https://www.lemonde.fr/argent/article/2020/04/28/les-francais-inquiets-remplissent-leur-livret-a-tandis-que-d-autres-investissent-en-bourse_6037956_1657007 .html

[24] https://www.lafinancepourtous.com/decryptages/finance-perso/epargne-et-placement/livret-a/la-regle-de-fixation-du-taux-du-livret-a/

[25] https://nouveau-europresse-com.bibelec.univ-lyon2.fr/Document/View?viewEvent=1&docRefId=0&docName=news%C2%B720200131%C2%B7SO%C2%B7310120ap10837485&docIndex=0

[26] https://www.lemonde.fr/economie/article/2020/04/28/coronavirus-chute-brutale-de-la-confiance-des-menages_6038003_3234.html

[27] https://www.lafinancepourtous.com/decryptages/finance-perso/epargne-et-placement/livret-a/la-regle-de-fixation-du-taux-du-livret-a/

[28] https://www.alternatives-economic.fr/livret-a-gouvernement-nepargne-francais/00091523

[29] https://www.economie.gouv.fr/livret-a-reforme-formule-calcul-taux

[30] https://www.capital.fr/votre-argent/le-livret-a-ne-finance-pas-leconomie-trois-placements-utiles-et-plus-rentables-1367663

[31] Sovereign wealth funds are hedge funds held by a State whose utility is both economic and geo-strategic.

[32] A multinational whose capital is listed on the Paris stock exchange is said to be "French". Its employees are nevertheless global

[33] https://www.unioncommunistelibertaire.org/Contre-le-libre-echange-l-autonomie-productive-5148

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