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Welcome to STSA

A remedy for high prices: investment in agriculture

Geneva, 8 September 2015 –The Swiss Trading and Shipping Association (STSA), the Swiss industry association for the commodity trading sector, is today publishing its study on “Determinants of agricultural commodity prices” which will contribute to a better understanding of the functioning of agricultural commodity markets.

In its role as the industry association for the commodity trading and shipping sector, STSA works to promote the positive image of the industry, and to ensure a better comprehension of the trader’s role.

Within the academic and public debate on the origins of agricultural commodity price spikes between 2008-2011, STSA has used its expertise to explain the functioning of agricultural markets and price fluctuations.

The first part of the publication presents the factors that affect the equilibrium between supply and demand, as well as climate change, growth in demand and government intervention. Investment in the agricultural sector, encouraging youth employment in agriculture, and the spread of more effective methods of production are also discussed.

The second part of the analysis turns to the role of financial markets and treats the question of the importance and the role of liquidity for the proper functioning of markets. Limiting access to financial markets could affect their liquidity and increase price volatility and rises in the short term. The research paper cites the conclusions of the FAO: “Adequate regulation should improve, not ban, speculative trading in order to foster market performance.”

The publication concludes that prices are determined by the supply-demand balance and demand for commodities. In order to ensure correct pricing of agricultural products, the impact of natural factors must be reduced, education and innovation encouraged, investment in agriculture increased, the access for women and young people to agricultural jobs facilitated and the status of farmers enhanced.

Research paper available in EnglishFrench and German

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