The Impact of Oil Price Fluctuation on the Price of Agricultural Products Considering the Food Crisis Periods

Abstract

Introduction: Fluctuations of oil price and petroleum products have had different effects on great economic variables. One of these cases would be Dutch Disease in some countries. The aim of this paper is to study The effect of Oil Price Fluctuation on the Price of Agricultural Products. Materials and Methods: In this paper we used the PVAR method. The statistical information of 14 oil-importing countries and 10 oil-exporting countries in the time period of 1990-2018 was used. The variables used in this study include corn price logarithm, rice price logarithm, soybeans price logarithm, wheat price logarithm, barley price logarithm, real currency rate logarithm, crude oil price logarithm, world oil production logarithm, world real economic activity logarithm and oil safety reserve logarithm. Findings: The price reaction of these products to oil shocks, total demand and merchandise market are similar and meaningfully positive in both oil exporting and oil importing countries in terms of direction, intensity and pattern. The results indicate that the oil price shocks lead to an increase in the price of agricultural products. Conclusion: It seems that to The results concluded out of price change estimations of agricultural products (corn and soybeans in particular) show that in addition to direct effect, oil shocks indirectly influence the price of agricultural products via total supply and demand shocks.