Food Commodity Prices Research Articles

Three bubbles and a panic: An explanatory review of recent food commodity price events

This paper is a summary of the behaviour of food commodity prices in 2007–2008 and a review of the causes of the price increases, extracted from a report to the Chief Scientific Advisor to Her Majesty’s Government [Thirtle, C., Piesse, J., 2008. An Explanatory Review of the World Food Commodity Price Events of 2007–2008. A Report to the Chief Scientific Advisor. Department for Innovation, Universities and Skills, London]. The historical background shows that the price spike was much less severe than in the 1970s. The conventional wisdom that prices of the main food commodities were falling prior to 2006 is questioned. Most ceased falling and were quite stable from the 1980s. The paper separates the causes of the spike from the underlying changes driving the long run trends. The literature on the causes of the spike is critically reviewed and summarised. There is a reasonably broad consensus on most of the causes, but much less on the impact of the depreciation of the US Dollar. There are also concluding speculations on the future.

Trends, drivers and impact of high food commodity prices.

Abstract Price hikes are frequent in agricultural commodity prices, though a spike such as the 2007/2008 one had not been seen for 34 years. The causes are various in nature. There is a strong increase in the demand for industrial use and for feed use, owing to biofuel expansion and to changing diet habits in emerging countries, respectively. On the supply side, there has been a low supply response because of adverse weather conditions in some important exporting countries. As a consequence of the tight demand/supply situation, stocks are decreasing dramatically. The problem of high prices of basic food commodities exposes governments and societies to a great challenge that can only be addressed by means of a comprehensive food policy for the coming years. The challenge is to address the adverse impact of high food prices in the short run without compromising the long-run equilibrium of agricultural markets. High food prices in the short-run are very damaging for low-income groups of the population in developing countries. At the same time, high prices are an incentive for producers and extremely important for generating an aggregate supply response and to re-establish a long-run equilibrium. Agriculture is a sector where markets are far from perfect and require the presence of functioning institutions and public goods, which are lacking in most of the developing countries. There is the need to ' get institutions right ' and to undertake investments in the provision of public goods together with the right price signals. Only by putting in place these complementary policies can a situation of high prices can become an opportunity.

Editorial

Welcome to the first issue of the seventh volume of the Plant Biotechnology Journal. It is difficult to believe that the journal is now six years old and that the Plant Biotechnology Journal has now published ~350 of the very best research and review articles in pure and applied plant sciences. Looking back at these articles I am pleased to report that many have been highly cited, with the very first (‘The molecular analysis of leaf senescence – a genomics approach’, Buchanan-Wollaston et al., Plant Biotechnology Journal, 1, 3–22, 2003) being cited 121 times. In 2008, the Plant Biotechnology Journal increased the number of annual issues from six to nine. This increase has proven to be a great success, in so much as it has enabled the editorial office to speed up the processing of manuscripts so that our average time from submission to first decision has been reduced from a respectable 24 days to just 21 days. The editorial team believes that this rapid turnaround is one of the primary reasons for the increased number of manuscripts submitted in 2008. However, unfortunately, this significant increase has also resulted in an increase in the number of manuscripts rejected; currently 75% of the manuscripts submitted to the Plant Biotechnology Journal are rejected at some point during the review process. In connection with the Plant Biotechnology Journal's high rejection rate, I am often asked by authors for advice on how to minimize the chance of rejection. In response, I have three simple pieces of advice: (i) only submit your best manuscripts to the Plant Biotechnology Journal, as only those manuscripts that include novel findings of biological significance will be accepted for review; (ii) provide the journal with concise manuscripts, in the correct format and free from grammatical and typographical errors; and (iii) be prepared to meet, in full, the requirements of both the reviewers and the handling editor. By meeting all of these criteria authors will considerably enhance the chances of their manuscript being published in the Plant Biotechnology Journal. In 2008, we at the Plant Biotechnology Journal were fortunate in being able to recruit Professor Malcolm Campbell from the University of Toronto to its editorial team. Professor Campbell is a leading authority on the molecular mechanisms that control plant architecture, including the regulation of those aspects of plant growth and development that are critical in architectural design. During 2009, the editorial team of the Plant Biotechnology Journal intends to publish several special issues covering topics of immediate interest to our readers. So far two special issues, one on biofuels and one on SNP development and high throughput genotyping, are planned. In addition, the editorial team is also interested in hearing from you our readers about titles for other possible special issues. Although worthwhile, publishing special issues is time consuming; hence, the editorial team would be interested in hearing from appropriately experienced researchers interested in co-editing specific special issues. Finally, plant researchers like all researchers are not immune from the socioeconomic factors that affect all of human kind. The last 12 months have seen the price of food commodities hit record highs only to drop rapidly as the various world economies slip into recession. Although such events are alarming and will unfortunately have numerous consequences, they should not blind us to the fact that the human race is running out of time and options. It is my personal view that the major problems facing the human race are a lack of resources, which are both food and fuel-based. As I suggested during my 2008 editorial, many of these problems can only be solved by the appropriate use of plant-based science and technology. Hence, in 2009 I look forward to seeing more papers published that use plant biotechnology to address such global issues.

Food price increases and net food importing countries: lessons from the recent past

AbstractRecent increases in food and other commodity prices have highlighted concerns that many poor countries are net food importers and higher food prices would worsen their trade balances. In this article, we analyze the changes in food trade balances associated with the 32% increase in food prices from 2000/2001 to 2004/2005. We find a small deterioration in food trade balances of low‐income countries and an improvement in middle‐income countries. The deterioration is most severe for countries in conflict and small island states, so attention should be placed first on these countries and on a few very‐low‐income countries that are also vulnerable. Because low‐income countries as a group had much lower agricultural GDP growth rates than middle‐income countries, the answers to food vulnerability in low‐income countries should probably be addressed within the context of incentives for agricultural production.

High food commodity prices: will they stay? who will pay?

AbstractMuch of the public discussion of the food price crisis has focused on the sharply increased use of food commodities for biofuel production, framing debate in simple food versus fuel terms. Reality is more complex. Multiple forces drove food prices to high levels and, according to findings we report in this article, these forces will sustain high prices over the medium term. We also find that the distinction between high world prices for food commodities and the consumer costs of food is an important one to make. Food consumers do not buy raw food commodities at international prices. The degree to which the price of traded food commodities and the price of food are related depends on a long list of factors, most of which operate to dampen price transmission. In the search for appropriate policy response, it is essential to measure consumer effects correctly and to apportion properly the causes of current high prices.

Farm subsidies and obesity in the United States: National evidence and international comparisons

Many commentators have claimed that farm subsidies have contributed significantly to the “obesity epidemic” by making fattening foods relatively cheap and abundant. But U.S. farm policies have generally small and mixed effects on farm commodity prices, which in turn have even smaller and still mixed effects on the relative prices of more- and less-fattening foods. Other factors have had much more influence on reducing the farm prices of food commodities and the consumer prices of food such that any effects of U.S. farm policies on U.S. obesity patterns must have been negligible. Moreover, while many arguments can be made for changing U.S. farm subsidies, even entirely eliminating the current programs could not be expected to have a significant influence on obesity rates. International evidence reinforces this finding. The countries that support their farmers most strongly tend to have relatively low obesity rates. In these countries the main support for farmers comes through trade barriers and higher consumer prices, which—like U.S. policies for sugar, dairy, orange juice, and beef—discourage consumption and reduce obesity. In contrast with agricultural subsidies, agricultural R&D has had a significant effect in the past on the relative price of food commodities and food, and has the potential to influence obesity patterns in the future, but R&D policy is a very blunt instrument for pursuing public health policy objectives.

Agricultural efficiency and welfare in South Africa

Agricultural and food commodity price declines associated with domestic and international agricultural efficiency gains can have important welfare effects for a country. While food price reductions benefit low-income consumers in particular, they may also cause declines in agricultural employment, leading to some resistance to technological change as a policy goal. The simulations reported here use a South African Computable General Equilibrium model with highly disaggregated food and agricultural sectors to illustrate the various effects of such agricultural efficiency gains. The results suggest that technological advances in agriculture should not be resisted because of their negative impact on agricultural employment; the welfare gains from declining prices are too important, while employment gains in other (growing) sectors are likely to outweigh the loss of agricultural employment. In the face of increasing international efficiency South African agriculture should be encouraged to respond by also increasing its efficiency, despite the negative consequences for employment in the industry, as a failure to do so may be even more detrimental to the poor in terms of overall employment.

Globalisation: a study of the poultry‐meat supply chain

Increasing globalisation of the poultry‐meat supply chain has led to consolidation and evolution of transnational companies, whether by vertical or horizontal integration, and the development of business clusters. There are significant benefits in these economies of scale, especially improved purchasing power and greater intellectual, technological and production resources for organizations to draw upon to provide products that meet differentiated customer needs. The consumer has seen the benefit of globalisation in lower commodity food prices, wider product choice and the advent of “convenience” food. Seeks to review the key factors that have led to the globalisation of the poultry supply chain and the impact of these changes. The poultry supply chain was chosen because it is highly integrated and the research includes a literature review and an evaluation to determine how it specifically relates to the poultry supply chain. Identifies the factors that affect current and future developments in food globalisation, including: relative strength of currencies; speed of technology transfer to developing countries; tax and regulatory burden in nation states or trading groups; cost of capital and labour and its effect on competitiveness; continuing production specialization and greater differentiation between domestic and international meat trade; and concerns over production methods, food safety and hygiene standards. Analyses the impact of globalisation of the food supply chain to all sectors and will be of interest to academics and those working in food supply.

Policy Options for Developing Countries to Support Food Security in the Post-Uruguay Round Period

ABSTRACT This paper analyzes the possible evolution of the level and variability of world market prices of basic food commodities as a result of the Uruguay Round Agreement on Agriculture and other developments under way. Policy options available to developing countries to support food production and to safeguard against market instability are identified, and suggestions are made on how the international community can support these efforts. Overall, existing flexibility in the Agreement on Agriculture allows developing countries to pursue policies in support of domestic food production and consumption and to mitigate the effects of possible world price instability Some remaining problems must be addressed during the continuation of the reform process under the World Trade Organization, scheduled to be initiated in 1999.

Understanding the health and nutritional status of children in Ghana

Abstract The data set of the Ghana Living Standards Survey (GLSS, round 1, 1987/1988) was utilized to analyse the principal determinants (publicly and privately) of health and nutrition of children under five in Ghana. While in most health and nutrition studies the emphasis is either on health-related factors such as occurrence of illness, immunization, accessibility to light (electricity), the role of breastfeeding, or on food availability and food-consumption-related factors, in the present study, an attempt has been made to incorporate both aspects simultaneously. On the basis of the GLSS, Ghanaian households spend at the average approximately 60% of total expenses on food. Changes in relative prices of the various food commodities differently affect household food availability. Lowering prices of relatively cheap foods (e.g., millet, cassava) tends to have a strong positive effect on total household kcal availability. At the level of the household, the absolute number of nondependents, presumed to represent the available labour force, is positively correlated with household food availability. There is also a positive correlation between the mothers' level of education (10 yrs of schooling and above) and the nutrition level of children. Occurrence of illness in children could be shown to negatively affect their health and nutrition status. Finally, a specific finding in the analysis was a rather strong negative effect of prolonged breastfeeding on the nutritional status of children. Among the policy recommendations emanating from the research are: (1) promotion of efficient production and marketing of cassava, (2) efforts to achieve slowing down of rural-urban migration to prevent labour shortages in rural households, (3) improving water and sanitation conditions, (4) expanding immunization programmes in particular in rural areas, and (5) promoting better weaning practices when children are no longer fully breastfed.

Understanding the health and nutritional status of children in Ghana

AbstractThe data set of the Ghana Living Standards Survey (GLSS, round 1, 1987/1988) was utilized to analyse the principal determinants (publicly and privately) of health and nutrition of children under five in Ghana. While in most health and nutrition studies the emphasis is either on health‐related factors such as occurrence of illness, immunization, accessibility to light (electricity), the role of breastfeeding, or on food availability and food‐consumption‐related factors, in the present study, an attempt has been made to incorporate both aspects simultaneously. On the basis of the GLSS, Ghanaian households spend at the average approximately 60% of total expenses on food. Changes in relative prices of the various food commodities differently affect household food availability. Lowering prices of relatively cheap foods (e.g., millet, cassava) tends to have a strong positive effect on total household kcal availability. At the level of the household, the absolute number of nondependents, presumed to represent the available labour force, is positively correlated with household food availability. There is also a positive correlation between the mothers' level of education (10 yrs of schooling and above) and the nutrition level of children. Occurrence of illness in children could be shown to negatively affect their health and nutrition status. Finally, a specific finding in the analysis was a rather strong negative effect of prolonged breastfeeding on the nutritional status of children. Among the policy recommendations emanating from the research are: (1) promotion of efficient production and marketing of cassava, (2) efforts to achieve slowing down of rural‐urban migration to prevent labour shortages in rural households, (3) improving water and sanitation conditions, (4) expanding immunization programmes in particular in rural areas, and (5) promoting better weaning practices when children are no longer fully breastfed.

Liberalization and food price distributions: ARCH-M evidence from Madagascar

There is no well-articulated theory of how stochastic food prices respond to economic liberalization measures, a surprising oversight in the vast literature on market-oriented reforms. This paper presents reduced form estimates of the effects of liberalization measures on food commodity prices in Madagascar using autoregressive conditional heteroskedastic in mean (ARCH-M) methods. The data indicate that the short-term effects of liberalization on the mean and variance of food prices vary substantially by commodity, region and season. In the long term, liberalization increases both the mean and the variance of food prices. The abandonment of a quantity-rationed state marketing system with administrative pricing also leads to smaller inter-regional and interseasonal differences in mean food prices and a sharp increase in price autocorrelation. Real exchange rates have pronounced positive effects on mean food prices, but these effects emerge indirectly, rather than directly, through induced changes to border parity prices.

World Agricultural Trade Reform: Implications for Australia

In this paper we assess the implications of agricultural trade reform by GATT member countries. To do this, we link two general equilibrium models, a world food trade model and the ORANI model of the Australian economy. By treating the ORANI model as an integral part of the world model, we are able to focus on the implications for Australia of world agricultural trade reform.The findings suggest that, if price distorting agricultural policies were removed by GATT member countries, world food commodity prices would rise, some by up to 30 per cent, and world food trade expand by about a third. Australia would be a major beneficiary of these international developments, the value of its agricultural exports rising by close to 15 per cent. In 1986, this would have meant for Australia additional export earnings of around SUS750 million, as well as more rapid economic growth.

Large-scale droughts over India and their impact on agricultural production

For most parts of India, the crops are rainfed, Rainwater received over the country undergoes variation from year to year. In some years, the rainwater received is very inadequate and the country suffers from drought, In this study, a large-scale drought over India is defined as the situation when the rainwater received over the country is less than the tenth percentile of the probability distribution of the annual rainwater. While computing the rainwater over the country, hilly areas have been excluded, The tenth percentile of the rainwater distribution over the country is 2760 cu. km. In accordance with the foregoing criterion, the years of large-scale drought over India during the period 1871-1978 are, 1873, 1876, 1877, 1905, 1918, 1920, 1941, 1965 and 1972, in all 10 years. Of the different meteorological parameter, rainwater is the most important from the point of view agricultural production in dry farming areas, Non-rneteorological factors, e.g., crop pests and diseases and technological improvements also affect the production significantly; these are, however, taken to be fairly constant from one year to the next. The effect of large-scale drought on agricultural production has been assessed by computing the percentage change to production from the preceding year to the year of large-scale drought, for each of the drought year for which the statistics of production are available. On the basis of the seven large-scale drought years for which statistics of production are available, it is seen that the mean values of the percentage fall in the country's total production of food grains, rice and wheat were 16, 11 and 12 per cent respectively, the highest falls observed being 30-35 per cent, mostly for 1918. The prices of food grains, rice and wheat are affected by the amounts of their production, The percentage changes is the prices in the years succeeding large-scale drought years have been computed in all the cases. The mean rise in the wholesale prices of food grains, rice and wheat was 26, 26 and 21 per cent respectively, the highest rise of 54, 69 :and 47 per cent being recorded as a result of the large-scale drought of 1918. It has, however, to be remembered that a part of the rise in prices due to the drought year of 1918 has to be attributed to the World War II. The study clearly brings out the extent of the decrease in the country's agricultural production and the extent of the all India rise in prices of food grains and food commodities, like rice and wheat as a result of the large-scale droughts.

Commodity Marketing and Generic Promotion

Suggests some ways of overcoming large and unpredictable fluctuations in demand and prices of food commodities. Proposes, in order to maintain some equilibrium, there must be a“buyer of the last resort” – a mechanism for fixing a floor to the price of a product, or temporarily increasing supplies or damping demand in order to keep an upper limit. States that fresh produce conforms to few of the basic assumptions of classical marketing theory, and has an inherent tendency towards market instability. Concludes that commodity marketing faces problems unknown in a manufacturing industry and the essential skill lies in understanding the distributors and consumers, and successfully communicating with them.

The structure of agricultural marketing in the United Kingdom

Shows how the marketing of agricultural products differs from the marketing of consumer goods, dealing chiefly with marketing in the home‐produced sector. Presents a general survey of the main structural features of leading UK marketing boards and private enterprise systems of distribution. Suggests some future trends in agricultural marketing which will take place on entry into the European Economic Community, effecting sources of supply and absolute and relative prices of most food commodities.