A Note on Rising Food Prices

The rapid rise in food prices has been a burden on the poor in developing countries, who spend roughly half of their household incomes on food. This paper examines the factors behind the rapid increase in internationally traded food prices since 20...

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Bibliographic Details
Main Author:	Mitchell, Donald
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AGRICULTURAL EXPORTS AGRICULTURAL MARKETS AGRICULTURAL PRODUCTS AGRICULTURE ANIMAL FATS BANANAS BEETS BIODIESEL BIOFUEL BIOFUEL PRODUCTION BIOFUEL USE BIOFUELS BIOFUELS PRODUCTION BY-PRODUCTS CEREAL PRICES CEREALS CLIMATIC CONDITIONS COMMODITY COMMODITY PRICE COMMODITY PRICES CONSUMER PRICES CONSUMERS CORN CORN PRICES COST INCREASES COTTONSEED CROP CROP PRICES CROP PRODUCTION CROP PROSPECTS DEBT DEMAND FOR FOOD DEMAND GROWTH ELASTICITY ENERGY PRICES ETHANOL ETHANOL PRODUCTION EXCHANGE RATES EXCISE TAXES FAO FARM FERTILIZER FINANCIAL CRISIS FLAX FOOD EXPORTS FOOD GRAINS FOOD POLICY FOOD POLICY RESEARCH FOOD PRICES FOOD PRODUCTION FOOD PRODUCTS FOOD RIOTS FOODS FORECASTS FOSSIL FUELS GRAIN GRAIN CONSUMPTION GRAIN PRICES GRAIN PRODUCTION HOUSEHOLD INCOMES IFPRI INFLATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE MAIZE MAIZE PRODUCTION MARKET DEVELOPMENTS MARKET PRICES MEAL MEATS OILSEED PRICES OILSEEDS PALM OIL PALM OIL PRICES POULTRY POULTRY INDUSTRY PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INFLATION PRODUCE PRODUCTION COSTS PROTEIN RAPESEED RENEWABLE FUELS RETAIL RETAIL PRICES RICE RICE PRICE RICE PRICES RICE PRODUCTION SOYBEAN SOYBEAN OIL SOYBEAN PRICES SOYBEANS STARCH STOCKS SUBSTITUTES SUBSTITUTION SUGAR SUGAR CANE SUGAR CROPS SUNFLOWER SUNFLOWER OIL TOTAL COSTS VEGETABLE OIL VEGETABLE OILS WHEAT WHEAT FUTURES WHEAT PRICES WORLD MARKET WORLD MARKETS YIELDS
Online Access:	http://documents.worldbank.org/curated/en/2008/07/9724305/note-rising-food-prices http://hdl.handle.net/10986/6820

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Summary:	The rapid rise in food prices has been a burden on the poor in developing countries, who spend roughly half of their household incomes on food. This paper examines the factors behind the rapid increase in internationally traded food prices since 2002 and estimates the contribution of various factors such as the increased production of biofuels from food grains and oilseeds, the weak dollar, and the increase in food production costs due to higher energy prices. It concludes that the most important factor was the large increase in biofuels production in the U.S. and the EU. Without these increases, global wheat and maize stocks would not have declined appreciably, oilseed prices would not have tripled, and price increases due to other factors, such as droughts, would have been more moderate. Recent export bans and speculative activities would probably not have occurred because they were largely responses to rising prices. While it is difficult to compare the results of this study with those of other studies due to differences in methodologies, time periods and prices considered, many other studies have also recognized biofuels production as a major driver of food prices. The contribution of biofuels to the rise in food prices raises an important policy issue, since much of the increase was due to EU and U.S. government policies that provided incentives to biofuels production, and biofuels policies which subsidize production need to be reconsidered in light of their impact on food prices.

A Note on Rising Food Prices

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