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Food Price Surges: Possible Causes, Past Experience, and Longer Term Relevance

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  • Nikos Alexandratos
Abstract
The food price surges of recent years have created much misery and raised once again the Malthusian specter. Increases in the demand for food in the emerging economies, particularly China and India, have frequently been identified as the dominant factor behind a perceived shock on the demand side. Use of crops for biofuels was listed as an additional, though less important, factor. Yet global cereals utilization without biofuels has been growing at slowly decelerating rates, as in the past. It is the addition of biofuels that has resulted in its growing faster than in the past. In parallel, global production had been falling behind utilization for several years, leading to declining stocks. Weather shocks, depreciation of the dollar, and turbulence in the financial markets were added to these fundamentals of the supply–demand balance to generate the price surges. If energy prices remain high and/or rising and pro‐biofuel policies remain in place, the diversion of crops to biofuels is likely to continue. This could prevent the current commodity cycle from unfolding in the “normal” way over the short to medium term with prices trending back toward their pre‐surge levels. Conclusions are drawn about how these developments should influence the way we assess long‐term food and agriculture prospects.

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  • Nikos Alexandratos, 2008. "Food Price Surges: Possible Causes, Past Experience, and Longer Term Relevance," Population and Development Review, The Population Council, Inc., vol. 34(4), pages 663-697, December.
    • Handle: RePEc:bla:popdev:v:34:y:2008:i:4:p:663-697
    DOI: 10.1111/j.1728-4457.2008.00245.x
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    References listed on IDEAS

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    Cited by:

    1. John Baffes, 2014. "Global Economic Prospects : Commodity Markets Outlook, October 2014," World Bank Publications, The World Bank, number 20455.
    2. Ederer, Stefan & Heumesser, Christine & Staritz, Cornelia, 2013. "The role of fundamentals and financialisation in recent commodity price developments: An empirical analysis for wheat, coffee, cotton, and oil," Working Papers 42, Austrian Foundation for Development Research (ÖFSE).
    3. Baffes, John & Haniotis, Tassos, 2010. "Placing the 2006/08 commodity price boom into perspective," Policy Research Working Paper Series 5371, The World Bank.
    4. Youzhu Li & Jingbo Xia & Chongguang Li & Mingyang Zheng, 2015. "Construction of an Early-Warning System for Vegetable Prices Based on Index Contribution Analysis," Sustainability, MDPI, vol. 7(4), pages 1-15, March.
    5. Pallab Paul & Kausiki Mukhopadhyay, 2010. "Growth via Intellectual Property Rights Versus Gendered Inequity in Emerging Economies: An Ethical Dilemma for International Business," Journal of Business Ethics, Springer, vol. 91(3), pages 359-378, February.
    6. Rudrani Bhattacharya & Abhijit Sen Gupta, 2015. "Food Inflation in India: Causes and Consequences," Working Papers id:7141, eSocialSciences.
    7. Harding, Torfinn & Herzberg, Julika & Kuralbayeva, Karlygash, 2021. "Commodity prices and robust environmental regulation: Evidence from deforestation in Brazil," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    8. Tangermann, Stefan, 2011. "Policy Solutions to Agricultural Market Volatility: A Synthesis," Price Volatility and Beyond 320209, International Centre for Trade and Sustainable Development (ICTSD).
    9. Jena, Pratap Kumar, 2015. "Commodity Prices and Macroeconomic Variables in India: An Auto-Regressive Distributed Lag (ARDL) Approach," MPRA Paper 73892, University Library of Munich, Germany.
    10. Geraldo Sant'ana de Camargo Barros & Lucilio Rogerio Aparecido Alves & Mauro Osaki, 2010. "Biofuels, food security and compensatory subsidies," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 2(4), pages 433-455, November.
    11. World Bank Group, 2016. "Commodity Markets Outlook, July 2016," World Bank Publications, The World Bank, number 24735.
    12. Castells-Quintana, David & Lopez-Uribe, Maria del Pilar & McDermott, Thomas K.J., 2022. "Population displacement and urban conflict: Global evidence from more than 3300 flood events," Journal of Development Economics, Elsevier, vol. 158(C).
    13. John Baffes & Tassos Haniotis, 2016. "What Explains Agricultural Price Movements?," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 706-721, September.
    14. Rudrani Bhattacharya & Abhijit Sen Gupta, 2018. "Drivers and impact of food inflation in India," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 11(2), pages 146-168, May.
    15. Sukati, Mphumuzi, 2014. "The South African Bio ethanol blend mandate and its implications on regional agricultural markets and welfare," MPRA Paper 57702, University Library of Munich, Germany.
    16. Natalia Brzezina & Birgit Kopainsky & Erik Mathijs, 2016. "Can Organic Farming Reduce Vulnerabilities and Enhance the Resilience of the European Food System? A Critical Assessment Using System Dynamics Structural Thinking Tools," Sustainability, MDPI, vol. 8(10), pages 1-32, September.
    17. Hanjra, Munir A. & Qureshi, M. Ejaz, 2010. "Global water crisis and future food security in an era of climate change," Food Policy, Elsevier, vol. 35(5), pages 365-377, October.

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