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Category: Agriculture

Published March 14, 2011

Q&A on Food Prices in The Chronicle

I did a Q&A last week with The Chronicle — the student newspaper here at Duke University, not the other Chronicle — on, among other things, the relationship between food prices and political unrest:

TC: What sort of relationship exists between food prices and political turmoil?

MB: I think the causal relationship flows mostly from high food prices leading to political unrest. I can’t make a definite causal statement. We can’t observe a world in which nothing would have changed except for food prices, because there are so many factors that cannot be controlled. In the summer of 2008, it is uncanny that during that period of high food prices we had revolt in Indonesia and East Africa. Likewise, we are experiencing high food prices, and we have unrest in the Mediterranean.

Read the whole thing here. As an erratum, note that whoever wrote the lede got my affiliation wrong: I am an Assistant Professor of Public Policy and Economics, not an Assistant Professor of Economics.

 

Published March 14, 2011

Why US Food Prices Haven’t Increased Significantly

From Patrick Westhoff’s The Economics of Food:

“Because there are so many steps between the farm and the consumer, prices usually change proportionately less at the consumer level than they do at the farm level. Even though prices for some food products doubled at the farm level between 2005 and 2008, the increase in US consumer food prices was only 4.0 percent in 2007 and 5.5 percent in 2008. In fact, some of that increase in consumer food prices cannot be attributed to changes in farm-level prices, but rather to high energy prices that increased the cost of transporting and processing food. (…)

In lower income countries, consumers tend to eat more staple foods, and less value is added to food after it leaves the farm. As a result, the sharp increase in world cereal prices from 2005 to 2008 translated into larger increases in consumer food prices in low-income countries than in the United States. For example, FAO reported that consumer food prices in developing countries rose by an average of 13.5 percent in the year ending in February 2008.”

I had my doubts about this book when I clicked “Add to Cart,” but so far I have learned a number of new things from reading it.

 

Published March 10, 2011

More Frequent Spikes in Food Prices in the Future?

From Deutsche Bank, via the Wall Street Journal:

“Food prices are likely to start falling later in 2011 but will remain high for the rest of this decade (…) We expect spikes in food prices to occur with increasing frequency, mostly due to weather disruption and climate change.”

In sum, the food price level is expected to remain high on average, but food price volatility is expected to increase? If so, agricultural producers will be the ones who suffer more than consumers.