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Category: Biofuels

Published March 13, 2012

Do Food Prices Track Oil Prices?

Not necessarily, argues Kay McDonald on the basis of a recent OECD report:

While it is partly true in the industrial agricultural system that “food equals oil,” there are many other factors which affect food prices, including the definition of “food” used in making the comparison. Below, I’ve listed some of them.

  • The dollar’s value compared to currencies of other food exporting and importing nations.
  • Supply and demand.
  • Amount of food used for biofuel production.
  • Available infrastructure in transport and storage of food.
  • The price of natural gas.
  • Economic health of each nation.
  • The amount of global meat consumption.
  • Weather.
  • Population growth.
  • The percent of food wasted.
  • Transport prices (not always the same as oil prices, as, for example, currently we have excess bulk shipping capacity which has lowered shipping rates).
  • Government Ag policies and price support programs.
  • Trade agreements.
  • Geopolitics.

In her post, Kay also discusses how the OECD report finds no support for the claim that food price volatility has increased  significantly over the last few years when compared to the last 50 years.

More generally, if you have any interest in food policy, Kay’s blog, Big Picture Agriculture, is a must-follow.

Published December 16, 2011

Food Prices Helped Trigger the Arab Spring

And it looks like I am no longer the one saying it: the following VOA news clip features both International Food Policy Research Institute director-general Shenggen Fan as well as my coauthor Chris Barrett:

For more in-depth reading on this topic, see:

(HT: Chris Barrett, via Facebook.)

 

Published November 17, 2011

Super Committee: Cut US Farm Subsidies, Not Foreign Aid; Pass Go, Save $20 Billion

So says the Center for Global Development’s (CGD) Kimberly Ann Elliott in a recent post:

As a start, CGD colleague Connie Veillette and John Norris from the Center for American Progress identified five ways to “make aid more effective and save more than $2 billion.” Three of their five recommendations involve cuts in subsidies for farmers, shippers, and NGOs that would make US food aid policies more flexible, responsive, and development-friendly… and save a half billion dollars. In addition, Connie and John recommended cutting at least $1.5 billion from farm subsidies, which go disproportionately to larger, richer producers.

Increasingly in the congressional debate, the $5 billion in “direct payments” that go to farmers every year — regardless of crop prices or yields, and on top of any other subsidies they receive — have moved squarely into the budget-cutting bulls eye. Eliminating those payments, which were created almost two decades ago as part of a failed effort to reform farm subsidies, is certainly justified, but those payments are delinked from production and cutting them would do little to reduce the global distortions imposed on developing-country producers. There is also another $10-12 billion in trade-distorting subsidies that undermine incentives to invest in agriculture in developing countries – those should not escape the budget ax.

I have addressed this topic many times on this blog in order to make the exact same point Connie Veillette and John Norris make. In chronological order:

Continue readingSuper Committee: Cut US Farm Subsidies, Not Foreign Aid; Pass Go, Save $20 Billion