Farm Foundation Issue Report: What's Driving Food Prices?
Understanding the complex and multiple factors influencing food prices today is important as future policy options are debated, according to a new study released by Farm Foundation on Wednesday, July 23, 2008.
“Today’s food price levels are the result of complex interactions among multiple factors. However, one simple fact stands out: economic growth and rising human aspirations are putting greater pressure on the global resource base,” says Farm Foundation President Neilson Conklin. “The difficult challenge for public and private leaders is to identify policy choices that help the world deal with the very real problems created by today’s rising food prices without jeopardizing aspirations for the future.”
Written by Purdue University economists Wallace Tyner, Christopher Hurt and Philip Abbott, the study, What’s Driving Food Prices?, identifies three broad sets of forces driving food price increases: global changes in production and consumption of key commodities, the depreciation of the U.S. dollar, and growth in the production of biofuels.
“We made no attempt to calculate what percentage of price changes are attributable to the many disparate causes and, in fact, think it is impossible to do so,” says Tyner, the lead author of the report. “But examining the interplay of the forces driving food prices gives a clearer picture of what has been happening.” Tyner is an energy and policy economist, most recently specializing in biofuels policies. Hurt works in analysis of commodity markets and Abbott in international trade and macro factors.
The authors reviewed current reports and studies, considering the findings of that literature as they did their own analysis of the situation.
“We commissioned this report to provide a comprehensive, objective assessment of the forces driving food prices,” Conklin said. “It is the intent of Farm Foundation that the information will help all stakeholders meet the challenge to address one of the most critical public policy issues facing the world today."
Farm Foundation works as a catalyst for sound public policy by providing objective information to foster deeper understanding of the complex issues before the food system today. Farm Foundation has a 75-year history of objectivity. It does not lobby or advocate.