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Causes and Consequences of Rising Food Prices

Author

Listed:
  • Georg Erber
  • Martin Petrick
  • Vanessa von Schlippenbach

Abstract

Since mid 2007 there has been a dramatic rise in prices for basic foods such as internationally traded varieties of rice, corn and wheat. At the moment, it is rather impossible to estimate how far speculation in the commodity markets has contributed to this development. Irrespective of this, a long-term solution to present and future supply shortfalls, including investment in more efficient agro-technologies and infrastructures is required. This is a matter for the international community which should continue to promote the abolition of international trade barriers in the agricultural sector in addition to local measures to provide structural aid. Hoped-for structural change may however be impeded if agricultural producers are exposed both to the market power of trader demand and the supplier power of upstream suppliers. It therefore appears that controls on abuse of market power at an international level are urgently required in order to increase the efficiency of agricultural markets and ultimately to secure the food supply.

Suggested Citation

  • Georg Erber & Martin Petrick & Vanessa von Schlippenbach, 2008. "Causes and Consequences of Rising Food Prices," Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 4(12), pages 73-79.
  • Handle: RePEc:diw:diwwrp:wr4-12
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.91486.de/diw_wr_2008-12.pdf
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    More about this item

    Keywords

    Noisetraders; Trade liberalization; Vertical relations;

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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