L03Sep11_306

L03Sep11_306 - Lecture 3: Global Food Price Dynamics...

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Lecture 3: Global Food Price Dynamics – Current Issues AgEc 306
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Intro Recent years (2006-07, then again in 2010-11) food prices have increased dramatically In Spring 2011, the March 2008 peaks were met or exceeded; June 2010 to June 2011: +40% fd p Increase has covered all crops and oilseeds, in Canada and is more dramatic in world markets Cereals price increase highest; oilseeds too. Not much action on sugar until 2009 2 Lec 3 Recent Food Price
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Lec 3 Recent Food Price 3
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Lec 3 Recent Food Price 4 Nature of Problem Food price run-up is a world market story World Food Market price increases, 2007-2008 (March) Wheat +130% Rice + 74% Corn + 31% Soy, oils + 87% Diary + 75% Meats, Sugarno significant increases yet Within Canada, U.S. retail outlets, price increases substantially moderated Due to further processing and addition of normal retail markups. Does not necessarily indicate profiteering. http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934- 1111002331357/829378- 1309188477387/CommodityMarketsReview_July2011.pdf
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What are causes? No single cause or culprit; both supply and demand factors Most prominent and significant cause: bioenergy programs in US, EU, Canada and many (!) other countries Increased incomes in Asia (China, India) Increase in export restrictions by exporting countries; notable in rice Monetary policy, value of US $, speculation 5 Lec 3 Recent Food Price
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Lec 3 Recent Food Price 6 Major Causes I Bioenergy programs Many such programs around the world Reducing supplies of land and other farm resources going to producing food for food Reliable sources estimate this accounts for 35-40% of last year’s food price increase Steady increase in demand for more and better quality foods throughout Asia, notably in China and India, due to rapid economic growth Steady process over last 5+ years, not one-yr issue Has added much pressure to food prices, pushing them up, but has not caused spike
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Lec 3 Recent Food Price 7 Major Causes II Reduced supplies on world markets due to export restrictions by many exporting countries, particularly for rice
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L03Sep11_306 - Lecture 3: Global Food Price Dynamics...

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