36891 - High Agricultural Prices: Current Reasons and...

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A A P P C C A A High Agricultural Prices: High Agricultural Prices: Current Reasons and Current Reasons and Prospects for the Future Prospects for the Future Daryll E. Ray University of Tennessee Agricultural Policy Analysis Center FDIC’s US-China Rural Finance Seminar Dallas, Texas May 22, 2008
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A A P P C C A A Recent Corn Prices Recent Corn Prices $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 2005 2005-07 2006 2006-07 2007 2007-07 2008
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A A P P C C A A What are the Most Often Stated What are the Most Often Stated Triggers? Triggers? Ethanol US corn-based ethanol production is booming Federal mandates for biofuels Increasing meat consumption in China and India Middle class shift from grain-based to meat-based diets
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A A P P C C A A Expected Ethanol Demand Expected Ethanol Demand Source: UDSA Baseline Projections to 2017
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A A P P C C A A We Have Seen This Before We Have Seen This Before $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 1965 1970 1975 1980 1985 1990 1995 2000 2005 7-74 $3.907 7-72 $1.267 10-05 $1.962 4-08 $6.26
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A A P P C C A A What Were the Triggers Then? What Were the Triggers Then? Russian grain imports Crop failure Decision not to liquidate cattle herds Petrodollar driven exports Loans to developing countries Used to import food to feed people
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A A P P C C A A Then Food vs. feed —Western grain-based-meat diets Eat less meat so the poor of the world can have grain to eat Now Food vs. fuel —US ethanol mandates Eliminate grain-based biofuels to the poor or the world can have grain to eat
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A A P P C C A A Looking More Closely Looking More Closely Low price regimen Dismantling of government stocks Random weather events Reduced world-wide grain stocks Increased demand for meat in China But has this put significant upward pressure on international grain prices?
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This note was uploaded on 02/23/2012 for the course AGRICULTUR 200 taught by Professor Staff during the Fall '11 term at Rutgers.

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36891 - High Agricultural Prices: Current Reasons and...

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