Reasons For Increased Food Prices

Economists have reported finding several factors for increased commodity and food prices. A group of Purdue University agricultural economists have analyzed factors contributing to higher commodity and food prices, Farm Progress reports. In a Farm Foundation-commissioned report, “What’s Driving Food Prices,” Purdue’s Phil Abbott, Chris Hurt and Wally Tyner highlight key factors gleaned from examining 25 recent studies plus their own analysis.

Their conclusion: A complex combination of factors are fueling agricultural commodity price increases and rising food costs, among them high oil prices spurring biofuels growth, a weak dollar, and world production and consumption trends. Many studies point to the pace of global consumption being higher than global production as an important driver of commodity prices. Unlike many who see China and India as major contributors to rising food commodity prices, the Purdue economists argue that is not the case.

“It’s countries who trade that set the price. China and India are agriculturally self- sufficient and largely do not trade agricultural commodities,” said Tyner.

To view the “What’s Driving Food Prices” report go to www.FarmFoundation.org.