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What Explains Agricultural Price Movements? / John Baffes.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Baffes, John.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Agricultural Prices.
- Climate Change Economics.
- Commodity Boom.
- Commodity Prices.
- Emerging Markets.
- Energy Production and Transportation.
- Energy.
- Food and Beverage Industry.
- Industry.
- Macroeconomics and Economic Growth.
- Markets and Market Access.
- Price Cycle.
- Private Sector Development.
- Local Subjects:
- Agricultural Prices.
- Climate Change Economics.
- Commodity Boom.
- Commodity Prices.
- Emerging Markets.
- Energy Production and Transportation.
- Energy.
- Food and Beverage Industry.
- Industry.
- Macroeconomics and Economic Growth.
- Markets and Market Access.
- Price Cycle.
- Private Sector Development.
- Physical Description:
- 1 online resource (25 pages)
- Place of Publication:
- Washington, D.C. : The World Bank, 2016.
- System Details:
- data file
- Summary:
- After 2005, commodity prices experienced their longest and broadest boom since World War II. Agricultural prices have now come down considerably since their 2011 peak, but are still 40 percent higher in real terms than their 2000 lows. This paper briefly addresses the main arguments on the causes of the agricultural price cycle. It broadens the scope of analysis by focusing on six agricultural commodities, and identifies the relative weights of key quantifiable drivers of their prices. It concludes that increases in real income negatively affect real agricultural prices, as predicted by Engel's Law. Energy prices matter most (not surprisingly, given the energy-intensive nature of agriculture), followed by stock-to-use ratios and, to a lesser extent, exchange rate movements. The cost of capital affects prices only marginally, probably because it not only influences demand, but also evokes a supply response.
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