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In response to the surges in world agricultural and food prices that have occurred since 2006, many countries imposed controls on their agricultural exports, using taxes, quotas, and complete export bans. Further, during the past few decades, many countries have maintained longstanding export taxes not only on agricultural goods, but also on forestry and fishery products, minerals, metals, and precious stones. This study examines the market effects of a conventional export tax, as well as three alternative policies that are less market distorting, and thereby less welfare diminishing: a subsidy to consumption, a tax on production, and a modification of a conventional export tax that allows additional exports after producers meet a sales requirement for their output. All three alternatives result in more exports of affected goods than the unmodified tax does. The increased exports will thereby benefit foreign consumers, and if the country is a large exporter of an affected good on the world market, the benefit is larger, because the additional exports will lower the good's world purchase price. Increased global sales and lower prices will improve world food security and benefit the consuming poor of the world, especially if the affected product is a staple food such as wheat or rice. Policies that pursue such goals are consistent with U.S. efforts to improve world food security. However, the alternative policies are "second best" options because they are less effective at increasing both domestic and world economic welfare than the first best policy of abolishing the export tax and allowing free export.

The relationships between changes in food sector input costs and retail food prices are examined. Results indicate that increases in factor prices pass quickly to consumers, within two quarters for most foods. In addition, rising farm‐level prices and substantial increases in nonfarm resource prices appear to explain why food prices rose more rapidly than nonfood prices in the 1970s. The analysis is based on a twenty‐equation econometric model of the food‐price determination process, specified following Popkin's “stage of processing” approach. Causality and validation test statistics for the model are presented.

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