How to Understand High Food Prices

Gilbert, Christopher L.

doi:10.1111/j.1477-9552.2010.00248.x

Cited by 587 publications

(407 citation statements)

References 30 publications

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“…Similarly, reductions in the rate of yield increases in rice and wheat could have contributed to a tighter market, but as mediumterm phenomena related to global neglect of crop research, they were hardly surprises. For detailed discussions see Abbott et al (2008), Mitchell (2008, Timmer (2008) and Gilbert (2008). Factors such as the unprecedented extension of the Australian drought, other regional production problems, the possible effects of global warming, and exchange rate movements were much less predictable.…”

Section: What Caused Recent Grain Price Fluctuations?mentioning

confidence: 99%

Grain reserves and food security in the Middle East and North Africa

Wright

Cafiero

2011

Food Sec.

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Aggregate stocks of major grains declined to minimal feasible levels in [2007][2008], due to high global income growth and biofuel mandates. Given these minimal stocks, prices were very sensitive to shocks, such as the Australian drought, and biofuel demand boosts due to the oil price spike. The effects of these shocks were magnified by a sequence of trade restrictions by key exporters to protect vulnerable consumers. Beginning in the 'thin' global rice market in the fall of 2007, these turned market anxiety into panic. Recognizing the unreliability of imports, vulnerable countries, including some in the Middle East and North Africa (MENA), are now considering investing in strategic reserves, pursuing self sufficiency and acquiring foreign land to ensure grain supplies for domestic consumption. The associated expense and negative incentive effects on national reserves may be acceptable if they have quantitative targets related to the needs of the most vulnerable, for distribution only in emergencies. In many MENA countries, heavy subsidies on grain consumption for both rich and poor reduce the stabilizing response of consumption to price, and increase reserves needed to ensure food security. Accumulation of stocks is a more efficient strategy than pursuit of self-sufficiency in most MENA countries, as they have no comparative advantage in expanding agriculture, given restricted water supplies. Acquisition of foreign lands leaves food supplies exposed to sovereign risk and other supply chain problems beyond importers' control. MENA countries could cooperate and so smooth much of the risk posed by fluctuations in their own harvests.

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Section: What Caused Recent Grain Price Fluctuations?mentioning

confidence: 99%

Grain reserves and food security in the Middle East and North Africa

Wright

Cafiero

2011

Food Sec.

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“…In recent years, we have been witness to dramatic increases in both the level and volatility ( uctuations) of international agricultural prices (Gilbert 2010). This has raised concern about unexpected price spikes as a major threat to food security, especially in less developed countries where food makes up a high proportion of household spending.…”

Section: Introductionmentioning

confidence: 99%

How far do shocks move across borders? Examining volatility transmission in major agricultural futures markets

Hernandez¹,

Ibarra²,

Trupkin³

2013

European Review of Agricultural Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: This paper examines the level of interdependence and volatility transmission in global agricultural futures markets. We follow a multivariate GARCH approach to explore the dynamics and cross-dynamics of volatility across major exchanges of corn, wheat, and soybeans between the United States, Europe, and Asia. We account for the potential bias that may arise when considering exchanges with different closing times. The results indicate that agricultural markets are highly interrelated and there are both own-and cross-volatility spillovers and dependence among most of the exchanges. The results also show the major role Chicago plays in terms of spillover effects over the other markets, particularly for corn and wheat. Additionally, the level of interdependence between exchanges has only increased in recent years for some of the commodities. Keywords: Volatility transmission, agricultural commodities, futures markets, Multivariate GARCH. JEL Classification: Q02, G15, Q11, C32. Terms of use: Documents inResumen: En este trabajo se analiza el nivel de interdependencia y transmisión de volatilidad en los mercados internacionales de futuros agrícolas. Se sigue un enfoque de GARCH multivariado para explorar la dinámica y la dinámica cruzada de la volatilidad para los principales mercados de maíz, trigo y soya en Estados Unidos, Europa y Asia. Se toma en cuenta el posible sesgo que puede surgir cuando se consideran mercados con diferentes horarios de cierre. Los resultados indican que los mercados agrícolas se encuentran altamente interrelacionados y que existen derrames propios y cruzados de volatilidad y dependencias entre la mayoría de los mercados. Los resultados indican además el importante papel que juega Chicago en términos de efectos de derrame de volatilidad sobre los otros mercados, particularmente para maíz y trigo. Adicionalmente, el nivel de interdependencia entre los mercados sólo se ha incrementado en años recientes para algunos de los productos primarios. Palabras Clave: Transmisión de volatilidad, productos primarios agrícolas, mercados de futuros, GARCH multivariado.

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“…Gilbert (2010a) finds future positions of index providers strongly impacted price of soybean while Gilbert (2010b) finds that financial activity influenced food prices through the index futures investment channel.…”

Section: Introductionmentioning

confidence: 99%