The terms of trade for agricultural and food products, 1951-2000

Abstract

This study aims to answer whether empirical records confirm the existence of a secular decline in the terms of trade affecting primary producers (the Singer–Prebisch hypothesis). The paper analyses the evolution of the terms of trade for agricultural and food products in the second half of the 20thcentury. We obtain sixty new real price indices for internationally traded agricultural products. We conclude, from a long-term perspective, that the deterioration in the terms of trade for agricultural and food products was strong and clear in the second half of the last century. In general, less processed products suffered a very heavy fall in their real prices. However, there was no continuous and persistent deterioration in the terms of trade either as a whole or for the great majority of the agricultural and food product groups (with the exception of natural rubber, textile fibres and other raw materials). Rather, this deterioration occurred in stages.

The World Periphery in Global Agricultural and Food Trade, 1900–2000

“…The second oil crisis forced governments to toughen their monetary and fiscal policy, resulting in a painful economic slowdown that particularly affected developing countries. Demand for imports fell and problems of overcapacity emerged, reflected in the steep fall in international commodity prices (Serrano and Pinilla, 2011b). Structural adjustment programs were launched to mitigate the effects of the crisis, and agricultural trade increased only very slowly in the early 1980s.…”

“…In an effort to shield farmers from the crisis, Europe, Japan, and the United States, among others, raised non-tariff barriers sharply and sought to isolate their agriculture from falling prices and volatility. In addition, real prices of agricultural products experienced a downward trend that persisted until the mid-1980s, when prices tended to stabilise (Serrano and Pinilla, 2011b).…”

“…This is evident when we consider the difference between the drastic loss of share of agricultural trade in total trade in terms of value, compared to the more moderate (albeit important) decline in terms of volume, which demonstrates an extremely serious fall in relative prices. This occurred most sharply between 1973 and 1982, and especially conditioned the incomes of countries specialised in the export of the most basic products (Serrano and Pinilla, 2011b).…”

“…On the evolution of the terms of trade of agricultural products, seeSerrano and Pinilla (2011b) andPfaffenzeller (2007).…”

The Dynamics of Latin American Agricultural Production Growth, 1950–2008

“…Consequently, both private and public agricultural investment was reduced (Morales, 1991). Although exchange rate policies tended to benefit agricultural and livestock exporters, their impact was limited both by the constraints on access to foreign markets and by the sharp deterioration of international agricultural prices in this period (Serrano and Pinilla, 2011).…”