For many commodities, prices are at or near records. Why have commodity prices gone up so much? In the debate surrounding this question some have singled out one or two factors as the primary drivers of food price increases. The real and much more complex answer involves economic growth, international trade, currency markets, oil prices, government policies and bad weather. In preparing this report, we reviewed 25 recent studies and reports, a rich but sometimes controversial literature.
Through this review and our own analysis, we identified three broad sets of forces driving food price increases:
- global changes in production and consumption of key commodities,
- the depreciation of the dollar, and
- growth in the production of biofuels.
The factors driving current food price increases are complex. We make no attempt to calculate what percentage of price changes are attributable to the many disparate causes, and, indeed, think it impossible to do so. However, in looking at the interplay of the forces driving food prices, a clearer picture emerges of what has been happening.
