The Economics of Food Prices and Considerations for. Katherine R. Smith American Farmland Trust

Transcription

1 The Economics of Food Prices and Considerations for Valuing Food Katherine R. Smith American Farmland Trust

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5 Which food prices are going up the most in 2012? 1. Meats, Poultry and Fish % 2. Fats and Oils % 3. Cereals and Bakery Fruits and Vegetables % Source: ERS

6 Why are food prices so high in 2012? High Commodity Prices High Energy Prices

7 Production Accounts for Ten Percent of the U.S. Food Dollar

8 Underlying Factors Affecting Commodity and Food Prices Growing and More Affluent Global Population Faster Income Growth in Developing and Centrally Planned Countries

9 Faster income growth in developing and former centrally planned countries Percent (annual average) World Developed Countries Developing Countries Former Centrally Planned Countries Source: World Bank World Development Indicators, International Financial Statistics of the IMF, HIS Global Insight, and Oxford Economic Forecasting.

10 Underlying Factors Affecting Commodity and Food Prices Growing and More Affluent Global Population Faster Income Growth in Developing and Centrally Planned Countries Growing Demand for Biofuels

11 Growth in World Ethanol Market World Ethanol Production World Ethanol Trade Bnl Source: OECD and FAO Secretariats

12 Growth in World Biodiesel Market World Biodiesel Production World Biodiesel Trade Bnl Source: OECD and FAO Secretariats

13 Underlying Factors Affecting Commodity and Food Prices Growing and More Affluent Global Population Faster Income Growth in Developing and Centrally Planned Countries Growing Demand for Biofuels Stagnating Investments in Agricultural R&D and Slower Growth in Agricultural Productivity

14 Variables Affecting Food Commodity Prices Year-to-Year 1. Energy prices

15 Source: International Monetary Fund

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17 Variables Affecting Food Commodity Prices Year-to-Year 1. Energy Prices 2. Stocks to Use Ratios

18 Total world grain & oilseeds 1 Stocks-to-use ratio Stocks / Use 35% 30% 25% 20% 15% 10% 5% 1 Oilseeds = soybeans + rapeseed + sunflowers 0% 1970/ /11 Source: ERS calculations based on USDA WASDE and PS&D Database: Feb 2012

19 Variables Affecting Food Commodity Prices Year-to-Year 1. Energy Prices 2. Stocks to use ratios 3. The Weather

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22 Longer Term Concerns that could affect food prices Climate Change Water Scarcity

23 Externality A cost or benefit not transmitted through prices that is incurred by a party who did not agree to the action causing the cost or benefit

24 Some General Types of Externalities Associated with Food Ecological Effects Environmental Quality Green House Gases Animal Welfare Social Costs associated with Labor Public Health

25 Soil to Soil Cycle for Crop-Based Food Production Process Harvesting Transportation Processing + Packaging Soil Seed + Waste + Disposal Consumption Marketing

26 Soil to Soil Cycle for Animal-Based Food Slaughter Feed Animal Production + Manure Production Non-point Point Source Food Processing Waste Disposal Health Consumption

27 Potential Ecological Effects of Genetically Engineered Seed Create new or more vigorous pests Harm to non-target species Disruption of biotic communities Irreparable loss of species diversity or genetic diversity within species ( A.A. Snow, et al, Ecological Society of America)

28 Some Environmental Costs of Crop and Animal Production Soil Erosion and Sedimentation Soil Erosion and Sedimentation Impaired Water Quality Overdrawn Aquifers Loss of Biodiversity Air Pollution Particulate Matter Green House Gas Emissions

29 Some External Health Impacts of Agricultural Production Pesticide exposure Pathogens in water systems Inhalation of dust Bio-stored additions to animal feed Resistant antibiotics

30 Things to Keep in Mind About the External Costs of Food Everything is relative. The averages mask high variability. Among producers or consumers Across geography While not in the price of food, we could be paying through the price of other things. Food and agriculture also have positive externalities.

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