Just like many other commodities, food prices have fallen in the last couple of years. Over the next 10 years, prices for all agricultural products are projected to stabilise without dropping above their pre-2007 levels, according to the 2015 OECD-FAO Agricultural Outlook.
How times have changed since 2008 when real food prices had increased sharply, sparking widespread criticism about speculation. But in this magazine, Loek Boonekamp wrote that this spike was “neither unique nor the biggest one to occur” in the previous three decades. Indeed, many factors triggered the rise in food prices, including the weak dollar, surging demand for food and biofuels, and the emergence of new traders in commodity markets.
OECD work shows that the period of low prices in the early 2000s was followed by a period of high and volatile prices starting in 2007. Prices began to moderate in 2013: among crops, two years of strong harvests put further pressure on prices of cereals and oilseeds in 2014, while tighter supplies–due to herd rebuilding and disease outbreaks, among others– supported high meat prices. The prices of dairy products dropped steeply.
The question of whether real food prices are on a higher or lower trend depends on the period over which they are examined. When analysing the evolution of real prices over the last century, the projected prices will continue on a long-term declining trend.
Loek Boonekamp, “Food prices: The grain of truth”, in OECD Observer No 267, May-June 2008, http://oe.cd/14n
©OECD Observer No 303, September 2015