Global food markets

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Global food markets

• Economics of Food Markets
• Lecture 2
• Alan Matthews

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Long term perspectives

• Think about in terms of simply supply-demand
  diagram
• Factors affecting demand
• Population growth, income per head, changing
  tastes
• Factors affecting supply
• Resources, technology

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Source FAO World Agriculture Towards 2015/2030
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Source FAO Food Outlook
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Long term perspectives

• Malthusian predictions not yet confirmed by
  historical experience
• Great volatility around the trend
• What does the future hold?
• International organisations relatively sanguine
• Dissenting voices, e.g. Lester Brown
• Global population growth slowing down
• The China syndrome?
• Vanishing resources?
• Technology?

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Prospects for food and nutrition

• Tremendous progress in improving nutrition levels
  over last four decades
• But almost 800 million people still suffer from
  undernutrition
• The importance of agricultural development to
  address poverty and undernutrition

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FAO World Agriculture Towards 2015/2030
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FAO World Agriculture Towards 2015/2030
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Changing international trade patterns

• Agricultural exports a declining share of global
  merchandise trade
• Overall agricultural trade surplus of developing
  countries has virtually disappeared
• Least developed countries are net food importers
  since the mid-1980s
• Trends driven by both policy and market factors

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FAO World Agriculture Towards 2015/2030
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Policy impacts on international trade

• Tariffs continue to curb trade
• Domestic support remains high
• More liberalisation would mainly benefit
  developed countries
• Does globalisation disadvantage the poorest
  countries?

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FAO World Agriculture Towards 2015/2030
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Taming commodity markets

• Commodity markets declining and volatile prices
• Price stabilisation
• Buffer stocks
• Price raising
• Export cartels
• Market-based mechanisms
• Compensatory financing schemes
• Risk management

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Key messages global food markets

• Positive achievements
• declining food prices, fewer people hungry
• Issues
• can this continue?
• do OECD farm policies hurt the poor?
• can we tame commodity markets?
• Can globalisation of food markets work in favour
  of the poor?