World Bank Paper Blames Commodity Price Boom on Energy Prices
A new report has been released by the World Bank on the 2006-2008 commodity price boom. The paper, which is co-authored by DG Agri economics chief Tassos Haniotis, highlights higher energy prices as the main factor in driving up food prices.
The 2006-2008 commodity price spikes were identified by the World Bank publication to be different from previous spikes of this kind as they simultaneously involved all three main commodity groups: metals, energy and agriculture. Initial reactions as to the cause of increased prices cited adverse weather conditions, a growing demand for biofuels and a growth in demand from expanding middle class populations in Asia wishing to vary their diet. However, strong links between agriculture and energy prices have now been suggested by the paper to be the “dominant influence on developments in commodity, and especially food, markets”. Price increases for one crop type then had clear knock-on effects on other agricultural products, leading to price increases spreading across the different groups of agriculture commodities.
Other reports on the subject place different factors such as uncertainties surrounding projected global stocks of wheat, maize and other agricultural commodities as the main cause of the crisis. A UK Government publication on the price spikes, for example, recognised the role of energy prices, but also attributed the exacerbation of commodity prices to the strength of the US dollar, and the increase in demand for biofuels.
18 Aug 2010
The Institute for European Environmental Policy coordinates CAP2020. It is an independent not for profit institute which undertakes research in a number of policy areas including agriculture and rural development.
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