Developments in Global Food Prices

The international prices of many agricultural commodities have increased significantly over the past two years. After falling sharply during the global financial crisis, the IMF Food Price Index has increased by 50 per cent since the end of 2008 and is now above its earlier peak in mid 2008. Supply disruptions have been an important factor behind the recent rise in the relative price of food, with unfavourable weather conditions in a number of key food-producing countries weighing on production – particularly for crops such as wheat, sugar, corn and soybeans. More generally, strong demand for agricultural commodities has also contributed to rising food prices since the early 2000s, reversing the long-run trend decline in relative food prices over previous decades (Graph 1). High population growth and rising living standards in developing economies are leading to an increase in protein consumption, which – through demands on land use and demand for feed grains – is contributing to broad-based pressure on food prices.