Why Farmers Still Struggle When Food Prices Rise

The FT yesterday (April 17 2013) forecast that wholesale food prices are set to fall this year — because of bumper crops in the US and South America.  But rise or fall, according to Thomas Lines in this report Primary Commodity Prices and Global Food Security (Green House 2012) worldwide farm incomes remain low.

The report looks at “what. . . has happened to the prices of commodities used in the world food economy, and what the changes imply. It compares two recent periods about 30 years apart, and considers how price changes affected poor developing countries and food security within them.

[He] found that the world prices of cereals largely held their own in relation to manufactures but they fell sharply against the prices of leading inputs to agriculture. This tendency was even stronger among major export crops of poor countries. Many farmers and farmworkers therefore failed to gain full benefit from rising food prices, as their inputs rose more in price than their produce.

All of this suggests not so much a crisis of agriculture or food supplies in general as of high-input, intensive agriculture in particular. This is reflected in continuing low farm incomes worldwide. It is especially damaging for the numerous countries where food imports have grown while the real prices of exports have fallen.”

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