World Food Policy Volume/Issue 2-2/3-1 Fall 2015/Spring 2016 | Page 138

Food Security in an Age of Falling Commodity and Food Prices

There are, though, reasons to
argue that the price spike we have seen
more recently in 2007 and subsequent
years was of a different nature than what
happened in the mid-1970s, even though
some of the factors that have triggered
the dramatically rising prices in both
periods may have been the same. In the
1970s, when the price crisis subsided
prices essentially returned to their longer
term declining trend in real terms. This
time, however, it appears that even though
we observe a strong price decline at the
moment, international market prices for
food and agricultural commodities may
not really return to the lower levels that
prevailed before 2007. Of course, this is
a statement about what might happen
in the future and nobody knows with
any certainty what will actually happen
in the future. Yet, there are institutions
that generate price projections, and such
projections can provide an impression
of where markets may go in the years
to come, under all sorts of assumptions
regarding the most likely development

of the factors determining supply and
demand. In well-done projections, these
assumptions are explicitly specified and
reported in a transparent way.

One institution that has already
for quite some time generated projections
for world markets for agricultural
and food commodities is the OECD
(Organisation for Economic Co-operation
and Development). Since a number of
years the OECD has been joined in this
work by the FAO, contributing specific
knowledge of the market and policy
situation in developing countries. Let us
for a moment consider the development
of the international price of wheat in real
terms as projected by OECD and FAO.
The wheat price data presented in Figure 3
first of all remind us of the enormous price
peak experienced in the mid-1970s. They
also show the depressed though fluctuating
price level on international wheat markets
prevailing in the years before the 2007–
2008 price peak, as well as the much
higher price level observed after 2007.
The wheat price projected by OECD and

Figure 3: World Market Price for Wheat in Real Terms
Source: Author’s calculations based on OECD/FAO (2015)
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