World Food Policy Volume/Issue 2-2/3-1 Fall 2015/Spring 2016 | Page 139

World Food Policy

FAO in their 2015 Outlook, produced at a
time when commodity prices had already
embarked on their recent much noticed
decline, implies a gradual downward
movement (in real terms) from their high
post-2007 level. Yet, for the 10 year future
period covered wheat prices are projected
to remain still significantly above their
pre-2007 level.2

If, contrary to developments in the
1970s, prices for wheat (and other food
commodities) should after the more recent
peak indeed not return to their pre-2007
level then some sort of a structural change
appears to have occurred in the mid2000s. To provide a graphic impression
of the magnitude of that structural shift,
the author of this article calculated simple
time trends (logarithmic) for the two subperiods of 1972–2006 and 2007–2024,
the latter one including the OECD/FAO
projection. As shown in Figure 3, the

trend implicit in the second sub-period is
on a significantly higher level than that of
the earlier period.

In the international market for
rice, some factors driving prices are similar
to those working in the wheat market, but
there are also differences. In particular,
there was an extraordinary price peak on
the rice market as well in 2008, but the
forces behind that specific price situation
for rice had little in common with those
behind the price spike on the international
market for wheat.3 Whatever the market
situation for rice in recent years may have
been, the futur e evolution of the rice price
as projected by OECD/FAO is such that,
like in the case of wheat, it is not expected
to fall back to the low level prevailing
before the 2008 price crisis (see Figure 4).
As a matter of fact, the projection even
implies a slight increase of the rice price in
real terms.

Figure 4: World Market Price for Rice in Real Terms
Source: Author’s calculations based on OECD–FAO (2015)

2

The central price projections of OECD/FAO do not include random factors such as weather-caused
yield variations. They do, therefore, not exhibit price fluctuations. In reality, prices will of course fluctuate around their longer term trend.
3
For an analysis of the rice price crisis in 2008 see various chapters in Dawe (2010).
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