World Food Policy Volume/Issue 2-2/3-1 Fall 2015/Spring 2016 | Page 158

Food Security In an Age of Falling Commodity and Food Prices: The Case of Sub-Saharan Africa

2014–2015, the world cereal supply was
estimated to be 20% more than demand.
The world stock-to-use ratio was 25.2%
in 2014–2015. Abundant supplies keep
international prices under pressure.
Supplies and stocks of the major grains
are still very strong (25.2% versus 19.4%
in 2007/2008), even if estimates for 2015–
2016 indicate a tiny decrease of world
cereal production (FAO 2016). The cost
of energy has reached minimal value (see
below figure 5). Trade policies based on
export reduction are no more applied in
some countries.

But some driving forces of the
2008 situation did not reverse at all:
the increased production of bio fuels;
(the speculative money involved in
commodities markets; and the structural
changing consumption patterns in some
major emerging countries; all these
factors are still contributing to push the
food prices up.

The Correlation between Food and Oil
Prices

In the past 18 months, fossil fuel
prices have seen a decline by more than
half. During the last 25 years, agricultural
commodity prices were interconnected
with energy prices. This interconnection
derives from both demand and supply
sides. Mainly the growing mechanization
of agriculture has increased the influence
of energy prices on production costs, and
hence, output prices. Falling oil prices are
likely to have subdued the competitive
demand for biofuels and, consequently,
the derived demand for agricultural
feedstocks, which, in turn, reduced their
own prices (maize and sugar, and to
some extent wheat, used as feedstocks for
biofuel production).

The correlation between the
two series, especially since 2007, is very
pronounced mainly because of increased
influence of energy prices on production

Figure 5: Correlation between oil and food prices

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