Farm Foundation has updated its July 2008 report "What's Driving Food Prices?" to reflect major changes in the economic and agricultural landscape. "While these transitions are remarkable -- almost a 180-degree course change -- the key drivers of food prices remain the same: supply and utilization; the exchange rate of the dollar and related world macroeconomic factors; and the energy-agriculture linkage," write Purdue University economists Phil Abbott, Chris Hurt and Wally Tyner.
The authors say the future of food prices depends on a number of variables which can't be predicted, "not the least of which are the depth and recovery characteristics of the current global financial crisis and recession." Another important unknown is how much inflation accompanies economic recovery. They also stress the importance of crude oil prices, which are closely tied to exchange rates. (Read the executive summary; read the entire update; read the initial report)
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