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Potential driver | Economic rationale | References |
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Supply side factors |
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Shocks in production | Production shortfalls caused by adverse weather conditions result in lower levels of global supply and stocks | [32] |
Energy and fertilizer prices | High input prices increase agricultural production and transportation costs | [3, 4, 33] |
Export policies | Some of the net exporting countries introduced restrictive trade policies aimed at isolating their economies and controlling the pass-through mechanism | [4] |
Low level of global inventories | A consequence of production shortfalls and political decisions | [34, 35] |
Neglected investment in R&D and infrastructure | A limit to the growth in agricultural productivity | [33] |
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Demand side factors |
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Emerging economies and structural change in global demand | Economic growth in BRIC raises individual welfare as well as urban population with a consequent shift in consumption patterns towards an increasing global demand for superior agricultural products. Effect on food prices is indirect via demand for crude oil | [36] |
High oil prices | Reduction in price advantage of fossil fuels relative to biofuels and consequent increase in demand for competitive renewable energies | [33] |
Global biofuels production | Increase in demand for crops used as input factors in biofuels production; driving prices of other crops through substitution effects in food utilization and through competition in the use of agricultural land | [3, 33, 34, 36, 37] |
Import policies | Some of the importing countries lift import restrictions and taxes in order to alleviate domestic consumption; no decrease in aggregated global trade despite food inflation | [34, 37] |
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Macroeconomic factors and market conditions |
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Depreciation of USD | On the international level grains are traded in USD; due to the USD’s depreciation price increases less in other countries’ currencies relative to U.S. prices and import remained constant | [3, 4, 33] |
Inelastic markets | Due to prevailing market conditions neither supply nor demand responded to price incentives; no expansion of supply or reduction of global demand | [37] |
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