How to understand high food prices
Abstract
Agricultural price booms are better explained by common factors than by market‐specific factors such as supply shocks. A capital asset pricing model‐type model shows why one should expect this and Granger causality analysis establishes the role of demand growth, monetary expansion and exchange rate movements in explaining price movements over the period since 1971. The demand for grains and oilseeds as biofuel feedstocks has been cited as the main cause of the price rise, but there is little direct evidence for this contention. Instead, index‐based investment in agricultural futures markets is seen as the major channel through which macroeconomic and monetary factors generated the 2007–2008 food price rises.
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The financialization of the food system, driven by investment funds, fuels speculative trading, particularly through ETFs and Commodity Index Funds (CIFs).
“The financialization of the food system, driven by investment funds like those cited by Gilbert (2010), Kerckhoffs et al. (2010) and Clapp (2019), fuels speculative trading, particularly through ETFs and Commodity Index Funds (CIFs).”
From Food Financialization: Impact of Derivatives and Index Funds on Agri-Food Market Volatility (2024) · cites this paper as Gilbert (2010)
The link between the financialization of food and investment funds associated with agri-food companies allows us to argue for the recurrent existence of speculative operations through these instruments, particularly ETFs and Commodity Index Funds (CIFs).
“As we have noted, the link between the financialization of food and investment funds associated with agri-food companies (Gilbert 2010; Kerckhoffs et al. 2010; Clapp 2019) allows us to argue for the recurrent existence of speculative operations through these instruments, particularly ETFs and the operation of Commodity Index Funds (CIFs).”
From Food Financialization: Impact of Derivatives and Index Funds on Agri-Food Market Volatility (2024) · cites this paper as Gilbert 2010
Cites
CAPITAL ASSET PRICES: A THEORY OF MARKET EQUILIBRIUM UNDER CONDITIONS OF RISK*
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Anatomy of a crisis: the causes and consequences of surging food prices
Headey, D., & Fan, S. (2008) · Agricultural Economics · doi:10.1111/j.1574-0862.2008.00345.x · Cited by 725 · see citing works
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Index Funds, Financialization, and Commodity Futures Markets
Irwin, S. H., & Sanders, D. R. (2011) · Applied Economic Perspectives and Policy · doi:10.1093/aepp/ppq032 · Cited by 488 · see citing works
Synchronous failure: the emerging causal architecture of global crisis
Homer-Dixon, T., Walker, B., Biggs, R., Crépin, A.-S., Folke, C., Lambin, E. F., Peterson, G. D., Rockström, J., Scheffer, M., Steffen, W., et al. (2015) · Ecology and Society · doi:10.5751/es-07681-200306 · Cited by 244 · see citing works
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Shocks in Economic Growth=shocking Effects for Food Security?
Kavallari, A., Fellmann, T., & Gay, S. H. (2014) · Food Security · doi:10.1007/s12571-014-0368-y · Cited by 31 · see citing works
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Land and Water: Linkages to Bioenergy
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Food Financialization: Impact of Derivatives and Index Funds on Agri-Food Market Volatility
Venegas, M. D. R., Feregrino, J., Lay, N., & Espinosa-Cristia, J. F. (2024) · International Journal of Financial Studies · doi:10.3390/ijfs12040121 · Cited by 13 · see citing works
Does Agricultural Commodity Speculation Contribute to Sustainable Development?
Kleinau, C., & Lin-Hi, N. (2014) · Corporate Governance · doi:10.1108/cg-07-2014-0083 · Cited by 4 · see citing works
- Authors
- Gilbert, C. L.
- Affiliations
- University of Nottingham (GB)
- Corresponding author
- Gilbert, Christopher L.
- Venue
- Journal of Agricultural Economics
- Publisher
- Wiley
- Published
- 2010-05-13
- Volume
- 61
- Issue
- 2
- Pages
- 398-425
- ISSN
- 0021-857X (ISSN-L)
- 1477-9552
- OpenAlex
- W2100000398
- Cited by
- 738
- References
- 2
- Citations by year
- 2026: 24 · 2025: 21 · 2024: 33 · 2023: 43 · 2022: 42 · 2021: 37 · 2020: 35 · 2019: 44 · 2018: 47 · 2017: 40 · 2016: 52 · 2015: 58 · 2014: 83 · 2013: 68 · 2012: 47
- FWCI
- 130.73
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Journal of Agricultural Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Iris (University of Trento) (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economics of Agriculture and Food Markets
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Market Dynamics and Volatility
- Social Sciences › Safety Research › Agricultural economics and policies
- Keywords
- food prices, common factors, supply shocks, capital asset pricing model, Granger causality, demand growth, monetary easing, exchange rate movements, biofuel feedstock, agricultural futures markets, 2007-2008 food price crisis
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