Have recent increases in international cereal prices been transmitted to domestic economies?

  • 01/04/2008
  • FAO

International cereal prices (in US dollar terms) have been increasing since 2003, but it is domestic prices that affect food consumption and production. This report analyzes, for seven large Asian countries, the extent to which domestic prices have increased since 2003 and presents several conclusions. First, the data show that the increases in world cereal prices have been accompanied by a real depreciation of the US dollar. Second, domestic commodity specific policies in several of these Asian countries have further stabilized domestic prices relative to the change in world prices. Third, for the specific cases analyzed here, producer or farmgate prices have changed by approximately the same percentage as consumer prices. Thus, in these Asian countries, domestic markets seem to be transmitting price changes between farmers and consumers rather efficiently. Fourth, the experience with urea fertilizer prices is more heterogeneous: some countries are following free trade, while others have stabilized prices in nominal terms.