The period from 2003 to the summer of 2008 saw significant and sustained increases in global food prices, especially for staple goods such as maize, rice and wheat. For instance, between December 2003 and May 2008, the global price of rice rose by 415%. Such large rises are of particular concern for developing countries such as Mexico, especially with respect to the standards of living of poor households, who spend a large part of their total expenditure on food. In this column, I discuss the food price rises faced by Mexican households and I detail efforts to measure the welfare cost of these price rises using demand modelling.
First of all, just how big and widespread were the rises in food prices? Figure 1 shows the world producer price index for maize, rice and wheat from December 2003 to July 2009. These price indexes are normalised, so that the price in December 2003 is 100, and hence a value of 200 would indicate a price twice that of December 2003. Between the start of this period and their peaks in early 2009, the price of rice, maize and wheat rose by 415%, 156% and 165% respectively. As a result, average prices in 2008 were 255%, 99% and 97% above the 2003 levels. Prices in international markets have since fallen back somewhat, but they remain considerably higher than their 2003 level.
Your organisation does not have access to this article.
Sign up today to give your students the edge they need to achieve their best grades with subject expertise
Subscribe
