The 2007-08 food crisis saw the international price of staple agricultural commodities (such as wheat, maize, soybeans, and rice) more than double; today the international price of many of these commodities is again on the rise. A common assumption is that as the international price of such commodities increases, the domestic consumer price of basic food items such as bread, flour, wheat, corn, tortillas, and rice will also increase. However, the degree of this transmission may vary from country to country and from commodity to commodity.
Whether and to what extent global food price increases are transmitted to domestic markets must be taken into account when discussing appropriate policy responses, particularly in developing nations. Strong transmission of high international prices to domestic markets can erode the purchasing power of the world’s poor, leading to widespread food insecurity and serious economic and political ramifications. Understanding which regions and commodities are most affected by price transmission can help policymakers develop more effective strategies to prevent an increase in food insecurity.
Watch Senior IFPRI Research Fellow Nicholas Minot discuss price transmission in Sub-Saharan Africa.
Watch IFPRI Research Fellow Miguel Robles discuss price transmission in Latin America and Asia.