1 / 18

Food and Fuel Issues

This presentation discusses the changes in food prices, the U.S. food marketing system, and the factors leading to higher commodity prices. It also provides information on countries pursuing biofuels and events in 2007 that affected commodity prices.

geaton
Download Presentation

Food and Fuel Issues

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Food and Fuel Issues Iowa Seed Association Annual Convention Ames, Iowa November 18, 2008 Chad Hart Assistant Professor of Economics/Grain Markets Specialist Iowa State University chart@iastate.edu 515-294-9911

  2. Change in Food Price Indexes, 2005-2007 Item Final Final Final 2005 2006 2007 Consumer price indexes Percent change All food 2.4 2.4 4.0 Food away from home 3.1 3.1 3.6 Food at home 1.9 1.7 4.2 Meats, poultry, and fish 2.4 0.8 3.8 Eggs -13.7 4.9 29.2 Dairy products 1.2 -0.6 7.4 Fats and oils -0.1 0.2 2.9 Fruits and vegetables 3.7 4.8 3.8 Sugar and sweets 1.2 3.8 3.1 Cereals and bakery products 1.5 1.8 4.4 Nonalcoholic beverages 2.9 2.0 4.1 Other foods 1.6 1.4 1.8 Sources: Bureau of Labor Stats., USDA-ERS

  3. Corn Prices Source: CBOT

  4. U.S. Ethanol Production Source: Renewable Fuels Association

  5. U.S. Food Marketing System • Five distinct sectors • Agricultural production • 2 million farms • Food processing and manufacturing • 25,000 food and beverage companies • Wholesale distribution • 33,000 food wholesalers • Retail distribution • 113,000 food retailers • 378,000 foodservice companies • Consumption • 111 million households

  6. U.S. Food Marketing System In 2001, government estimates showed: 23.7 million employed in the food system 12% of the nation’s gross domestic product Food is a major component of our economy Each step in the system adds value and costs

  7. The Food Dollar Source: USDA-ERS

  8. Declining Farm Value in Food In the 1950s, 25% of food was consumed away from home. Today, nearly 50% of food is consumed away from home. Source: USDA-ERS

  9. Farm to Retail Food Price Spread Source: USDA-ERS, 2001

  10. Factors Leading to Higher Commodity Prices Source: USDA-ERS, Trostle, July 2008

  11. Commodity Price Indexes Source: International Financial Statistics

  12. Population Source: U.S. Bureau of the Census

  13. Countries Pursuing Biofuels • US • Brazil • Argentina • Colombia • Paraguay • Canada • Uruguay • Mexico • Thailand • New Zealand • South Africa • South Korea • Philippines • Indonesia • Pakistan • China • India • Malaysia • Australia • Japan • EU • Russia • Not a complete list

  14. Events in 2007 • Droughts: • Northern Europe, Ukraine, Russia, Northwest Africa, Turkey, Australia, and Argentina • Increased export taxes: • China, Argentina, Russia, Kazakhstan, Malaysia, and Indonesia • Export restrictions: • Argentina, Ukraine, India, Vietnam, Serbia, Egypt, Cambodia, Indonesia, and Kazakhstan

  15. Commodity Price Ratios (Sept. 2006 =1)

  16. Change in Food Price Indexes, 2005-2009 Item Final Final Final Forecast Forecast 2005 2006 2007 2008 2009 Consumer price indexes Percent change All food 2.4 2.4 4.0 5.0 to 6.0 4.0 to 5.0 Food away from home 3.1 3.1 3.6 4.0 to 5.0 4.0 to 5.0 Food at home 1.9 1.7 4.2 5.5 to 6.5 4.0 to 5.0 Meats, poultry, and fish 2.4 0.8 3.8 3.0 to 4.0 5.0 to 6.0 Eggs -13.7 4.9 29.2 13.5 to 14.5 1.0 to 2.0 Dairy products 1.2 -0.6 7.4 8.0 to 9.0 4.0 to 5.0 Fats and oils -0.1 0.2 2.9 13.0 to 14.0 3.0 to 4.0 Fruits and vegetables 3.7 4.8 3.8 6.5 to 7.5 3.5 to 4.5 Sugar and sweets 1.2 3.8 3.1 4.5 to 5.5 3.0 to 4.0 Cereals and bakery products 1.5 1.8 4.4 9.0 to 10.0 3.5 to 4.5 Nonalcoholic beverages 2.9 2.0 4.1 3.5 to 4.5 3.0 to 4.0 Other foods 1.6 1.4 1.8 4.0 to 5.0 3.0 to 4.0 Updated October 20, 2008 Sources: Bureau of Labor Stats., USDA-ERS

  17. Quick Notes • Farm value is less than 20% of the food dollar. • Costs beyond the farm gate make up more than 80% of the food dollar. • Labor, transportation, energy, advertising, etc. • There have been a number of factors influencing food and commodity prices. • USDA Chief Economist Joe Glauber recently stated that biofuels are responsible for 10% of the inflation in food values.

  18. Thank you for your time!Any questions?http://www.econ.iastate.edu/faculty/hart/

More Related