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Abstract

The recent rise of food cost in world markets has accelerated the research examining the underlying factors for this rise. The present research investigated the separate and combined impacts of three factors thought to contribute to the price rise: adverse weather events, strong and sustained growth in high populated countries, and increased biofuels production. The research further analysed the effects of these price rises on consumption expenditures in Brazil, China and India. Analyses were carried out using a partial equilibrium trade model with a focus on the 2004 to 2007 period. The modelling suggests that the most important factor behind the price rise depends on the commodity, with maize/corn, oilseeds, and sugar most affected by biofuels, while some meats and dairy products are more affected by income growth.

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