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mestic prices do not always follow international prices (FAO,
2006). The periods of rising real prices were generally associ-
ated with real exchange rate devaluations. Relaxation of govern-
ment controls over prices and market systems also led to gains
in producer prices in some cases. In other instances, import
liberalization appears to have contributed to a decline in the
real domestic prices of some commodities. Consequently, glob-
al shortages of food and feed that lead to global price increases
are not followed by production increases at the local level.
FUTURE WORLD FOOD PRICES
Accessibility to food is also determined by the long-term trend
in food prices (which is a different issue from price volatili-
ty). The rising trend in global food prices is likely to persist in
the next decade. In the long run, however, prices will decline
(OECD-FAO, 2008).
Prices are driven by a complex combination of factors. Histori-
cally, productivity gains and increasing competition in trade
have overtaken stronger demand, resulting in the declining
trend of the past 100 years. Recently, food prices have been
driven by a combination of rising fuel costs, production of bio-
fuels, and unfavorable weather conditions, with trade restric-
tions boosting upward price pressures (World Bank, 2008).
Agricultural prices are forecast to decline over the next two
years, but remain well above the levels of the first half of this
decade. A strong combination of supply response and contin-
ued growth in demand is expected to keep prices above his-
torical levels, but well below the peaks experienced in recent
years (OECD-FAO, 2008). In real terms, prices in 2017 are pro-
jected to be 10% to 35% higher than in the past decade (OECD,
2008). While the long-term outlook for agricultural prices is
particularly uncertain, the decline is expected to continue. In
Global Economic Prospects, the World Bank projects a decline
of about 0.7% a year through the forecast period until 2030
(World Bank, 2008b).
Price projections depend on a wide range of factors, including
climate change, productivity developments, GDP and popula-
tion growth and the policy environment. One of the cruel iro-
nies today is seen in the connection between rising energy and
food prices. Higher energy prices have increased fertilizer and
Figure 34: Market access in agricultural areas of Africa, Asia and Latin America.
(Source: Sebastian, 2007).