Commodity prices and food inflation

Timothy Richards, Geoffrey M. Pofahl

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Timothy J. Richards and Geoffrey M. Pofahl focus on how high and volatile commodity prices impact food prices. Commodity prices increased between 2007 and 2008, with corn prices rising 51.9%, soybean prices 74.4%, wheat prices 104.5%, and milk prices by 41.4% in the year between July 2007 and July 2008. Consumer demand is represented by a random utility model in which consumers are assumed to make a discrete, hierarchical choice of one product from among all products sold at the retailers represented in sample, or some other product from another outlet. Each supplier is assumed to set its wholesale price in order to maximize the surplus over production costs for the particular brand or variety he or she sells, conditional on the retailer's response. The cereal-model results indicate that when input prices are rising, wholesalers are able to raise margins, taking advantage of retail buyers' expectations that prices should be rising in an inflationary environment.

Original languageEnglish (US)
Pages (from-to)1450-1455
Number of pages6
JournalAmerican Journal of Agricultural Economics
Volume91
Issue number5
DOIs
StatePublished - 2009

Fingerprint

commodity prices
commodity foods
inflation
Economic Inflation
Food
input prices
milk prices
food prices
consumer demand
surpluses
production costs
Inflation
Commodity prices
soybeans
wheat
corn
Soybeans
Triticum
Zea mays
Milk

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

Cite this

Commodity prices and food inflation. / Richards, Timothy; Pofahl, Geoffrey M.

In: American Journal of Agricultural Economics, Vol. 91, No. 5, 2009, p. 1450-1455.

Research output: Contribution to journalArticle

Richards, Timothy ; Pofahl, Geoffrey M. / Commodity prices and food inflation. In: American Journal of Agricultural Economics. 2009 ; Vol. 91, No. 5. pp. 1450-1455.
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