1. Global food markets Economics of Food Markets Lecture 2 Alan Matthews

2. Lecture objectives To explore factors affecting the global balance between food supply and demand To highlight the continuing role of hunger and what can be done about it To discuss changing patterns of international trade in agri-food products

3. Long term perspectives Think about in terms of simply supply- demand diagram Factors affecting demand –Population growth, income per head, changing tastes Factors affecting supply –Resources, technology

5. Source: FAO World Agriculture: Towards 2015/2030

7. Source: FAO Food Outlook

8. Long term perspectives Malthusian predictions not yet confirmed by historical experience Great volatility around the trend What does the future hold? –International organisations relatively sanguine –Dissenting voices, e.g. Lester Brown –Global population growth slowing down –The China syndrome? –Vanishing resources? –Technology?

9. Prospects for food and nutrition Tremendous progress in improving nutrition levels over last four decades But almost 800 million people still suffer from undernutrition The importance of agricultural development to address poverty and undernutrition

11. FAO World Agriculture Towards 2015/2030

13. Changing international trade patterns Agricultural exports a declining share of global merchandise trade Overall agricultural trade surplus of developing countries has virtually disappeared Least developed countries are net food importers since the mid-1980s Trends driven by both policy and market factors

14. FAO World Agriculture Towards 2015/2030

16. Source: Regmi Gehlhar Amber Waves Feb 2005

17. Policy impacts on international trade Tariffs continue to curb trade Domestic support remains high More liberalisation would mainly benefit developed countries Does globalisation disadvantage the poorest countries?

23. FAO World Agriculture Towards 2015/2030

25. Global supply chains “Understanding the competitive nature of the global food industry means understanding changing consumer preferences and the food industry’s efforts to meet these demands. The task of moving food from the farm to the table is becoming increasingly complex, involving diverse local, national, and global agents and networks. Food markets are constantly evolving, driven not only by changes in consumer preferences, but also by technology, linkages between members of the food supply chain, and prevailing policies and business environments. Sophisticated supply chains and distribution channels are now being adopted across different regions and national boundaries” - Regmi and Gehlhar 2005

30. Taming commodity markets Commodity markets – declining and volatile prices Price stabilisation –Buffer stocks Price raising –Export cartels Market-based mechanisms –Compensatory financing schemes –Risk management

33. Key messages – global food markets Positive achievements –declining food prices, fewer people hungry Issues –can this continue? –do OECD farm policies hurt the poor? –can we tame commodity markets? –Can globalisation of food markets work in favour of the poor?