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January 18th, 2016

Explaining grain and oilseed price volatility: The role of export restrictions

Published by Food Policy Journal,

This study in the Food Policy journal examines the impact that export restrictions have on price volatility. Since 2007 food prices have become significantly higher and more volatile. This impacts food security because it affects household incomes and purchasing power. In general, food price volatility is problematic for policy makers and can disrupt the food supply chain. A more and more frequent response to price volatility is the use of export restrictions to stabilize domestic prices. However, when a country is a large exporter, the restrictions can even increase global price volatility. The authors of this article used data on the prices of maize, wheat, rice and soy to estimate the impact of export taxes and quantitative restrictions on global price volatility. The results showed that the export restriction that were implemented between 2006 and 2011 increased price volatility for wheat and rice, however the did not increase prices for maize and soybean. With a simulation method, the authors show that the contribution of export restrictions has almost the same impact on price volatility as key macroeconomic variables.

 

Curated from sciencedirect.com