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Transmission of Global Food Prices to Domestic Prices in Developing Countries: Why It Matters, How It Works, and Why It Should Be Enhanced

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dc.contributor.authorWorld Bank
dc.date.accessioned2017-06-13T20:59:18Z
dc.date.available2017-06-13T20:59:18Z
dc.date.issued2012-04
dc.description.abstractTransmission of international food prices to domestic prices is essential to pursue comparative-advantage-based, sustainable agricultural production, and to ensure domestic production responds to global food scarcity or surplus. (i) International prices are opportunity costs for most price-taking developing countries and are crucial in determining an efficient distribution of domestic resources. When the long-term trend of international prices is transmitted slowly and imperfectly to domestic markets, consumers and producers make decisions based on prices that do not represent their real social costs and benefits. There is strong empirical evidence from both developing and developed countries that any large, sustained deviation of domestic prices from world prices in either direction leads to substantially sub-optimal outcomes and slows the rate of economic growth; and (ii) as international food prices reflect global scarcity or surplus, their transmission to domestic prices can help improved the global responsiveness of the food system to shocks. The recent increase in the volatility of international food prices is, therefore, a big concern. These volatile and unpredictable prices may undermine incentives for farmers to respond to high price levels with the critical increase in production needed to bring food prices down. In practical terms, farmers decide what to plant and countries deciding when to import face uncertainty in the likely distribution of world food prices and greater consequences when using past price levels and distributions to guide current decisions. This uncertainty keeps food prices high for a longer period, leading to fundamental food security risks for consumers and governments. To achieve more efficient domestic price formation, policy actions need to focus on (i) strengthening the integration of local markets with international markets (through investments in infrastructure and market-oriented policies), especially local markets that are more volatile than international markets, (ii) reducing global food price volatility, including through more discipline on trade policy, and (iii) strengthening safety nets to rapidly and cost-effectively protect the poor and vulnerable from the food price spikes.en
dc.identifierhttp://documents.worldbank.org/curated/en/234511468316442852/Transmission-of-global-food-prices-to-domestic-prices-in-developing-countries-why-it-matters-how-it-works-and-why-it-should-be-enhanced
dc.identifier.doi10.1596/27121
dc.identifier.urihttps://hdl.handle.net/10986/27121
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectACCESS TO MARKETS
dc.subjectAGRICULTURAL ECONOMICS
dc.subjectAGRICULTURAL POLICIES
dc.subjectAGRICULTURAL PRODUCTION
dc.subjectAGRICULTURE
dc.subjectARBITRAGE
dc.subjectCEREAL PRICE
dc.subjectCEREAL PRICES
dc.subjectCEREALS
dc.subjectCLOSED ECONOMY
dc.subjectCOMMODITIES
dc.subjectCOMMODITY
dc.subjectCOMMODITY PRICE
dc.subjectCONNECTIVITY
dc.subjectCONSUMER PRICES
dc.subjectCOOKING
dc.subjectDEVELOPING COUNTRIES
dc.subjectDOMESTIC COMPETITION
dc.subjectDOMESTIC ECONOMIES
dc.subjectDOMESTIC MARKET
dc.subjectDOMESTIC MARKETS
dc.subjectDOMESTIC PRICE
dc.subjectDOMESTIC PRICES
dc.subjectFOOD CONSUMPTION
dc.subjectFOOD PRICE
dc.subjectFOOD PRICES
dc.subjectFOOD RESERVES
dc.subjectFOOD SECURITY
dc.subjectFOOD SUBSIDIES
dc.subjectFOOD SUPPLY
dc.subjectFOOD TRANSFERS
dc.subjectGLOBAL MARKETS
dc.subjectGOVERNMENT CONTRACTS
dc.subjectIFPRI
dc.subjectINCOME
dc.subjectINTERNATIONAL MARKET
dc.subjectINTERNATIONAL MARKETS
dc.subjectINTERNATIONAL TRADE
dc.subjectLOCAL CURRENCY
dc.subjectMAIZE
dc.subjectMARKET INFRASTRUCTURE
dc.subjectMARKET INTEGRATION
dc.subjectMARKET PRICE
dc.subjectMARKET PRICES
dc.subjectMARKET SHARE
dc.subjectMARKET STRUCTURE
dc.subjectMARKETING
dc.subjectOIL ­ PRODUCTS
dc.subjectOPEN ECONOMIES
dc.subjectPRICE BAND
dc.subjectPRICE CHANGE
dc.subjectPRICE CHANGES
dc.subjectPRICE LEVELS
dc.subjectPRICE MOVEMENT
dc.subjectPRICE MOVEMENTS
dc.subjectPRICE SERIES
dc.subjectPRICE SUPPORT
dc.subjectPRICE TREND
dc.subjectPRICE VOLATILITY
dc.subjectPRIVATE SECTOR
dc.subjectRESULT
dc.subjectRESULTS
dc.subjectSAFETY NETS
dc.subjectSECURITY RISKS
dc.subjectSOCIAL COSTS
dc.subjectSOCIAL PROTECTION
dc.subjectSUBSTITUTE
dc.subjectSUBSTITUTION
dc.subjectSURPLUS
dc.subjectSUSTAINABLE GROWTH
dc.subjectTRANSMISSION
dc.subjectVOLATILITY
dc.subjectWHEAT
dc.subjectWORLD MARKET
dc.titleTransmission of Global Food Prices to Domestic Prices in Developing Countriesen
dc.title.subtitleWhy It Matters, How It Works, and Why It Should Be Enhanceden
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleTransmission of Global Food Prices to Domestic Prices in Developing Countries
okr.date.disclosure2012-07-18
okr.date.doiregistration2025-05-05T12:32:24.314935Z
okr.doctypePublications & Research::Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/234511468316442852/Transmission-of-global-food-prices-to-domestic-prices-in-developing-countries-why-it-matters-how-it-works-and-why-it-should-be-enhanced
okr.guid234511468316442852
okr.identifier.externaldocumentum000386194_20120718031928
okr.identifier.internaldocumentum16514727
okr.identifier.report71268
okr.importedtrue
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/234511468316442852/pdf/712680WP0WB0CP00Box370065B00PUBLIC0.pdfen
okr.topicIndustry::Food & Beverage Industry
okr.topicInternational Economics and Trade::Access to Markets
okr.topicMacroeconomics and Economic Growth::Markets and Market Access
okr.topicAgriculture::Food Markets
okr.topicAgriculture::Food Security
okr.unitAgriculture & Environmental Serv (AES)
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