Ohio’s Country Journal
April 2009
11
MarkEts
Economists: What sent farm prices up now bringing
them down
A trio of economic factors that sent “The dollar had lost about 67% of its less demand for the corn and soybean “Had commodity prices stayed high,
commodity prices soaring in mid-2008 value through July 2008, and since July it meal to produce meat. It filters through farmers could have supported those
has since reversed course and is pushing has gained 22% of that value back,” the system. input prices,” he said. “It’s going to be a
prices lower, according to an updated Tyner said. “Since July, the expectations “It takes a long time for some animal tight margin year for farmers. They came
report by three Purdue University agri- on supply and demand are that our livestock products before those lower off of two really good years, but this year
cultural economists. stocks are going to be better than we commodity prices get filtered into the is going to be much different.”
“The three major drivers that we iden- thought since 2008 was a good produc- meat, dairy and eggs. Poultry products Hurt said, “The future for agriculture
tified last year were trends in global pro- tion year and world demand has are the quickest. For beef it’s the longest is also closely tied to the depth and dura-
duction and consumption, the value of dropped. So supplies are not nearly as time period — up to several years — and tion of the current recession, as well as to
the dollar, and biofuels,” said Wally short now in terms of stocks-to-use ratios for pork it’s somewhere in between. For the magnitude of the recovery in coming
Tyner, who, along with Philip Abbott and as they were before. some meat products, we may be seeing years. Other important factors will be
Chris Hurt, released “What’s Driving “And then the demand for biofuels is prices now that reflect more what corn how governments and consumers
Food Prices?” this past July. “One of the not near what we thought it was going to and soybean prices were last year than respond to the downturn and how biofu-
key questions we asked in doing this be. The price of oil comes down, the what they are this year.” els policy evolves in coming years.”
new study was, ‘Are these same three price of gas comes down and demand for Hurt said, “Some products like eggs, To read the July 2008 “What’s Driving
that drove prices up the ladder now ethanol goes down. That means there’s milk and dairy will have lower Food Prices?” report and update, go to
driving prices down the ladder?’ The not as much corn needed to make prices this year. Others like meats the Farm Foundation Web site at
answer is yes.” ethanol, and, therefore, not near as much may be close to unchanged, and fruits www.farmfoundation.org.
Tyner and Hurt found that a stronger pressure on the price.” and vegetables will likely still be some- Farm Foundation is a non-profit
American dollar, falling ethanol demand Given time, consumers are likely to what higher.” organization promoting non-advocacy
and rising grain stocks combined to send see lower prices for some food items, The news for crop farmers is not as agricultural policy analysis. The Oak
corn, soybean, wheat and rice prices cas- Tyner said. rosy, however. Production costs have Brook, Ill.-based organization provides
cading in late 2008. Behind those dramat- “Demand is down for everything,” not fallen as quickly as commodity objective information on issues shaping
ic changes is the global financial crisis, he said. “In particular, demand is down prices. As a result, input prices remain the future of agriculture, food systems
the economists said. more for meat products, which means relatively high, Tyner said. and rural regions.
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