Strategic Commodity Food Price Volatility of Central Java in 2020-2023

Drivers and triggers of international food price spikes and volatility

Globalization has enhanced the development of the transport sector and more importantly, the distribution of agricultural produce and food globally. However, not much is known about how this has impacted the welfare of the poor in Nigeria. Therefore, the study probed the persistence and asymmetry in food and transport price volatility; creating a dummy with the period before and after the adventure of significantly improved internet facility like 3G allowed the study to observe the significant effect of this period on persistence volatility of food price returns; and exploring the welfare effects of these volatility dynamics. A bi-variate EGARCH model was deployed to estimate the heteroskedastic behavior in rural food price and transport returns (1995M1-2017M11) obtained from National Bureau of Statistics while a simple welfare framework was used to gauge the effect of the price fluctuations. Persistence volatility in food price declined after introduction of 3G innovation. The study also confirmed that the risk in transport market significantly transmitted to rural food price volatility. Volatility persistence was high (0.99% apiece) both in food and transport markets. Also, there was evidence of leverage effect in transport price volatility in Nigeria. The study revealed that due to persistent price volatility, households gave up an average/maximum of 12%/33% and 13%/44% of their food consumption and transport expenditure/returns accordingly to achieve household food stability. Using the Lucas (1987, 2003) threshold, the study concludes that the benefits of eliminating volatility in food and transport are high.   Key words: Food price volatility, welfare and globalization.

We study the relationship between the extent of participation in global agricultural value chains (GAVCs) and food prices at the country level. Using longitudinal data on a sample of 138 countries for the period 2000–2015 and a shift‐share instrumental variable design, we study how the extent of a country's participation in GAVCs in a given year relates to food price levels and volatility in that same country and in the same year. We document a mean–variance trade‐off, finding that on average, participation in GAVCs is associated with a decrease in consumer food price levels but an increase in food price volatility. Looking at a country's upstream (i.e., closer to producers) or downstream (i.e., closer to consumers) positioning in GAVCs, we find that food price volatility is associated more strongly with downstream participation than with upstream participation.

Food price volatility in sub-Saharan Africa: Has it really increased?

This study examines the impact of technological progress on food price dynamics and supply stability across the 27 European Union Member States during 2011-2024. Using a balanced panel dataset, the analysis explores four dependent indicators-consumer food prices, food price inflation, price volatility, and food supply variability-while controlling for trade openness, GDP per capita growth, and population. Technological progress is estimated through panel least squares regression with fixed effects. The results reveal that technological advancement significantly reduces food prices and inflation, suggesting that innovation-driven productivity and efficiency gains stabilize consumer markets. However, its influence on food price volatility and supply variability is statistically insignificant, indicating that innovation alone cannot fully mitigate systemic risks in the European food system. The results provide policy-relevant evidence supporting the integration of technological innovation into food system governance across the European Union. They underline the need for targeted investment and regulatory coordination to translate innovation gains into tangible resilience outcomes, thus offering practical guidance for policymakers and stakeholders involved in implementing the European Green Deal and the Farm to Fork Strategy.

This study aims to analyse the effect of food price volatility on inflation in 34 provinces in Indonesia using monthly data from January 2018 to December 2021. The dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS), and heterogeneous non-causality approaches were used. The results showed the presence of a long-term relationship between food prices and inflation volatilities. Furthermore, it was noted that chili, rice, shallot, and garlic prices had a positive impact on inflation volatility, but chicken prices had a negative effect. The empirical results also suggested that central and local governments need to stabilize food prices to minimize inflation fluctuation. When the data were split before and during the Covid-19 pandemic, the results showed there was a significant difference in the effect of chili, rice, shallot, and chicken prices volatility on inflation volatility.

This study examines the effect of oil price on the volatility of food price in Nigeria. It specifically considers the long-run, short-run, and causal relationship between these variables. Annual data on oil price and individual prices of maize, rice, sorghum, soya beans, and wheat spanning from 2000 to 2013 were used. The price volatility for each crop was obtained using Generalized Autoregressive Conditional Heteroskedascity (GARCH (1, 1)) model. Our measure of oil price is the Refiner acquisition cost of imported crude oil. The Augmented Dickey–Fuller and Phillip–Perron unit root tests show that all the variables are integrated of order one, I (1). Therefore, we use the Johansen co-integration test to examine the long-run relationship. Our results show that there is no long-run relationship between oil price and any of the individual food price volatility. Thus, we implement a VAR instead of a VECM to investigate the short-run relationship. The VAR model result revealed a positive and significant short-run relationship between oil price and each of the selected food price volatility with exception of that of rice and wheat price volatility. These results were further confirmed by the impulse response functions. The Granger causality test result indicates a unidirectional causality from oil price to maize, soya bean, and sorghum price volatilities but does not show such relationship for rice and wheat price volatilities. We draw some policy implications of these findings.

Understanding how producers make decisions to allot acreage among crops and how decisions about land use are affected by changes in prices and their volatility is fundamental for predicting the supply of staple crops and, hence, assessing the global food supply situation. The innovations of the present paper are estimates of monthly (i.e. seasonal) versus annual global acreage response models for four staple crops: wheat, soybeans, corn and rice. We focus on the impact of (expected) crop prices, oil and fertilizer prices and market risks (price volatility and spikes) as main determinants for farmers’ decisions on how to allocate their land. Primary emphasis is given to the magnitude and speed of the allocation process. Estimation of intra-annual acreage elasticity is crucial for expected supply and for input demand, especially in the light of the recent short-term volatility in food prices. The econometric results indicate that global crop acreage responds to crop prices and price risks, input costs as well as a time trend. Depending on respective crop, short-run elasticities are about 0.05 to 0.15; price volatility tends to reduce acreage response as do price spikes on top of that. Comparison of the annual and the monthly acreage response elasticities suggests that acreage adjusts seasonally around the globe to new information and expectations. Given the seasonality of agriculture, time is of the essence for acreage response: the analysis indicates that acreage allocation is more sensitive to prices in spring than in winter and the response varies across months.

The recent period of high and volatile food prices has cast doubt on many longstanding assumptions such as the inevitability of declining real food prices, and brought to an end a long period of food price stability. Some of the key driving forces appear to have been declines in yield growth for major commodities and the rapid growth of biofuels. Both high and volatile food prices are justly causes for concern. Key elements of the cure for high food prices include a strong focus on agricultural research and development, as well as rural development more generally, and a reconsideration of the role of biofuels. The best cures for food price volatility aim to reduce it by improving market information and reducing output volatility. Social safety nets are the best policy for coping with its effects, while the widely-used trade and storage policy measures have many complex and uncertain effects.

This paper investigated how sensitive food price is to changes in petroleum price and exchange rate in Ghana from January 1997 to August 2017. Interest rate was included as a control variable in the study since it may be a useful macroeconomic policy tool. Using Johansen cointegration procedure, Vector Error Correction Model, Impulse Response Functions and BEKK-GARCH estimations, the results of the study showed there exist positive long-run and short-run relationships between food prices and all the macroeconomic variables used in the model. Thus, increases in petroleum price, exchange rate and interest rate raise food prices in Ghana. The magnitudes of these increases were found to be very high during the food crises periods in 2007/08 and 2010/11. It was also found that effects of these food price spikes caused by shocks from petroleum price, exchange rate and interest rate are long lasting and do not decay easily with time. The results from the BEKK-GARCH estimation showed that food prices in Ghana exhibit time-varying volatility; caused by its own ARCH and GARCH effects as well as exogenously determined shocks from petroleum price, exchange rate and interest rate. Also, the results indicated that food price volatility shocks in Ghana are persistent. It is recommended that; policy aimed at food price stabilization must build national petroleum buffer stocks to stabilize fuel prices, improve exchange rate and interest rate management, build district, regional and national food buffer stocks, selectively target fuel subsidy at crop farmers and food processors, and remove bottlenecks in food marketing.

Agricultural markets and food prices are no longer as stable and predictable as they had been. After decades of gradually falling food prices, the world is experiencing a period of price spikes and rapid swings in food prices and may face more of the same in the coming years. This dramatic shift has serious implications for the people who are already hungry or who are poor and spend a high proportion of their income on food. This new reality highlights the need to modify the architecture of international financial and agricultural markets in order to address the problem of price spikes and prevent excessive price volatility. This chapter details several innovative policy proposals at the global level to address the issue of extreme price volatility, such as a small global humanitarian physical reserve, information systems, and alternative risk coping mechanisms.

Food price volatility often occurs and cannot be avoided, including food price volatility that occurs in Parepare City. The effect of movement or changes in food prices appears to influence inflation, which in turn becomes the purpose of this study, namely to analyze the effect of changes in food prices on inflation in Parepare City. The analysis method used is multiple linear regression analysis. The data used is secondary data in the form of monthly time series from July 2018 to June 2021. The independent variables in this study are the food prices of rice, chicken meat, red chili, chicken eggs and granulated sugar. The results showed that the food prices of rice and chicken eggs have an increasing trend while the prices of chicken meat, red chili, and granulated sugar tend to decrease. The coefficient of determination test results shows that changes in food prices simultaneously positively and significantly affect inflation. The t-statistical test shows that partially changes in food prices of rice and chicken meat have a positive and significant effect on inflation while changes in food prices of red chili, chicken eggs and granulated sugar have a positive but insignificant effect on inflation. This research has implications for public policy to develop food prices stabilization policies, such as food reserve policies, market regulations, incentives for food producers, or social assistance programs to alleviate the impact of food inflation.

The world faces a new food economy that likely involves both higher and more volatile food prices; evidence of both conditions was clear in 2007/08 and 2011. After the food price crisis of 2007/08, food prices started rising again in June 2010, with international prices of maize and wheat roughly doubling by May 2011. This situation imposed several challenges. In the short run, the global food supply is relatively inelastic, leading to shortages and amplifying the impact of any shock. The poor are hit the hardest. In the long run, the goal should be to achieve food security. The drivers that have increased food demand in the last few years are likely to persist (and even expand). Thus, there is a significant role for international organizations like the World Bank, IFAD, AFD, and the IADB to play in increasing the countries’ capacity to cope with this new world scenario and in promoting appropriate policies that will help to minimize the adverse effects of the increase in prices and price volatility, as well as to avoid exacerbating the crisis.

Insights and methods of complex systems science are transforming science and providing clarity about the impact of policies to address major societal problems. These conceptual and mathematical advances allow us to study interdependence, patterns, networks, multiscale behaviors, and “big data.” Here I focus on the application of these advances to real-world concerns. I discuss case studies from global socioeconomic systems and immune cell regulation. Our analysis of the global food crisis exposes the causes and consequences of rapidly increasing and volatile food prices. Food price spikes in 2007–2008 and 2010–2011 triggered food riots across the world and precipitated the Arab Spring. Our quantitative models of nonequilibrium markets show that the food price increases are due to (1) US biofuel quotas increasing the amount of corn to ethanol conversion and (2) deregulation of commodity trading enabling speculator trend-following to cause bubbles and crashes. Policy action by the US and the European Union could alleviate or even resolve these problems. Our analysis of cell regulation makes use of gene expression data to obtain whole-cell regulatory models describing the response of immune cells to dynamic perturbations. Moreover, we have shown that cell dynamics are controlled by attractor states with implications for understanding biological development and treating cancer. Our analyses demonstrate the opportunity for complex systems science to inform both social policy decisions and medical advances.

In an effort to increase agricultural production, promote regional specialization and stabilize domestic food prices, the Tanzanian government has implemented several market-enhancing policies. The success of these measures depends, among other factors, on the cointegration and degree of price transmission across spatial markets. This study uses the vector autoregressive procedure of the Toda-Yamamoto causality test, dynamic ordinary least squares cointegration tests, and the asymmetric error correction model to examine the performance of Tanzania's domestic wholesale rice markets (lead-lag price relationship and long-run price adjustment process) during the post-agricultural market liberalization period. In response to changes in the marketing-enhancing policies during the investigation period, the presence of multiple structural breaks in the long-run equation is allowed. The results show that the Dar es Salaam market influences prices in all the rice markets examined, thus acting as a price leader. Furthermore, the price adjustment process results demonstrated the absence of asymmetric price adjustment between the central and regional wholesale rice markets, suggesting improved integration and efficiency of inter-regional rice markets. On the other hand, a central market's presence implies that interventions aimed at the central market can buffer regional markets to withstand adverse price shocks caused by food price spikes and volatility.