Farming alone doesn't drive food prices

International food prices began rising again last summer, and experts - from economists to government ministers - are debating the causes and consequences, and whether it will last long.

International food price trends are certainly important, but not as important as domestic price trends, because international trade does not satisfy most of the food demands around the world. Particularly for large countries like China, which are essentially self-sufficient in basic cereal supplies, domestic price trends will tend to be driven more by domestic macroeconomic policy than by price fluctuations in the world market.

The current rising trend in international food prices is not by itself surprising. The International Food Policy Research Institute recently projected that by 2030 the world price of wheat would be on average 17 percent higher than in 2000, and corn prices would be 33 percent higher. This rise is expected because of increased commercial demand driven by population and income growth, especially in transitional economies such as China.