Making Sense of Commodity Markets: FAPRI-MU Outlook and Policy Implications

Abstract

Declining prices have followed two recent price spikes in 2007/08 and 2010/11 to 2012/13 that brought an era of higher and more volatile commodity prices that is quite different from the previous years of depressed prices. Declining petroleum prices  combined with excellent global harvests brought the lowest market prices in many years. Are current policies tuned to these market conditions? We begin with a review of past policy evolution that took place in the European Union (EU) and United States (US), and then look at recent reforms and prospects for policy changes in the context of likely changes in the global market and policy environment over the next decade. Since agricultural policies generally evolve in response to internal and external pressures in a political economy context, we explore how the outlook of commodity markets may influence the directions of policies and the decision making environment for farmers.