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The Question of a Reasonable Price for Food: Policy Alternatives to Control Food Price Inflation in Developed Economies

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Food Security in Australia

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Abstract

This chapter explores a number of policy responses to food price inflation in developed economies. It focuses on previous food price crises, in particular the 2007–2008 food price crisis, and examines how governments of selected developed economies have managed the price inflation of the food basket. In particular, this chapter investigates how Australia, the United Kingdom and France have responded to the challenges of volatile international food prices and have managed to maintain stable national food prices. While food price inflation in Australia and the United Kingdom has reached in excess of 40% over the last 10 years, in France it has been contained to about 20% over the same period. The reluctance of liberal market economies to engage in policies that directly control food price inflation contrasts with the French hands-on approach at regulating the domestic food distribution and retailing sectors. Australia and the United Kingdom advocate that only the improvement of market efficiency will assist in controlling food price inflation rather than intervening along the supply chain. More in-depth research is required to confirm what the present work is suggesting, that is bargaining between state and the food industry contributes towards reducing the speed and magnitude at which price increases are transmitted along the supply chain to the end consumer.

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Notes

  1. 1.

    Conseil Economique, Social et Environnemental: ‘Les modalites de formation des prix alimentaires’ March 2009.

  2. 2.

    Source: FAO website: www.fao.org/worldfoodsituation/FoodPricesIndex/en/ retrieved 10 September 2011.

  3. 3.

    World wheat production output was estimated at 684.31 million tons in 2009/2010. By 2010/2011 it had dropped to 648.70 million tons. Source: USDA World Supplies and Estimates available at www.usda.gov/oce/commodity/wasde/latest.pdf, Retrieved November 2011.

  4. 4.

    Source: US Department of Agriculture.

  5. 5.

    In December 2010, the Australian government announced a National Food Policy Group to advise government on issues and policies affecting Australia’s food chain (Press Release DAFF 10/062L). Members of the National Food Policy Group represent food and grocery retailers, transport and logistics operators, food manufacturers, farmers, and grains growers.

  6. 6.

    Source: 2009 Report from The Conseil Economique Social et Environemental, quoting OECD Agricultural Perspectives 2008–2017.

  7. 7.

    Source: Australian Food Statistics 2008—Department of Agriculture, Fisheries and Forestry. In 2007 France’s food exports represented 5.9% of the total world food trade in value.

  8. 8.

    The average proportion of household income spent on food varies around 35–60% in the developing world.

  9. 9.

    Source: ABS Consumer Price Index, March 2008.

  10. 10.

    Source: Office of National Statistics – News release 16 December 2008. Seen at www.statisitics.gov.uk/pdfdir/cpi1208.pdf Retrieved October 2011.

  11. 11.

    Source: Eurostat Database—European Food Prices Monitoring Tool

  12. 12.

    Source: Report ‘Family Food 2009’ from UK Department of Environment, Food and Rural Affairs (Defra).

  13. 13.

    Source: French Senate website: http://www.senat.fr/rap/a04-076-8/a04-076-86.html Retrieved October 2011.

  14. 14.

    Europa—Press Release STAT/08/76 dated 2 June 2008.

  15. 15.

    The ‘Conseil Economique Social et Environnemental’ is the third constitutional assembly of the French republic advising the government and parliament in the development of public policies. The report is available on line at www.conseil-economique-et-social.fr/rapport/rapsec/RS083920.pdf Retrieved November 2011.

  16. 16.

    Over the past 5 years the value of Australia’s food exports has been declining at an average of 5% a year in real terms, as seasonal conditions have generally been less than ideal in many regions. The 2006–2007s drought contributed to a 6% fall in the value of Australia’s food exports to $24.2 billion in real terms (Australian Food Statistics 2008, p.14).

  17. 17.

    Source: The Australia Food & Grocery Council (AFGC) ‘State of the Industry Report’—October 2010.

  18. 18.

    The Senate Economics Reference Commission Report Grocery Choice Website, September 2009 states in its executive summary that ‘The Inquiry has revealed that the Government’s Grocery Choice initiative was characterised by waste and mismanagement’ (p. 9).

  19. 19.

    The National Food Policy Working Group is composed of representatives from Woolworths, Linfox, Simplot, Boost Juice, National Farmers Associations, Elders, Graincorp, ACTU, CSIRO, AFGC.

  20. 20.

    Source: BBC News available at: http://www.bbc.co.uk/news/uk-england-12039041 Visited November 2011.

  21. 21.

    Source: UBS Global Economic Perspectives, 26 February 2011.

  22. 22.

    Reference to the following legislations: Loi Royer 1973 and Loi Raffarin 1996.

  23. 23.

    Reference to following legislations: Loi Galland 1996 and Loi Dutreuil 2003.

  24. 24.

    Reference to the ‘Loi de Modernisation de l’Economie 2008’.

  25. 25.

    ‘Price Formation from Producer to Consumer’ March 2009—Report from the ‘Conseil Economique Social et Environnemental’ and available on line at www.conseil-economique-et-social.fr/rapport/rapsec/RS083920.pdf Retrieved October 2011.

  26. 26.

    The law no. 2010–874 dated 27 July 2010, also known as the law of modernisation of agriculture and fisheries (Loi de la Modernisation de l’Agriculture et de la Peche) defines in great details the necessary requirements to meet these key objectives.

  27. 27.

    Source: OECD—UK Response July 2011, Survey of activities in food price formation, transparency and monitoring along the chain. Available at www.oecd.org/dataoecd/48/41/48961029.pdf Retrieved November 2011.

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Authors and Affiliations

  1. Macquarie University, Sydney, Australia

    Brigit Busicchia

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  1. Brigit Busicchia
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Correspondence to Brigit Busicchia .

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Editors and Affiliations

  1. 17 The Grange, East Malvern, 3145, Victoria, Australia

    Quentin Farmar-Bowers

  2. , School of Humanities and Social Sciences, Charles Sturt University, Locked Bag 588, Wagga Wagga, 2678, New South Wales, Australia

    Vaughan Higgins

  3. , School of Environmental Sciences, Charles Sturt University, Albury, 2640, New South Wales, Australia

    Joanne Millar

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Busicchia, B. (2013). The Question of a Reasonable Price for Food: Policy Alternatives to Control Food Price Inflation in Developed Economies. In: Farmar-Bowers, Q., Higgins, V., Millar, J. (eds) Food Security in Australia. Springer, Boston, MA. https://doi.org/10.1007/978-1-4614-4484-8_6

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