Investigating changes in food prices
During the surge in commodity prices between 2007 and 2012, food prices in some EU Member States increased by 5 to 6 times the EU average. A European Commission report in 2009 recommended an increase in transparency in the food chain to promote competition and resilience against further price fluctuations. The EU-funded 'Transparency of food pricing' (TRANSFOP) project was then set up to investigate various aspects of price transmission in the European food sector. The initiative involved data collection and modelling. More than 20 research papers were published as part of the TRANSFOP project. One finding was that consumer food prices are not directly related to changes in agricultural prices, but are rather affected by a number of other factors. In particular, researchers highlighted the interplay between food and energy prices, which may be due to increased biofuel production. They also found that there are major differences between how food chains operate in different EU states. However, there were commonalities: farmers respond more quickly to major price fluctuations than retailers, and producer prices are, in general, more volatile than consumer prices. Another finding was that networks of farmers or small producer companies seem to add value to the products of participating companies. This is most likely through improved efficiency, organisation and management practices. The overall outcome of the TRANSFOP project was a four-point action plan that identified priorities for improving price transparency in the EU. This document will inform policymakers and lead to more stable food chains.
Keywords
Food chain, price fluctuation, price transparency, consumer, competition, commodity, price transmission
