The Price of Farm Products in the Future

Abstract

The central focus of this article is on the be havior of U.S. grain prices in the context of prospective world developments over the next several decades. We first look at the process of farm price determination. We next look at the dramatic movements in farm prices, particularly grain prices, in the period 1970-75. Given this background, we explore in some depth what is likely to be the trend in world grain prices over the next 25 years and the bases of that trend development. The conclusion is reached that world grain prices are likely to trend upward over the period 1975-2000. It is argued, how ever, that grain prices are not likely to move along a smooth trend; to the contrary, grain prices are likely to fluctuate widely, sharply, and unpredictably around trend. Finally, the policy implications of future grain price behavior are explored and some tentative policy suggestions presented.