Sunday, November 27, 2011

FAO - there is confusion in commodity markets

The impact of uncertainty in commodity markets is strong. If there is greater price volatility, it will be harder to plan for next year's production. The cost of production will also fluctuate with the price of energy. The cost of buying seeds will also be less certain. Even if prices have fallen from their highs, there is uncertainty with what should be the right crop mix by farmers which creates an impact on food security as reported in the latest FAO study. The impact on certain regions such as Africa are significant. The impact of food price variability is much stronger on the poor because they spend a significant greater portion of their income on food.

Confusion and uncertainty is never good for both consumer and producers of food. 

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