Determinants of food price transmission from international to domestic markets

This presentation investigates the determinants of food price transmission from international grain markets to domestic food markets using a global dataset of rice, maize, and wheat prices. Applying cointegration tests, vector error correction models, and impulse response functions, the study finds that domestic prices respond gradually and incompletely to international price shocks, with the median response reaching about 50% after six months and 70% after twelve months. The analysis shows that price transmission is stronger in countries more integrated into international trade and weaker in landlocked countries, as well as for processed foods and retail prices. Contrary to expectations, commodities that contribute a larger share of dietary calories exhibit higher price transmission, while no significant differences are found between imported and exported commodities or among rice, maize, and wheat markets. The findings improve understanding of how trade integration, market structure, and geographic factors shape the transmission of global food price shocks and their implications for food security and policy. -Abstract generated by Copilot AI 2.2