The effects of agricultural trade openness on food price transmission in Latin American countries

  • Insa Flachsbarth CEIGRAM, Universidad Politécnica de Madrid, Department of Agricultural Economics and Social Sciences, Madrid
  • Alberto Garrido CEIGRAM, Universidad Politécnica de Madrid, Dept. Agricultural Economics and Social Sciences, Madrid
Keywords: international food trade, market liberalization, global price shock, food security, food access, error correction model, consumer food prices


Trade of agricultural commodities has grown significantly in most Latin American countries (LAC) over the last two decades. However, after the international food price surges in 2006-08 and 2011-12 concerns about food access of the poor arose. Within a panel framework containing six LAC (Argentina, Brazil, Chile, Colombia, Mexico and Peru), we used a single equation error correction model to identify possible cointegrating relationships between the food consumer price index (CPI) and a set of trade related and domestic variables. The main focus of the study was to examine how different levels of trade openness impact international food price transmission to domestic markets. Our results confirm that deeper market integration increases global price transmission elasticities. In other words, more agricultural trade openness proves to elevate food CPIs during global price spikes. Thus, for poor consumers world price shocks can be deteriorating in the short-run and domestic food prices will slowly converge to a higher long-run equilibrium. Especially in increasingly integrated economies, effective policies to buffer food price shocks should be put in place, but must be carefully planned with the required budget readily available. We also found that exchange rate appreciations can buffer price shocks to a certain extent and that monetary policies seem to be an appropriate means for stabilizing food prices to safeguard food access of the poor population.


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Author Biographies

Insa Flachsbarth, CEIGRAM, Universidad Politécnica de Madrid, Department of Agricultural Economics and Social Sciences, Madrid

Alberto Garrido, CEIGRAM, Universidad Politécnica de Madrid, Dept. Agricultural Economics and Social Sciences, Madrid


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How to Cite
FlachsbarthI., & GarridoA. (2014). The effects of agricultural trade openness on food price transmission in Latin American countries. Spanish Journal of Agricultural Research, 12(4), 927-940.
Agricultural economics