+
Factors Affecting the Inclining/Declining Trends Food Prices
Matthew Tjahjadi, Ivan Lukito, Marianne Garbo, Nour Rahhal
+Agenda Introduction Defining Food Prices Regression Analysis on All Factors Direct Factors Influencing Food Price Indirect Factors Influencing Food Price
Conclusion
+Introduction Analysis of Inclining/Declining Patterns of
Food Prices Factor 1: Oil Prices Factor 2: Population Factor 3: Natural Disasters
Analysis of Indirect Factors Factors: Climate Change and Income
Is there correlation between all the individual independent factors?
+Defining Food Prices in US Food Price Index consists of the average of
commodity group price indices The five food commodities are:
Meat Cereal Sugar
Dairy
Vegetable Oil
+Data SamplingData is given monthly from the
beginning of January 1990 to March 2015
For Piecewise forecasting monthly data is used
Data sampling is used to run regression analysis – quarterly data used instead of monthly To avoid all the factors from being important
+Piecewise Forecasting
0 50 100 150 200 250 300 3500.0
50.0
100.0
150.0
200.0
250.0
300.0
f(x) = 0.950914863660878 x − 50.0809807833788R² = 0.793692162051432
f(x) = − 0.625731468592331 x + 175.423643302303R² = 0.811060019315434
f(x) = 0.302612569525898 x + 99.2477229441196R² = 0.544252120256142
Piecewise Forecasting For Food Prices
Time Series
Food
Pric
e In
dex
+Forecasting Equations
y = 0.3026x + 99.248 for 0<x<75 (January 1990 to April 1996)
y = -0.6257x + 175.42 for 76<x< 149 (April 1996 to July 2000)
y = 0.9509x - 50.081 for x>150 (July 2000 onwards)
+Regression on All The FactorsRegression Statistics
Multiple R 0.920999879R Square 0.848240778
Adjusted R Square 0.846702677Standard Error 17.53764896Observations 300
Coefficient
sStandard
Error T-Stat P-value
Intercept 172.4784 24.434341 7.058854 1.1976E-11
Oil Price 1.497832 0.0612047 24.47250 4.373E-73
US population (million) -0.33971 0.0932002 -3.64502 0.0003157Frequency of
Disasters/Month -0.33251 0.1304022 -2.54992 0.0112789
+Factor 1: Oil Price
1 13 25 37 49 61 73 85 97 1091211331451571691811932052172292412532652772893010.0
50.0
100.0
150.0
200.0
250.0
300.0
Food Price Index vs. Oil Price
Food Price Index
Oil Price
Time Period
Food
and
Oil
Pric
es/M
onth
+Factor 2: Population
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 9770
90
110
130
150
170
190
210
230
250
World Population (in 25 million) Vs. FPI
World population(in 25 million) FPI
Period
Popu
latio
n an
d FP
I
+Factor 3: Natural Disasters
Affect-ing Food Prices; 82.10%
No Effect on Food Prices; 17.90%
Percentage of Natural Disasters that Affect Food Prices
Disasters Affecting Food Prices Significantly: Flooding, Drought, Severe Weather, Winter Weather
+Factor 3: Natural Disasters
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100
0
100
200
300
400
500
600
700
800
Food Price Index vs. Frequency of Natural Disasters
Quarter #
+Indirect Factors
+ConclusionFood prices are forecasted to increase in
the next decade What are the implications?
Oil price is the main driver of the inclining/declining patterns of food prices
84% of the trend is explained by the three main factors: oil price, population and natural disasters
Indirect Factors explain the remaining 16%
+References
+Questions