Factors behind the price increase in the agricultural sector at the beginning of the twenty-first century: Rent, wages, oil and productivity

Abstract

During the first years of the 21st century, agricultural prices reversed the trajectory that had dominated for decades. The purpose of this paper is to study the determinants of such change. The methodology used was based on a classic approach to prices and information of Input-Output Tables from the World Input-Output Database (2012, 2016). The indicators included; rent captured by the average technique, land use, and accumulated price impacts following changes in the cost of imported oil, real wages, and total labor productivity. The results have confirmed that agricultural prices have increased due to increased intensive production and the new institutional context related to higher oil prices, higher wages, and slow technical progress. In conclusion, these elements make up an elevated minimum price level higher than in previous decades, which provides some space for structural change policies in primary developing countries.