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Keywords:

  • Agricultural prices;
  • agricultural trade;
  • emerging market economies;
  • market integration;
  • price transmission;
  • price variability;
  • trade policy
  • D52;
  • Q11;
  • Q17;
  • Q18

Abstract

This article develops a method for decomposing changes in agricultural producer prices. The method builds on a procedure used by the World Bank, with the main variables in the decomposition being trade prices, exchange rates and trade policies. We expand on the World Bank decomposition procedure by broadening the analysis of policy effects, adding the effect from incomplete transmission of changes in trade prices and exchange rates to producer prices, and handling the effect on prices from interactions between variables as they change simultaneously. Decomposition results are presented for various commodities for the major emerging markets of Brazil, China and South Africa.