Farm Foundation has issued an update of a report last year on “What’s Driving Food Prices?” and found the same factors affecting commodities.

“In July 2008, crude oil prices were at record levels, as were most agricultural commodity prices. Low supplies generated fears of food shortages. The rhetoric of the food-versus-fuel debate rose along with food prices. Today, despite remarkable course changes, the key drivers of food prices and their complex interactions remain the same,” according to the new report.

The new report updates the analysis Purdue University economists Phil Abbott, Chris Hurt and Wally Tyner did just nine months ago for Farm Foundation. That report, released in July 2008, identified three major forces driving food prices: World agricultural commodity consumption exceeding production growth, leading to very low commodity inventories; the decline in value of the U.S. dollar; and the new linkage between energy and agricultural markets.

In the second half of 2008, each of these driving forces completely reversed direction. “The transitions were truly remarkable—almost a 180-degree course change—yet the key drivers of food prices remain the same: supply and utilization of grains and oilseeds; the exchange rate of the dollar and related world macroeconomic factors; and the energy/agriculture linkage,” says Tyner. “Our updated analysis verified the role of the key drivers, although they sometimes play out in somewhat different ways.”

Tyner and his colleagues are participating in a Farm Foundation forum to discuss the results of the study this morning at the National Press Club.

Listen to an interview with Wally Tyner here: farm-foundation-tyner-09.mp3

Download the interview for broadcast use here: Wally Tyner on Food Price Drivers