A review of agricultural economics literature indicates the importance of macroeconomics, including energy impacts and financial factors, in the determination of agricultural commodity prices. In the last decade, we observed several occurrences of major importance to the agricultural sector simultaneously: the huge price hikes in the energy sector and increased biofuel production; extreme variability in farm prices; farm income at record levels; and the continuing global financial and economic crisis. Within this context, this chapter covers the agricultural economics and related literature on macroeconomic issues with a focus on international trade and finance and how such factors as monetary policy, exchange rates, and energy prices affect domestic and international prices for agricultural products. The purpose of this chapter is to reexamine the impact of macroeconomic variables on farm prices. We synthesize the literature on the direct impacts of monetary policies on agricultural prices and provide insights into the future for this literature.
JEL classifications: Q11, Q43