The report on the 2006-2008 commodity price boom argues that energy prices and commodity speculation played the biggest roles in the unexpected food price hikes of three years ago.
It concludes that a stronger link between energy and non-energy commodity prices is likely to be the dominant influence on developments in commodity, and particularly food, markets.
In addition, the use of commodities by financial investors (so-called 'financialisation of commodities') may have been partly responsible for the 2007/08 spike, the report continues.
At the same time, the study, which was co-authored by Tassos Haniotis, economic analysis director in the European Commission's agriculture department, plays down the importance of other phenomena, such as biofuel production and increased demand from emerging economies.
However, the Organisation for Economic Co-operation and Development (OECD) and the UN Food and Agriculture Organisation (FAO) warned in June that growing demand from emerging markets and biofuel production are expected to drive up farm commodity prices in the coming years (EurActiv 16/06/10).
Regarding biofuels, the new report's statement that the effect of biofuels on food prices has not been as large as originally thought represents an about-turn compared to the World Bank's earlier position. In its July 2008 report, it blamed biofuels for up to 75% of the commodity price spike.
Development NGOs also claim that the EU's target of sourcing 10% of its transport fuel from biofuels by 2020 as a way of tackling climate change may increase food insecurity for the world's poor (EurActiv 15/02/10).
The European Commission has rejected allegations that EU policies to promote biofuels are to blame for rising food prices (EurActiv 07/05/08).
The new report notes that the recent boom was also fuelled by a number of other factors, including low previous investment in extractive commodities, a weak dollar, fiscal expansion, lax monetary policy in many countries and investment fund activity.
According to the report, price increases may have also been accelerated by record low global stocks of many food commodities, triggered by a combination of adverse weather conditions, the diversion of some food commodities to biofuel production and government policies, including export bans and prohibitive taxes.