Because of an increase in grain supplies and a lowering of demand, food prices are expected to decrease worldwide according to the United Nation’s Food and Agricultural Organization (FAO).  This is nothing new however as the FAO’s “global food price index fell 2 per cent in September from August as cereal crops outlook improved,” (3).  As a result of the “global economic slowdown,” there is less demand for food (9).  The second factor of the foreseen price decrease is the global cereal supply predicted to be “7 million tonnes up” (19).

This information is concerning because the global grain supply increase has lowered the supplier power of grain farms in the food industry.  Consequently, individual companies (assuming homogenous products) can (in theory) substitute suppliers to reduce costs.  Unfortunately, the ability to substitute suppliers could raise competition between farms.  If a supplier utilizes predatory pricing, less efficient farms could go out of business.  In the big picture, the closing of many suppliers situated in a particular country could have the effect of lowering the perceived quality of life in a country, due to the lowering of the country’s GDP.

http://www.theglobeandmail.com/report-on-business/international-news/food-prices-on-downward-trend-fao/article2192760/
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