Decreasing oil prices directly correlates with the price of food. Fuel transports food and with lowered oil prices, the cost of food is dropping. The price of fuel is important to the global market, because it dictates how imports and exports are priced.
The cost of petroleum determines the cost of agricultural products, like corn and wheat. The price of these crops includes the cost of transportation, chemicals and pesticides – all of which are made from petroleum.
Impoverished citizens will often spend over 50 percent of their budget on food. For instance, in Vietnam, parents will spend 65 percent of their budget on food for themselves and their families. With decreased prices in food, families living in developing countries will be able to purchase larger quantities.
While many living in developing countries are benefiting from the fall in oil prices, there is a population who is not benefiting from lowered oil prices. The fall in oil prices negatively affects independent farmers and crop growers.
These farmers do not use large amounts of pesticides or fuel to transport their goods. Therefore, the decreasing price in oil does not affect their cost in production and distribution. These farmers transport their food only a short distance. Disconnected from the global market, these small-holder farmers are at a disadvantage.
Overall, developing countries are benefiting from the decrease in oil prices, with the exception of small-holder farmers.
Lower oil prices can potentially benefit developing countries in another way, through investment. With lower oil prices, investment is possible because high oil importing countries have the opportunity to invest increased amounts into improving rural infrastructure and social services.
– Maxine Gordon