Why should we be concerned about volatility and spikes in global food prices, particularly since they have subsided in recent years? For one, these crises hurt. The most recent food price crises in 2007–2008 and 2011 had significant and widespread negative impact on the welfare of poor people, particularly their food and nutrition status. Second, a crisis could occur again. The complex set of concurrent factors behind the last shocks—including diversion of crops for biofuel, extreme weather events, low grain stocks, and panicky trade behaviors—are still present or have the potential to reemerge.
In Building a Resilient Global Good System by Lowering Food Price Spikes and Volatility, authors Shenggen Fan and Joanna Brzeska take stock of our efforts to prevent such shocks from reappearing.
On the positive side of the ledger, they find three important areas of progress:
- In recent years both developed and developing countries and regions have increased investment in agriculture, food, and nutrition, which in turn enhances food security by helping reduce food prices and increasing production.
- A decrease in use of trade restrictions has helped to ensure agricultural markets maintain production incentives.
- National stocks have been increased, as have regional emergency reserves, surpluses that can help mitigate price spikes in times of crisis.
But there are critical areas of stagnation and regression as well:
- Most of the price support policies introduced or expanded during the 2008 food crisis—policies that can lead to resource misallocation and price instability—have remained in force.
- Recent actions in the European Union and the United States regarding biofuel production threaten to thwart momentum toward the long-term development of the next generation of nonfood biofuel technologies.
- Asia and Africa are experiencing rising inequality and large segments of the population throughout the developing world remain without social protection.
- In both the developed and developing there is inadequate climate-change adaption and mitigation activities.
Based on their examination of these issues, Fan and Brzeska offer six definitive steps in the areas of trade, technology, and social policy that the world can take to build resilience against volatile and high food prices.
Yet the authors are quick to point out that these policies are not ends in themselves: “Building the resilience of developing countries and their vulnerable populations to volatility in food prices is an important component of a comprehensive strategy to help these populations manage a myriad of future man-made and natural shocks to their already fragile livelihoods.”
