The Effects of Volatile Food Prices
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The FAO’s State of Food Insecurity in the World 2011 took a look at food price volatility and its effects and has produced some sobering statistics.Two key messages stand out: impacts are greatest on the world’s poorest, and high and volatile prices are likely to continue.
These shocks can have long-term devastating effects on economies and the lives of the most vulnerable.
The report tracks food prices from historically low levels in the 1960s through increases that began in 2003, and lists some of the reasons for the price jumps:
- Weather shocks, such as drought in Australia (2005–07) that reduced wheat production,
- Policies to promote use of biofuels (tariffs, subsidies and mandated levels of use) that increased demand for maize and vegetable oils for fuel,
- Upward pressure on prices for petroleum and fertilizer – on the resource-intensive economies of the world’s richest countries.
Here’s an extract, which should start us all thinking about the larger system changes that are needed for the sake of the world’s billion poor and hungry:
“Demand from consumers in rapidly growing economies will increase, population continues to grow, and any further growth in biofuels will place additional demands on the food system. On the supply side, there are challenges due to increasingly scarce natural resources in some regions, as well as declining rates of yield growth for some commodities. Food price volatility may increase because of stronger linkages between agricultural and energy markets, as well as an increased frequency of weather shocks.”
You can read more about this issue via this article on the FAO website, or Download the full report.
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