Lessons from the 2006-2008 World Food Crisis

Sudden spikes in global food prices over the last few years have produced instability around the globe. In The State of Food Insecurity in the World, authors from the Food and Agriculture Organization, the World Food Programme, and the International Fund for Agricultural Development examine the effects of food price volatility and analyze historical data to draw lessons from the 2006-08 world food crisis.

The authors find that while some large countries were able to insulate their economies by implementing restrictive trade policies and using safety nets, their protectionist measures increased price volatility in international markets. The report predicts that increasing demand from consumers in developing economies, population growth, and declining yields in commodities such as wheat and rice will continue to produce high and volatile food prices for the foreseeable future.

Increased price volatility is especially troublesome for small farmers and poor consumers. The authors note that

because food represents a large share of farmer income and the budget of poor consumers, large price changes have large effects on real incomes.

Despite these challenges, the report is optimistic that global food security can improve if countries commit to favorable policies, market information transparency, sound analysis, and adequate funding for appropriate interventions.

The authors argue that policymakers should focus on public and private investments to develop long-term food security. They assert that “increased investment in agriculture, safety nets targeted at the most vulnerable, and measures to reduce food price volatility need to be an integral part of this commitment.” These investments can improve the competitiveness of domestic production, increase farmers’ profits, and make food more affordable for the poor.

The recent global financial crisis demonstrated that protectionist measures only exacerbate price volatility. Stability is possible, however, through a combination of increased agricultural productivity and greater openness to trade. While the report predicts that food prices will likely remain volatile, there is no better time for countries to take action to provide sustainable global access to food.