Food prices

 

Food prices are literally a matter of life and death, especially for the poorest of the poor, who already spend anywhere from 80% to 90% of their income on food. For them, a small increase in the price of bread or rice means the family goes hungry. Global food prices rose sharply in 2007-2008 and have remained high since. While prices are expected to ease somewhat, they will still average 20-30% higher in the next decade than over the past 10 years.

This is a major global challenge. There were more than 800 million people going hungry in the world in 2007 before prices rose, and that spiralled to more than a billion in 2009 at the height of the crisis. International response was inadequate, and in some cases high food prices triggered social unrest as people who had managed to rise above the hunger line fell back below it.


Growing problem

Today, prices have dropped below the 2007 crisis peak, but there are still 900 million people without enough to eat, and the problem will not go away any time soon. Food production will increase in the future, but not as rapidly as in recent years, and demand will rise too as the global population continues rising.

If supply cannot keep pace, prices will come under pressure again, as shown by the latest Agricultural Outlook produced by the OECD and the UN Food and Agriculture Organisation (FAO). This annual publication tracks and forecasts agricultural commodity production and prices, and the 2011 issue has a special feature on food prices.

 

“Food prices are literally a matter of life and death, especially for the poorest of the poor …vanquish poverty and we will go a long way to solve the food crisis.”

 Angel Gurría
OECD Secretary General
Forum of the Americas, June 2011 (Full speech)

 

Rapid response


Recognising the importance of this challenge, France set food price volatility as one of the five pillars of its presidency of the G20 in 2011, and called the first ever G20 agriculture ministers’ meeting for 22-23 June.

A report prepared for that meeting by the OECD and other international organisations sets out an action plan for improving international co-operation to deal with future food crises. It calls for creation of a new system to share information, collect data and monitor stocks, to provide early warning of future shortages or market problems. It also calls for a “Rapid Response Forum” where countries could co-ordinate responses to any rapid rise in food prices, particularly to help the most vulnerable.

The OECD-based Sahel and West Africa Club also met ahead of the G20 agricultural ministers meeting to discuss the most effective response to sharp changes in food prices. One key message that emerged from the African perspective was the importance of sustainable poverty reduction to help reduce vulnerability to food price hikes. As OECD Secretary-General Angel Gurría said in a recent speech on food security in Canada, “food crises are above all a poverty and development issue.”

The world’s farmers were also invited to a pre-G20 conference at the OECD to explain how food price swings affected them. “There is something wrong when we do not have information about world production, crop forecasts, consumer demand or global stocks,” French President Nicolas Sarkozy told the meeting. He expressed hope that the G20 meeting would lead to adoption of a “new agricultural model”.


Further reading

 

Public-private efforts needed to tackle extreme price instability in food and agricultural commodity markets, says BIAC (Business and Industry Advisory Committee to the OECD)

Price Volatility in Food and Agricultural Markets: Policy Responses

OECD-FAO Agricultural Outlook 2011-2020

A Green Growth Strategy for Food and Agriculture

OECD Agriculture and Fisheries website

Sahel and West Africa Club: African views on food price volatility


Previous articles:

Greening growth

Development

 

 

 

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