Monitor Vol 39 08_Final_Nov08.pdf - tips

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food policy 79 Rising food prices: a global crisis 1 Action needed now to avert poverty and hunger Trade & Industry Monitor By Steve Wiggins and Stephanie Levy 2 1. Introduction Soaring food prices pose problems for three groups. First, the poor whose ability to buy food is undermined. Second, governments of low-income countries facing higher import bills, soaring costs for safety net programmes and political unrest. Third, aid agencies juggling increased demands for food, cash and technical advice. High food prices threaten the gains made since the 1960s and highlight the long-term need for investment in, and better management of, the global food supply. This Paper examines the causes of rising food prices, expected trends, the likely impact, and possible policy responses. 2. What is Happening and Why? Before recent price hikes, the real price of food had been falling since the 1950s. The ‘green revolution’ that began in the mid-1960s saw developing world farmers planting improved varieties of cereals, prompting extraordinary increases in yields, falling food prices and reductions in poverty. 1 This paper was first published as an ODI Briefing Paper in April 2008. ODI Briefing Papers present information, analysis and key policy recommendations on important development and humanitarian topics (www.odi.org.uk). The research for this Briefing Paper has been supported by the Future Agricultures Consortium (www.future-agricultures.org) and the Chronic Poverty Research Centre (www.chronicpoverty.org), as well as ODI. 2 Steve Wiggins (s.wiggins@odi.org.uk) and Stephanie Levy (s.levy@odi.org.uk) are ODI Research Fellows. Food prices have been rising since 2000, spiked in early 2008, and may remain high for another ten year. Prompt action is needed to protect the poorest and support low-income countries faced by surging import bills In the medium term, economic and agricultural growth can offset the damage, but this will require more determined efforts to boost food production.
Food Policy Figure 1: Food and oil price indices, 1980 to early 2008 200 150 80 Trade & Industry Monitor 2005 = 100 100 50 0 1980 Jan 1981 Jan 1982 Jan 1983 Jan 1984 Jan 1985 Jan 1986 Jan 1987 Jan 1988 Jan 1989 Jan 1990 Jan 1991 Jan 1992 Jan 1993 Jan 1994 Jan 1995 Jan 1996 Jan 1997 Jan 1998 Jan 1999 Jan 2000 Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan Food Oil Commodity Food Price Index, 2005 = 100, includes Cereal, Vegetable Oils, Meat, Seafood, Sugar, Bananas, and Oranges Price Indices Crude Oil (petroleum), Price index, 2005 = 100, simple average of three spot prices; Dated Brent, West Texas Intermediate, and the Dubai Fateh. Source: IMF Commodity Price data, downloaded 12 March 2008 from http://www.imf.org/external/np/res/commod/index.asp. Figure 2: Cereals prices 2000 to 2007, constant 2005 value 500 400 300 200 100 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Mar US$ tonne, 2005 constant Wheat Rice Maize Source: IMF Commodity Price data, downloaded 12 March 2008 from http://www.imf.org/external/np/res/commod/index.asp. FAO report for Mar 2008. Prices deflated by the US GDP deflator.
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