High food prices: the what, who, and how of proposed policy actions

May 2008

The sharp increase in food prices over the past couple of years has raised serious concerns about the food and nutrition situation of people around the world, especially the poor in developing countries; about inflation; and—in some countries—about civil unrest. Although the relative influence of various factors on global food price inflation remains somewhat open to discussion and debate, the underlying causes are increasingly well understood and noted at the highest policymaking levels. IFPRI drew attention to the problem early on and identified the main actions needed to prevent and mitigate the emerging crisis.
This paper aims to identify more specifically what needs to be done now. The set of policy actions, and in particular their sequencing, scale, adaptation to diverse regional and national conditions, and the arrangements for and governance of their implementation, need frameworks and clarity. Developing- and developed-country governments as well as international organizations have key roles to play in reducing and stabilizing prices by facilitating urgently needed trade and investment actions and in helping poor people cope with higher food bills through social protection. Some of these actions require global coordination in order to be effective.
Nearly every agricultural commodity is part of the rising price trend.
What really matters for the poor, however, is the effect on their purchasing power. Some of this effect is reflected in the declining ratio of wages of unskilled labor to food prices. The surge in food prices has been transmitted in varying degrees from international to local markets.
What is needed is more effective and coherent action to help the most vulnerable populations cope with the drastic and immediate hikes in their food bills, to help developing-country farmers swiftly respond to the opportunity posed by the rising demand for their products, and to bring more stability to highly volatile food markets.

By: International Food Policy Research Institute (IFPRI)

 
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