The current spike in food prices needs prompt reaction through various forms of social protection to avert poverty and hunger. Prices are soon likely to fall somewhat, but not to their previous levels. Higher prices mean problems for three groups: poor households struggling to cope with higher costs of food; governments of low income food-importing countries facing higher import bills and higher energy prices; and agencies such as the World Food Programme (WFP) that use food aid to combat food emergencies.
POlicy conclusions:
• Food prices have been rising since the early 2000s but spiked in early 2008. Even if they start to decline later this year, the next ten years will see food prices at levels above those seen in the early 2000s, thanks to higher energy costs, demand for biofuels, growing demands for staples as populations grow, and for higher value foods, such as livestock products, as incomes rise.
• Prompt assistance is needed for countries facing surging food and energy import bills and for low-income households
• Low stocks threaten the functioning of agencies such as the WFP and prompt calls for land to be switched back into food production, from biofuels throughout the OECD, and from “set-aside” in the EU.
• In the medium term, economic and agricultural growth can offset the damage, but this will require more determined efforts to boost food production.
• Beyond action, a better understanding is needed of the 2008 price spike, to ensure that such events are rare. Increased variability of weather from climate change makes future price spikes more likely. If more can be learned from the current shock, then dealing with future ones may be easier.

By: S. Wiggins, S. Levy (ODI)

download this document:    126 kb