Food markets and their regulation

Abstract

A food regime not dominated by one or a few entities, without governmental policies separating national markets, and with free access to information would result in a single,integrated global food market. Such a hypothetical market would contribute more than the current system to efficiency and stability, although it would not necessarily be superior from an equity standpoint. Such a global food market does not exist. This is primarily because government regulation separates individual national markets. Residual international markets, shaped by the domestic and trade policies of major buyers and sellers, exist for major commodities. In the international grain market the United States is preponderant, but American policies in recent years have prevented the US from playing a dominating role. Furthermore, futures trading provides an open reference price. Consequently, the international grain market more nearly approximates “ideal” market features than many other international markets. An expansion of public markets and futures trading, by the United States and other countries, could enhance the effectiveness of international food markets in serving goals of efficiency, stability and security of access.