Food Security in an Age of Falling Commodity and Food Prices

Abstract

International prices of food and agricultural commodities had reached an extremely high level in 2007‐08 and subsequent years, but have more recently embarked on a declining trend. It is, though, not certain that they will reach the lower levels again that prevailed before the price peak. It appears conceivable that international markets have experienced a structural shift towards a longer‐term higher price level. While there is no certainty that prices will remain at such a higher level it appears that the international community should at least be prepared for such an outcome. High international food prices can undermine global food security as developing countries overall, and low‐income countries in particular, are net importers of food and agricultural products. Their net imports keep growing, above all those of cereals. In many developing countries, even rural households are net buyers of food. An increase in food prices reduces welfare and impacts negatively on food security in net importing countries and among net‐buying households. As far as policy implications are concerned, this means that high‐price policies, implemented through import tariffs and domestic measures, cannot be recommended for developing countries. The international community needs to invest more in agricultural development and food security in developing countries. We must not repeat he experience of the mid‐1970s, when the promises to do more for agricultural development after a similar period of food price peaks were soon forgotten after prices declined again.