Food Price Crisis Research Articles

Urban shocks: the relationship between food prices and food security in Lesotho

ABSTRACTThe 2008 Food Price Crisis is estimated to have affected millions, forcing households into deeper poverty and food insecurity. However, nationally aggregated surveys demonstrate a remarkable degree of heterogeneity in the food insecurity impacts of high food prices. This investigation uses household survey data collected from the city of Maseru, Lesotho, during the 2008 Food Price Crisis to determine whether the impact of food prices was associated with household food insecurity. The investigation found that, while going without food due to food prices was associated with reduced dietary diversity, there was a much stronger association between food price impacts and reduced food access.

Guilty speculators? Range-based conditional volatility in a cross-section of wheat futures

In response to the unusually high levels of price volatility during the world food price crisis of 2007/2008, US and EU regulators have introduced position limits that aim to protect commodity markets from exposure to excess speculation. Such regulatory initiatives presuppose that excess speculation is indeed responsible for excess volatility. Our results debunk this presupposition and show the opposite effect: speculative activity reduces price volatility, particularly during times of distress. Our findings are based on a cross-section of wheat futures contracts, traded at five different commodity exchanges with various degrees of speculative activity. Volatility is estimated based on a Conditional Autoregressive Range Model (CARR), which is further augmented with exogenous excess-speculation shocks (CARRX). These models capture herding, feedback and noise trading, and a threshold version (TCARRX) identifies regimes in which the anatomy of the volatility process changes according to the level of excess speculation. Our findings support Working’s hypothesis that a certain level of excess speculation is essential for a well-functioning market.

Concentration and Power in the Food System: Who Controls What We Eat?

Concentration and Power in the Food System: Who Controls What We Eat?

Diagnosing integrated food security strategies

The global food price crises of 2007–8 and 2010 and subsequent policy debates have led to increased recognition that the drivers of food insecurity and associated policies transcend the boundaries of traditional governmental sectors and jurisdictions. Building on this insight, many governments of countries facing food insecurity have developed, or are in the progress of developing, integrated food security strategies. However, in spite of their recent popularity, to date little is known about the properties and outcomes of these strategies. This paper aims to help overcoming this gap by proposing a way of diagnosing the expected variety of integrated food security strategies and associated outcomes. Three diagnostic steps are put forward, each of which is linked to a specific theoretical perspective from the Public Policy literature. The first step concerns diagnosing the variety of IFSSs and is referred to as descriptive diagnostics. This type of diagnostics is suggested to be performed by using a policy integration perspective. The second step involves diagnosing what causes variety and change. This step is named explanatory diagnostics and revolves around what ‘mechanisms’ explain (dis)integration. The third diagnostic step focuses on diagnosing the outcomes of IFSSs and is referred to as evaluatory diagnostics. For this type of diagnostics a policy success and failure perspective is proposed. The applicability of these diagnostic steps and associated theories is illustrated through the case of South Africa’s Integrated Food Security Strategy. The paper ends with a discussion of promising methodological approaches and with raising some hypotheses and expectations about performing these types of diagnostics in a Sub-Saharan African context.

Global Financial and Food Price Crisis: A Double Shock on ASEAN Food Security

The food price crisis that occurred in the mid-2000s and the global financial crisis that transpired in 2008 had an enduring impact on developing and emerging countries where investment growth rates have declined sharply. Food insecurity has also become an important concern. Using a food security assessment model, an analysis of the medium- to long-term repercussions of the food price and global financial crises on ASEAN food security revealed that the effects of the food price crisis are expected to be more negative than those of the global financial crisis. When a financial crisis occurs in the USA and Europe, investment flows to emerging markets, suggesting that countries like Lao PDR, Singapore, Thailand, and Vietnam benefit from it. However, when a global financial crisis occurs, other ASEAN countries like Cambodia, Indonesia, Malaysia, and the Philippines are negatively affected.

Global Phosphorus Fertilizer Market and National Policies: A Case Study Revisiting the 2008 Price Peak.

The commodity market super-cycle and food price crisis have been associated with rampant food insecurity and the Arab spring. A multitude of factors were identified as culprits for excessive volatility on the commodity markets. However, as it regards fertilizers, a clear attribution of market drivers explaining the emergence of extreme price events is still missing. In this paper, we provide a quantitative assessment of the price spike of the global phosphorus fertilizer market in 2008 focusing on diammonium phosphate (DAP). We find that fertilizer market policies in India, the largest global importer of phosphorus fertilizers and phosphate rock, turned out to be a major contributor to the global price spike. India doubled its import of P-fertilizer in 2008 at a time when prices doubled. The analysis of a wide set of factors pertinent to the 2008 price spike in phosphorus fertilizer market leads us to the discovery of a price spike magnification and triggering mechanisms. We find that the price spike was magnified on the one hand by protective trade measures of fertilizer suppliers leading to a 19% drop in global phosphate fertilizer export. On the other hand, the Indian fertilizer subsidy scheme led to farmers not adjusting their demand for fertilizer. The triggering mechanism appeared to be the Indian production outage of P-fertilizer resulting in the additional import demand for DAP in size of about 20% of annual global supply. The main conclusion is that these three factors have jointly caused the spike, underscoring the need for ex ante improvements in fertilizer market regulation on both national and international levels.

Biofuel research: perceptions of power and transition

Whether biofuels represent a sustainable innovation, a creative alternative, or a gold rush, very much depends on our perception of power and change with regard to sustainability. This article provides an overview of existing understandings of power in the research on biofuels, including positive perceptions that often lead to more optimistic evaluations of biofuels. It exposes the diversity with which one can understand power through three ideal type concepts: “power with,” “power to,” and “power over”. Integrating these concepts in one power framework allows for examining how the three dimensions interrelate with each other and developing the contours of a power lens on biofuel governance and research. With the 2007–2008 food price crisis, critics re-politicized the governance of biofuels. Several farmer associations have completely turned against biofuels. The article argues that this rejection of biofuels is due to a limited perception of power as a coercion and manipulation (power over). While the current governance of biofuels basically reproduces systems and positions, we should start to more seriously and intensively ask questions of where, when, and how the governance of biofuels may also allow for “green” resistance (power to) and collective empowerment (power with).

The political economy of food price policy during the global food price crisis of 2006-2008

This paper finds support for seven political economy hypotheses that influenced governments’ policy choices during the 2006–2008 global food price crisis. Governments focused most heavily on consumer and trade policies rather than on policies designed to increase production. They also preferred policy changes with lower implementation costs, implying that responses to past crises were the best predictor of future actions. To explain the variety of responses and policy failures, a framework is proposed that locates policies along the twin dimensions of unitary vs. fragmented decision-making processes and social welfare maximizing vs. self-interested policy goals. Many of the common policy responses can be explained by a benchmark model of unitary decision makers seeking to increase social welfare. In contrast, fragmented government decision-making, uncertainty, and self-interest generate policy and implementation failures, significant departures from the benchmark model, and reductions in social welfare. Mistrust between government and the private sector causes a lack of transparency, which fuels mistrust and uncertainty, leading to additional policy and implementation failures.

The analysis of market integration and price transmission – results and implications in an African context

ABSTRACTA vast literature on market integration and price transmission has accumulated over the last half century. This literature has received major impetus, first from the introduction of increasingly sophisticated co-integration methods since the late 1980s, and second from the so-called food price crisis of 2007–2008, which heightened interest in the transmission of food price spikes in space and along the supply chain. In this paper I review the literature on price transmission and market integration, highlighting applications in an African setting. I begin by reviewing the basic methods that are commonly used in price transmission analysis, as well as several extensions that have gained prevalence in recent years. I then discuss several important limitations and challenges that remain to be addressed in future research on price transmission and market integration.

Household vulnerability to food price increases: the 2008 crisis in urban Southern Africa

AbstractVolatile food prices represent a common hazard to the food security of poor urban households. In trying to understand the impact of this hazard, income poverty is widely accepted as the principal predictive variable. But could other variables be important in understanding household vulnerability to food price shocks? This analysis uses survey data collected from 11 cities in Southern Africa by the African Food Security Urban Network during the 2008 food price crisis. As expected, the data show that household income is a significant predictor of the negative impact of rising food prices on household food security. However, other variables are significant predictors of household vulnerability to food insecurity as a result of food price increases. The analysis demonstrated how these diverse variables facilitated our classification of different households according to food price shocks using a CHAID decision tree. Demonstrating that household income is not the only significant predictor of household vulnerability to food price volatility, these findings broaden our understanding of the complex factors that can predispose households to food insecurity in the context of rising food prices.

The Impact of Food Price Crises on the Demand for Nutrients in Pakistan

The global economic crisis in 2007–2008 resulted in a tremendous food price increase that is likely to have adversely affected the food security and nutritional status in many developing countries. Understanding how nutritional intakes may have changed as a result of the food price crisis is important, especially for Pakistan, the country under scrutiny which, despite of being a large producer of staple food, suffers from severe problems of undernourishment. We used two survey rounds, 2005–2006 and 2010–2011, to investigate how calorie and macronutrient intakes have evolved. The analysis was carried out with the use of a time varying model and is enriched by an in-depth investigation for different quantiles. The results show that food security deteriorated because of the food price crisis. In the light of this outcome, policy implications are discussed.

Long-term Impacts of Global Food Crisis on Production Decisions: Evidence from Farm Investments in Indonesia

ABSTRACTThis paper estimates farmers’ investment response to food price spikes using household panel data collected before and after the 2007/08 food price crisis in Indonesia. We found that an increase in farmers’ terms-of-trade allowed relatively large crop-producing farmers to increase their investments at both extensive and intensive margins. Food price spikes had a significant income effect among farmers whose production surplus is large for market sales. During the food price crisis, large farmers particularly increased machine investments, which saved some labour inputs, pointing to the importance of complementarities between land and machine investments.

Evolution and Impact of EU Aid for Food and Nutrition Security: A Review

In the aftermath of the world food price crisis, the issue of food and nutrition security has received a high level of political attention and the international donor community has repeatedly underlined its commitment to combat hunger in the world. In order to enhance the effectiveness of the international community’s efforts in addressing the widespread problem of malnutrition, we need to improve our knowledge on what activities donors are currently engaging in and which interventions have been shown to be successful. This paper offers both an overview of the aid for food and nutrition security landscape and how it has changed and an extensive review of the available evidence on the impact of a wide array of interventions aimed at addressing all four dimensions of food and nutrition security; availability, access, utilization and stability. We find that despite the renewed interest and elevated levels of funding for food and nutrition security assistance in developing countries, the empirical evidence base for the effectiveness of these interventions in improving beneficiaries’ food and nutrition security – although in several cases promising – is weak. In particular, the question whether different interventions improve the quality of food consumption and consequently nutrient intake and status, remains largely unanswered. Moreover, few studies assess longer-term effects and there exists relatively little rigorous evidence that compares different interventions. It is therefore strongly recommended to undertake additional research to improve the evidence base as this would allow researchers and policy makers to establish the type of approaches that improve food and nutrition security in the most efficient and cost-effective manner. Finally, in order to facilitate this process, there is a need for a clear and uniform definition of food and nutrition security assistance on the one hand as well as agreed upon, comprehensive indicators on the other hand.

Legitimacy and accountability in the global governance of large-scale agricultural land investments

ABSTRACTThis article examines the international regulatory framework for large-scale agricultural land investments (‘LSALIs’). Population growth, natural resource scarcity, and the financial and food price crises have made financial actors revise their long-held hesitation towards direct investment in farmland. Although these investments could inject much-needed capital into rural areas, LSALIs have been connected with grievous human rights violations and environmental degradation. This article finds that the instruments designed to promote socially and environmentally responsible LSALIs have increasing levels of legitimacy but lack accountability mechanisms. As a result, the emerging regulatory framework for LSALIs does not create the balance required between protecting investors from host state interference and ensuring socially and environmentally responsible agricultural investments.

Volatility in Oilseeds and Vegetable Oils Markets: Drivers and Spillovers

AbstractFood price volatility has re‐emerged as an important topic of political discussion since the food price crisis of 2007–2008. Different volatility drivers have been identified for different markets in the theoretical and empirical literature. However, there is no comprehensive analysis that considers a large number of potential drivers and investigates their joint effects in a dynamic model of interrelated markets. Our study provides such a volatility analysis for the oilseeds and vegetable oils markets. We use a common GARCH approach and a VAR model to identify volatility drivers and spillover effects. Our results show that exchange rate volatility is very important. However, the hotly debated financialisation of commodity markets is not found to be volatility increasing in our monthly data. Impulse response functions show strong spillover effects. Because many volatility drivers found to be important in other markets have no significant effect in our study, our results suggest that volatility drivers are market specific. This implies that any volatility‐reducing policies need to be designed for the market in question.

South-South cooperation: Brazilian soy diplomacy looking East?

Ever since the food price crisis of 2007/8, concerns about global food supply interruptions have mounted. However, while exports from Brazil, the world’s leading soy exporter, are currently under threat, this is not due to geopolitical concerns, but due to resource mismanagement. As a consequence, the country with the most water availability per person is mired in an enduring water crisis, impacting on its major water transport routes. Brazil’s development model is based on an oligopolistic public-private, primary-sector conglomerate, fueled by the federal investment bank, BNDES. This article argues that Brazil has embarked on an unsustainable model of development and is exporting that model as part of its ‘South-South Cooperation’ (SSC) drive. Like the other BRICS, Brazil is using SSC to present itself as non-ideological and anti-imperialist but, in fact, uses the cooperation strategy for diplomatic and self-interested economic purposes. The Middle East is specifically targeted as a region with ‘complementary’ interests: rich in fossil fuels, poor in land and water and plenty of petrodollars to buy food security. The current water crisis shows limits to this complementarity, in the process undermining the assumption that ‘virtual-water exports’ promoted by competitive specialization are salutary to the global water balance.

The Heterogeneous Effects of a Food Price Crisis on Child School Enrolment and Labour: Evidence from Pakistan

Using a panel survey, this paper investigates how food price increases in Pakistan in 2008–2010 affect children’s school enrolment and labour. The causal identification relies on the geographical variations in food (wheat) price. The results show that the negative impacts of food price increase on school enrolment differ by gender, economic status and the presence of siblings. The negative effects on school do not directly correspond to the increase in child labour because the transition from being idle to labour activity or from school to being idle is significant, particularly among poor girls. The results also show that children in households with access to agricultural lands are not affected by higher food prices. The analyses reveal a more dynamic picture of the impact of food price increase on child status and contribute to broader policy discussion to mitigate the impact of crises on child education.

Global Food Crisis Response Program: A World Bank initiative for food security and hunger fight (An analysis)

The World Bank reacted quickly to the food price crisis that began in 2008 through the Global Food Crisis Response Program (GFRP), which blends quick track financing from International Development Association (IDA) and IBRD (International Bank for Reconstruction and Development) with trust asset grants to address the prompt food emergency, while urging agrarian frameworks to fabricate flexibility for what's to come. GFRP assets have as of now financed operations adding up to US$1.5 billion coming to about 40 million affected individuals in 44 nations. This paper reviews the achievement of the intended objectives which were underlining for conceptualizing the idea.

Disaggregated Analysis: The Key to Understanding Wellbeing in Kenya in the Context of Food Price Volatility

This article provides a national-level picture of food security and wellbeing in Kenya, focusing on the situation before the 2008 food price crisis, and the period after 2008. The extent and impact of food price changes differ spatially, and households have different ways of trying to respond. The major food price shocks in 2008 and 2011 impacted negatively on wellbeing, but even after 2011 prices continued to rise in most areas. Seasonal price movements also have adverse effects for resource-poor households. Food price rises have a particularly negative impact on the poorest households. Urban slum dwellers are vulnerable given their dependence on market purchases to meet food needs, but most rural households also have high dependence on market purchases. Current social protection programmes are piecemeal and unreliable. The article concludes with proposals on more effective social protection approaches and agricultural programmes which can address problems linked to food price rises.

Eat With Us: Insight into Household Food Habits in a Time of Food Price Volatility in Zambian Communities

Dramatic food price rises in Zambia followed the global food price crisis of 2008 and caused long-term damage to the lives and livelihoods of many low-income families. This article provides a view on what food was and is now on people's tables and explains how sudden increases in the price of food and other essentials has in some cases permanently altered what people eat, despite subsequent falls in prices. This article traces how change to what people can put on the table affects both individual and community wellbeing in terms of nutrition, taste and food heritage.