Food Price Volatility Research Articles

How to Support Poor Vietnamese Consumers to Deal with Food Price Volatility and Food Safety Issues

With 66 per cent of the population living in rural areas, over half depending on farm activities, food security and food safety are now two sides of the government effort to ensure food accessibility for the poor in Vietnam. While people living on low incomes may have to choose cheaper food over safer food, they are now more aware of food safety issues, and need more support to access safe food. After a long time of focusing on increasing food security in terms of quantities, new efforts are now needed to change the practice and awareness of stakeholders to move to quality-oriented production and consumption, including creating reasonable incentives for food producers, socialising of food safety monitoring and improving food safety inspection in Vietnam.

From Global to Local and Back Again: Researching Life in a Time of Food Price Volatility

This article sets out the thinking behind the research methodology used in the Life in a Time of Food Price Volatility project. It sets out the key questions and aims, describes the approach, and explains why we chose the research design we did. It discusses the strengths and weaknesses of the methodology, and concludes with reflections on the (increasingly important) question of how to research social change in a globalising era.

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.

Anomaly or Augury? Global Food Prices Since 2007

This article reviews the dynamics of global food prices since the food crisis of2007–08, the extent to which international prices have influenced national prices and poverty and wellbeing outcomes, and considers whether this exceptional period represents an anomaly or likely signals future episodes of food price volatility. It finds that although some factors that contributed to recent events have eased considerably, some significant drivers remain structural threats to future food security. There is little reason to be confident that recent reductions in food prices and volatilities augur well for the food security or wellbeing of those living on low and precarious incomes in the future.

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.

The Role of Fatalism in Resilience to Food Price Volatility in Bangladesh

Millions of people in Bangladesh suffer from hunger, unpredictable and unstable livelihoods, precarious living conditions and social injustice. Yet they survive and become resilient. However, the resilience achieved by the poor is minimal and incremental in nature and does not result in their wellbeing. Based on three years of qualitative research, this article attempts to understand the nature of and pathways to ‘resilience of the poor people'. The article argues that poor people's approach to ‘resilience’ is twofold. First, they perceive their poverty and associated problems as ‘Allah's will', with not much to be done about it. At the same time, they engage in continuous innovative practices to survive. These two worldviews together ('fatalism’ and ‘self-help') make the poor ‘resilient'. This also ‘partially’ explains the absence of strong activism, collective action and protests within a context of state failure (in terms of ensuring rights and entitlements to its citizens).

Explaining grain and oilseed price volatility: The role of export restrictions

This study examines the impact that export restrictions have had on price volatility. Food price volatility causes planning problems for policy makers and is disruptive to the food supply chain. An increasingly common response to stabilizing domestic prices is to implement export restrictions. However, if the country is a large enough exporter, the restriction can exacerbate global price volatility. Using price data on maize, wheat, rice and soy, we estimate the effect of export taxes and quantitative restrictions – as well as other macroeconomic variables – on price volatility. First, we use a univariate structural time series approach to remove regularities such as cycles and trends to yield an estimate of filtered price volatilities. Second, we regress the estimated volatilities from the first stage on a set of explanatory variables using a generalized method of moments (GMM) approach. The results from the GMM regression show that export restrictions implemented between 2006 and 2011 increased price volatility for wheat and rice but not maize and soybean. Simulation results show that the contribution of export restrictions to price volatility is the same order of magnitude as key macroeconomic variables.

Waste-to-fuel opportunities for British quick service restaurants: A case study

The fast food supply chain is facing increasing operating costs due to volatile food and energy prices. Based on a case study of a major fast food logistics operator, this paper quantifies the potential for fuel generation from the waste generated by quick-service restaurants in Britain. Several fuel pathways and supply chains were mapped to understand the carbon intensity of the various waste-to-fuel opportunities, the number of heavy goods vehicles that might be powered and the key factors that could help companies make better informed decisions related to fuel generation from waste.The research suggested that depending on the scenarios considered, between 13.9 and 17.2 million GJ of energy could be obtained from fuels made from the waste arisings of British quick service restaurants and their distribution centres (DCs), representing between 4.4 and 5.8% of the national energy consumption from heavy goods vehicles (HGVs) and well-to-wheel (WTW) greenhouse gases (GHG) savings of between 652 and 898 thousand tonnes of CO2 equivalent annually.Used cooking oil and burger fat arising from British quick-service restaurants could generate enough energy to power up to 3891HGVs with FAME diesel (B100), 1622 with HVO diesel (B100) or 1943 with biomethane annually. The paper and card generated by these same establishments could also power an additional 4623 biomethane vehicles, wood pallets could power an additional 73 bioethanol trucks and plastics could also power 341 vehicles running with synthetic diesel.The results showed that collections of separate waste fractions by logistics operators could make a relevant contribution towards the decarbonisation of the supply chain while reducing disposal fees and fuel costs. The carbon emissions resulting from this approach depend greatly on the footprint of the collection and transportation systems used to move waste from the restaurants to the processing plants and return the converted fuel back to the distribution centres where the vehicles are refuelled. Logistics firms are in a privileged position to manage these flows as they can use empty back-haul trips to collect and consolidate waste in distribution centres.

Regulating food-based agrofuels: The prospects and challenges of international trade rules

This article considers the potential for strategic and selective use of World Trade Organization (WTO) rules to regulate, and potentially curb, the expansion of food-based agrofuels. Since 2008, a global agrofuel complex has emerged that is characterized by government-led mandates and investment for food-based agrofuel production and trade. The majority of world agrofuel production utilizes basic foodstuffs–sugar, corn/maize, soy and palm oil–thus generating competition between food/feed and fuel end-uses. This competition is strongly linked to food price volatility, food insecurity and land grabbing on a global-scale. Food-based agrofuel production is projected to increase significantly over the next decade, with international trade of agrofuels growing in tandem due to rising global demand. Despite well-documented social and ecological consequences associated with food-based agrofuels, producing and consuming states demonstrate a lack of political will to curb future agrofuel expansion and, in particular, continue to resist demands by global civil society and other social groups for global agrofuels regulation. In a global political economic context best characterized by a global governance gap for agrofuels, I consider the prospects and challenges of strategic and selective application of WTO rules to regulate food-based agrofuels.

The 2001-03 Famine and the Dynamics of HIV in Malawi: A Natural Experiment.

BackgroundFood security has deteriorated for many people in developing regions facing high and volatile food prices. Without effective and equitable responses, the situation is likely to worsen due to diminishing access to land and water, competition from non-food uses of agricultural products, and the effects of climate change and variability. Understanding how this will affect the burden and distribution of major diseases such as HIV is critical. This study makes use of the near-experimental conditions created by the Malawi famine to shed new light on this issue.MethodsMultilevel, random intercept models were used to relate the change in HIV prevalence at antenatal surveillance sites over the course of the famine to the proportion of rural households requiring food aid in the surrounding district at the famine’s peak. Similar models were used to relate this indicator of rural hunger to changes in the composition of the antenatal population. The extent and direction of migration were estimated from a household survey conducted 1–2 years after the famine.FindingsAt rural sites, the change in HIV prevalence was positively and non-linearly related to the extent of rural hunger (P = 0.016), consistent with contemporary accounts of increased transactional sex and with hunger compromising immune function. At non-rural sites, prevalence declined as rural hunger increased (P = 0.006), concentrated in women who self-identified as farmers (P = 0.010). This finding is consistent with contemporary accounts of migration in search of food and work from villages where HIV risk was lower to towns and cities where it was higher. Corroborating this interpretation, the proportion of farmers in the antenatal population was found to rise at non-rural sites as rural hunger increased in the surrounding district (P = 0.015) whereas the proportion fell with increasing rural hunger at rural sites (P<0.001). The models suggest migrants were predominantly farming women under 25 years (P = 0.010). The household survey confirmed that there was a surge of rural-to-urban migration during the famine, particularly by women under 25 years. Migration to less affected rural areas also increased.ConclusionThe Malawi famine appears to have had a substantial effect on HIV’s dynamics and demography. Poverty and inequality, commonly considered structural determinants of HIV epidemics, can change rapidly, apparently transmitting their effects with little lag. Epidemic patterns risk being misread if such social and economic change is ignored. Many studies examining HIV prevalence declines have implicated sexual behaviour change but do not appear to have adequately considered the contribution of rural-urban migration. The evidence from Malawi, which links actions that undermined people’s food security to changes in the prevalence and distribution of HIV infections, suggests new opportunities for prevention.

Researching into Bio-Energy Change and Sustainable Land Use

Sustainable land management (SLM) (also sometimes referred to as “sustainable land use” by policy makers, developmental planners, and researchers) is a knowledge-based procedure that aims at integrating the management of land, water, biodiversity, and other environmental resources to meet human needs while sustaining ecosystem services and livelihoods. The term sustainable land management is used, for example, in regional planning and soil or environmental protection, as well as in property and estate management. The World Bank defines SLM as “a process in a charged environment between environmental protection and the guarantee claim of ecosystem services on the one hand”. On the other hand, it is about “productivity of agriculture and forestry with respect to demographic growth and increasing pressure in land use”. It is estimated that the human footprint has affected 83% of the global terrestrial land surface. Land use and land cover (LUCC) change has been the most visible indicator of the human footprint and the most important driver of loss of biodiversity and other forms of land degradation. Recent trends on global demand for food and bio-energy change (which are closely linked to food and energy price spikes and volatility) have raised concerns on the impact of LUCC change on biodiversity and other environmental impacts. This paper aims to assess the LUCC change and explores factors which could be addressed to ensure sustainable development. In terms of methodology employed, secondary data have been analyzed using descriptive research method. The paper concludes that integrated economic, geographic and ecological models are required to capture the multiple drivers of LUCC and objectives of ecosystems.

Emerging Economies and Large Land Investments

Since 2008, and following dramatic increases in prices, international commodities markets systems have begun changing after decades of relative indifference. The reasons for high, volatile food prices are manifold and widely analyzed by the abundance of literature on the subject, that deals essentially with imbalances in demand and supply. On the global demand for food, a factor with a huge impact, is the change in diet, especially in emerging countries where, an increase of per capita income corresponds to an increase in the demand for animal-based foods. As the demand for food increases, demand for land increases and pushes prices up, thus fuelling speculation that mainly affects countries where land prices are lower. The paper aims to highlight the behaviour of China and India –which are among the most important emerging countries in terms of economic growth, concentration of population and surface area – with regard to the large-scaleland investment phenomenon. We have aimed to identify those macroeconomic indicators (such as biofuels production, food price index, GDP per capita, cereals production and crude oil prices, usually referred to in order to explain the trend) which best exemplify how they can affect the two countries analyzed in the rush for land. The paper is divided into sections. Following a brief presentation of adopted methodology, an overall picture is presented of agriculture, renewable energy and land investment in China and India and, by means of a correlation matrix, the impact that some macroeconomic variables have on the phenomenon have been described.

Industrial and Academic Experts: Do They Differ in Their Weighting of Criteria for Agricultural Planning?

Agricultural planning models account for changing weather conditions and for high food price volatility. The maximum profit of farmers is one of the common criteria in these models. In this study I compare expert opinions on the importance of the criteria of maximum profit in a normal year, a dry year, and a year when agricultural prices rise substantially relative to a previous year. Total 32 experts in the North-Eastern Israel were interviewed: 15 of them working in agriculture (industry experts) and 17 – academic experts. Knowing weights of criteria is necessary for applying various multi-criteria techniques for handling weather and price uncertainties. The importance of the criteria was estimated from the collected expert opinions using the method of the Analytic Hierarchy Process. The experts answered questions about pairs of the criteria. All answers were reported on the 5-point scale that included “much more important”, “more important”, “the same importance”, “less important”, “much less important”. Then the balanced scale was used to give numeric values to the answers. Consistency ratios for every expert were calculated based on the given answers. The criterion “profit in a normal year” was the most important one. For academic experts this criterion was significantly less important, and the criterion of profit in a dry year was more important as compared to industrial experts. Almost the same percent in both categories of experts, 82-87%, were identified as loss averse persons. The coefficient of loss aversion was significantly higher for academic experts.

US monetary policy and sectoral commodity prices

Using a Structural VAR (SVAR) model, we examine the effects of the monetary policy of the United States on sectoral commodity prices (including the non-fuel commodity prices, food prices, beverage prices, prices of agricultural raw materials, prices of metals and prices of fuel (energy) commodities) and macroeconomic activity. The empirical evidence suggests that a U.S. monetary contraction leads to an immediate rise in the broad commodity price index, which possibly reflects an aggregation bias, greater expected inflation and speculation, high production costs or some overshooting due to overreactions. Then, the response erodes after six quarters as the positive interest rate shock vanishes and higher interest rates and liquidity drainage take traction. Despite this, the aggregate price response masks the existence of significant heterogeneity in the price responses of the different types of commodity sectors. More specifically, a positive interest rate shock leads to: (i) an initial pop in the price returns of the non-fuel commodities, which later reverses path and becomes negative (as in the case of the prices of agricultural raw materials); (ii) a positive and persistent rise in the volatile food prices; (iii) a fall in the beverage prices; and (iv) a persistent reduction in the prices of metals and the prices of energy prices. Our results also remain globally intact with respect to alternative specifications and identification schemes as well as to unconventional monetary policy effects. Similar results are also found when commodity futures prices are used. We conclude that policymakers should recognize the source of sector inflation before embarking on contractionary monetary policy. The design of core inflation targeting is also preferable to headline inflation targeting.

Food stocks and grain reserves: evaluating whether storing food creates resilient food systems

Many are worried that the global food system is entering a period of intense volatility driven by a combination of climate change and population growth. One way to address this problem is for governments and the international community to store more food as a buffer against crisis. The purpose of this paper is to explore the role of food storage as a component of a robust food security strategy in the twenty-first century. We do this by first drawing on historical examples from ancient Rome and China, where preindustrial government designed extensive systems that ensured adequate food storage to keep food systems stable. Next, we review the links between food storage and price volatility in the last 20 years and demonstrate that the size of food stores (and in particular grain reserves) directly relates to price volatility. Third, we explore three different types of policies designed to promote grain reserves, the US’s “ever-normal granary” policy, the EU’s Common Agricultural Policy, and the Strategic Grain Reserve in Africa. In this third section, we show how there has been a decline from state-owned strategic grain reserves in favor of a more market-oriented approach that is dominated by a handful of powerful corporations who maintain sophisticated supply chains. Because data on the amount of food supply these corporations hold in storage are proprietary secrets, it is impossible to assess how resilient or vulnerable this makes our food system. Finally, we conclude that over time, food storage has fallen in and out of favor, criticized for being expensive yet often shown to play an important role in protecting poor consumers in times of food crisis. Given the lack of data on current levels of supply chain and household storage, more research is needed to evaluate the scale at which food storage systems should be implemented to ensure food system resilience as well as the most effective mechanisms to govern and manage them.

Book Reviews

Finn Tarp of UNU-WIDER and University of Copenhagen reviews “The Economics of Food Price Volatility”, by Jean-Paul Chavas, David Hummels, and Brian D. Wright. The Econlit abstract of this book begins: “Nine papers, plus nine comments, present and assess recent research on central issues related to recent food price volatility. Papers discuss influences of agricultural technology on the size and importance of food price variability; corn production shocks in 2012 and beyond─implications for harvest volatility; biofuels, binding constraints, and agricultural commodity price volatility; the evolving relationships between agricultural and energy commodity prices─a shifting-mean vector autoregressive analysis; the question of bubble troubles─rational storage, mean reversion, and runs in commodity prices; bubbles, food prices, and speculation─evidence from the Commodity Futures Trading Commission's daily large trader data files; food price volatility and domestic stabilization policies in developing countries; food price spikes, price insulation, and poverty; and trade insulation as social protection.” Chavas is Anderson-Bascom Professor of Agricultural and Applied Economics at the University of Wisconsin-Madison. Hummels is Professor of Economics in the Krannert School of Management at Purdue University. Wright is Professor of Agricultural and Resource Economics at the University of California at Berkeley.

Is there co-movement between the China and US agricultural futures markets?

The world has been witnessing dramatic increases in both the level and volatility of international agricultural prices in the recent years. The unprecedented price spikes in agricultural commodities during the 2007–2008 food crises, as accompanied by shortages and diminishing agricultural stocks, resulted in a reduced access to food for millions of poor people in a large number of the low income, net food-importing countries. Worse, Egypt, Haiti, Kenya and other countries have suffered political turmoil because of the food shortages. The escalation of several agricultural crop prices, particularly soybean and wheat, and the prevailing high price volatility have all reinforced the global fears regarding volatile food prices. An urgent attention has turned to further examining food price volatility in global markets. Agricultural production has played an important role in the Chinese history since the ancient times. There is a famous old saying, “Food is the first necessity of the people”. As a country with such a large population, an agricultural crisis may occur if we cannot properly address agricultural concerns. Therefore, the issue of agriculture in China is not only an economic problem but also a great political issue. With the development of the China’s market-oriented economy, opening the China’s agricultural product market to the world is unavoidable. Fortunately, the pricing of agricultural products is set by the market instead of by a government regulation. Furthermore, the Chinese agricultural product market will also experience fluctuations from the international market. Particularly in recent years, the international market and domestic market suffer high fluctuations at the same time, which has a negative effect on the supply and demand of agricultural products. China and the US are both important countries in the international market. The movement of either of the two markets deeply affects the international market; therefore, the need for understanding the comovement between the China and US futures markets should by no means be underestimated. The Chinese

The Political Economy of Food Price Volatility: The Case of Vietnam and Rice

This article argues that the structure of the Vietnamese rice export system is, in political economy terms, a rational response to the volatility present in the international rice market. In particular, it is argued that the Vietnamese Food Agency, along with VINAFOOD‐1 and VINAFOOD‐2, have been structured so that they can benefit from the domestic demands for export restrictions anticipated to occur as a consequence of international price volatility and the psychological demand of consumers for price stability. In turn, the actions of these agencies also contribute to international price volatility and the resulting demand for export restrictions. Since the political and economic elite in Vietnam obtain both political and economic power from this system, it is unlikely to be replaced with more effective and efficient policies to combat domestic price volatility. Thus, continued volatility in the price of rice can be expected.

The Effect of Food Prices on Inflation in the Republic of Serbia

Abstract In the Republic of Serbia, food accounts for a significant share in the consumer price index through which the inflation is statistically expressed. Therefore, in considerations of the basic factors of increase in the general price level, a special emphasis is placed on the specific features of the market of agricultural-food products. The aim of this research is to peruse the effect of the characteristics of the food market in Serbia on the inflation rate. High volatility of food prices is present because of the instability of this market, mainly due to seasonal fluctuations of supply and the effect of natural factors. Bearing in mind that the increase in food prices is the main determinant of the increase in the inflation rate, the indirect state control is very important so as to maintain price stability. Special importance is attached to the following instruments of economic policy: commodity reserves, storage policy, and fiscal and foreign trade policy.

Food Price Pass‐Through and the Role of Domestic Margin Services

AbstractThe recent volatility in international agricultural markets has drawn attention to the impact of rising international agricultural prices and the induced price‐insulating measures on consumer food prices. Analyses based on simulation models on this topic typically ignore the role of domestic margin services. We extend the standard Global Trade Analysis Project (GTAP) model to allow for variations in the share of domestic margin services in consumed food across countries. This approach enables us to differentiate consumer prices from producer prices. Following the extension, the results show that domestic margin services reduce the consumer food price volatility for all countries, especially in high‐income countries, where the share of domestic margin services in final food consumption is higher. The effect of price‐insulating border policies is also reduced in the extended model. We find that our extension of the GTAP model greatly improves simulations of the 2007 surge in international agricultural prices. We validate our extension of the GTAP model by showing that the econometrically estimated food price pass‐through is decreasing with income and thus, is smaller in high‐income countries.