The 2007/08 agricultural price spikes: causes and policy implications
International prices for grains and many other agricultural commodities saw significant price spikes in 2007 and 2008. This matters for a number of reasons.
• The spikes reduced the real incomes of households that are net purchasers of food particularly in the poorest countries, and for the poorest households. Even before the price spikes, poverty meant that 800 million people were hungry, but the price spikes increased the number of hungry people to 1.02 billion (FAO, 2009) with progress towards the UN Millennium Development Goals’ hunger target (to halve, between 1990 and 2015, the proportion of people who suffer from hunger) set back significantly.
• Poor countries with a high dependence on food imports faced balance of payments and other
• Whilst high prices represented an opportunity for households that are net producers of agricultural commodities, higher costs of production arising from higher energy and fertiliser prices, combined with high levels of product price volatility, served to increase the risks of investing in agricultural production. It is important to emphasise that in 2008 there was comfortably enough food globally. But the price spikes raised extremely important affordability and distributional issues. And more generally, concern has been expressed that, against the background of climate change, and increasing pressure on the global natural resource base, the 2007/08 price spikes are ‘a sign of things to come’. This is implicit in the G8 L’Aquila Food Security Initiative and the Five Rome Principles for Sustainable Global Food Security, agreed at the November 2009 World Food Summit, both of which underline the importance of sustainable agricultural development for both the short and longer term.
|The 2007/08 agricultural price spikes: causes and policy implications||2.41 MB|