Price Spikes, Volatility, and Global Food Markets

April 17, 2012

The 2007-2008 and 2010-2011 food price crises have had lasting impacts on global food security, and the world will likely continue to face high prices and price volatility, given the global food economy’s structure. Since 2001, food price volatility has been at its highest level in 50 years, and the uncertainty caused by this volatility particularly harms the world’s poor producers and consumers. Global leaders now recognize the need to guard against price volatility and to protect the world’s most vulnerable populations against food insecurity. Meeting this need requires reforming the structure and functioning of global financial and agricultural markets. One important reform is improving farmers’, traders’, and policymakers’ access to global, regional, and local information regarding food prices and stocks. Access to transparent, accurate information will allow market players to make informed decisions about production levels, trading, prices, and country-level trade policies.

IFPRI has therefore spearheaded the creation of the Excessive Food Price Variability Early Warning System, a tool to provide timely information regarding volatility levels. Volatility information can prompt policymakers to develop country-level contingency plans—plans to use grain reserves during periods of extreme price variability, for example. This price variability tool supports the Agricultural Market Information System (AMIS) and the WFP proposal for a global emergency food reserve, both of which have been included in the Paris G20 action plan. Also, the Food Security Portal is dedicated to improving access to reliable, up-to-date research and data regarding food prices, agricultural markets, and food security.

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For more information regarding food prices and the steps being taken to reduce volatility in agricultural markets, watch for the Global Food Policy Report, due out on April 23.

IFPRI’s 2011 Global Food Policy Report—the first in a new annual series—reflects on the challenges and developments of 2011 and provides an outlook for 2012.