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Publication | 29 November 2018

Price volatility and food security

Global Food and Nutrition Security

Food price volatility over the last four years has hurt millions of people, undermining nutritional status and food security. The level of price volatility in commodity markets has also undermined the prospects of developing countries for economic growth and poverty reduction. After staying at historic lows for decades, food prices have become significantly higher and more volatile since 2007. A first price spike occurred across almost all commodities in 2007/2008. After a drop in 2009/10, prices are now climbing again and volatility remains high. Periods of high or low prices are not new. In fact, price variability is at the core of the very existence of markets. Since 2007, however, the degree of price volatility and the number of countries affected have been very high. This is why food price volatility in the context of higher food prices has generated considerable anxiety and caused real problems in many countries.

Global and national responses to this unprecedented food price trend have been remarkable. There have been numerous governmental and intergovernmental initiatives to protect vulnerable populations from the negative consequences of higher food prices. In October 2010, the recently reformed Committee on Food Security (CFS) asked the High Level Panel of Experts on Food Security and Nutrition (HLPE) to prepare a report on price volatility that covers "all of its causes and consequences, including market distorting practices and links to financial markets, and appropriate and coherent policies, actions, tools and institutions to manage the risks linked to excessive price volatility in agriculture. This should include prevention and mitigation for vulnerable producers and consumers, particularly the poor, women, and children, that are appropriate to different levels (local, national, regional and international) and are based on a review of existing studies. The study should consider how vulnerable nations and populations can ensure access to food when volatility causes market disruptions".