The economic, political, social, and nutritional impacts of food price volatility and price spikes are clear. In the 2007-08 food price crisis, 33 countries saw violent riots and social unrest as a result of rising food prices; in 2011, increasing food prices have been at least partially blamed for political turnover in Tunisia and Egypt, as well as riots in several other countries. Studies have shown that during the 2007-08 crisis, poor households whose daily calorie intake was already below adequate levels saw significant further reductions in their caloric intake; in Latin America, this was especially true for households with children 0-2 years of age.
While the impact of rising food prices may be clear, the root causes of the problem are not. The role of various short- and long-term factors, such as the growth of commodities futures markets and changing levels of grain stocks, continues to be debated. Despite the complexity of the problem, however, there is an obvious need for more research into the functioning of international financial and agricultural markets in order to institute a global solution to prevent food price spikes. Several proposals for alternative mechanisms to establish just such a solution have already been put forth, covering such topics as i) information and research, ii) trade facilitation, iii) reserves and stocks, iv) financial instruments, and v) regulatory proposals. While there are costs and benefits for each proposal, they all make clear the need for a strong, research-based global response.
To learn more, download the report by IFPRI Division Director Maximo Torero.
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