After two consecutive seasons of poor rainfall, the Horn of Africa is experiencing the region's worst drought in 60 years. Drought conditions have led to widespread crop failure and livestock deaths, as well as increasing food prices. Somalia now faces famine conditions in the southern part of the country.

While increasing access to well-functioning markets for high-value agricultural products is one key component of agricultural and economic development, an equally important component is ensuring that smallholder producers, particularly women, have the capacity to take advantage of this increased access.

In a recent issue of Foreign Affairs, Christopher Barrett and Marc Bellemare write a stimulating note on the recent price movements in agricultural commodity markets. They appear to have three clear messages for policymakers:

With the global population predicted to reach 9 billion by 2050, and incomes in developing countries to continue rising as well, increased global demand for food in the coming decades will place unprecedented pressure on sustainable food production. Climate change poses a further challenge, as changes in temperature and precipitation threaten agricultural productivity and the world’s capacity to feed a growing population.

IFPRI launched the Excessive Food Price Variability Early Warning System today. This new tool measures excessive food price variability and is the only mechanism currently available to identify time spans of increased price variability. It is updated daily and forewarns policymakers and humanitarian agencies of periods of time with excessive food price variability.

Risk characterizes everyday life for many of the world’s poorest households. These households are more likely to be located in environments where livelihoods are highly susceptible to weather and price variability and where health risks are pervasive. Reducing the risks faced by poor households, and enabling poor households to better deal with adverse events when they do occur, is essential to improving their welfare in the short run and their opportunities for income growth in the long run.

When the World Trade Organization (WTO) was created in 1995, its members committed themselves to a set of disciplines for domestic support, market access, and export competition for agriculture. The Agreement on Agriculture paved the way for the pursuit of progressive reductions in world agricultural market distortions.

While agricultural trade policies are one factor affecting global food prices and price stability, they are not the only factor. Policies not directly related to trade can also have destabilizing effects if enacted by large countries and/or by a large number of small countries. Traditionally, focus has been put on agricultural policies and domestic support for developed countries’ farmers. Another strong example of this is the recent dramatic increase in pro-biofuels policies throughout both the developed and the developing world.

2006-2008 saw dramatic increases in the price of many staple food items, particularly maize, rice, and wheat. These staple commodities form the bulk of the diet of the world’s poor populations, many of whom spend over one-half of their income on food. The result in many areas of the world was worsening poverty for already poor populations due to a decline in purchasing power. While much attention has been given to the economic impacts of the rise in food prices, little empirical research has been conducted to examine the nutritional impacts of the food crisis.

Recent trends in food prices—higher levels and higher volatility—mirror trends predicted by a number of experts. Given the complex web of factors influencing global food security, governments of developed and developing countries, as well as international organizations, must use a comprehensive approach to prevent a food crisis reoccurrence. This comprehensive approach should comprise a number of initiatives and reforms; while some of these have been proposed before, their merits are even more relevant today and justify reprioritization and reallocation of national and international budgets.

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