With an estimated 44 million people falling into poverty since June 2010, rising food prices and increasing agricultural price volatility is at the forefront of global attention. Commodity exchanges have long been touted as a way to mitigate the effects of price volatility and increase economic efficiency in a liberalized market environment. As with other aspects of global agricultural markets, however, exchange markets are facing increasing global interdependence as traders draw on information generated both domestically and internationally.

Successful global agricultural trade hinges on open, secure agricultural markets. Such markets provide risk management by allowing for inter-regional diversification of crops and food products and by reducing price differences through market integration. In other words, secure, well-functioning markets can balance one country’s food deficit with another’s surplus, and vice versa. In this way, global trade can support global price stability and food security.

With the world's population predicted to reach 9 billion people by the year 2050, issues related to global food security have taken on a growing urgency. Rising commodities prices, adverse weather events, increased use of biofuels, global and domestic trade policies, and shifting consumption patterns in the developing world will all come into play as the world's population grows. Developing appropriate policies to address such challenges is critical to improving and maintaining global food security.

The daily global news continues to be inundated with stories of rising food prices, and accompanying rises in poverty and hunger. Recent droughts in China have been added to the list of factors driving food prices, specifically commodity prices, up around the world. Policymakers are now faced with decisions regarding the appropriate response to these increases.

Global food prices increased for the eighth consecutive month in February, according to the FAO Food Price Index. With the exception of sugar, prices of all agricultural commodities continue to rise, bringing the Price Index to its highest level on record. In particular, the FAO expects a sharp decline in cereal stocks in 2011 due to increased global demand and decreased production. Export prices of major grains have risen 70 percent since February 2010.

To view the full report, visit http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/

The World Bank this week issued a statement saying that increasing food prices have driven an estimated 44 million people into poverty in low- and middle-income countries since June 2010. This staggering increase in global poverty levels has serious economic, social, and political implications. Many experts and media outlets worldwide have linked rising food prices to riots in Algeria, the ousting of President Zine El Abidine Ben Ali in Tunisia, and the recent riots in Egypt which led to the historic resignation of President Hosni Mubarak.

The USDA Economic Research Service has released its February 2011 reports for wheat, rice, and soybean outlooks. These reports can help inform policy makers of important current issues involving food security, farming, natural resources, and global markets.

Download the February reports below. For more information regarding the USDA ERS reports, visit http://www.ers.usda.gov/

The World Agricultural Supply and Demand Estimates (WASDE) report provides monthly comprehensive forecasts of supply and demand for major U.S. and global crops, supplied by the USDA. Crops covered include wheat, coarse grains, rice, and oilseeds. This report can explain past and current global commodities trends, as well as predict trends for the coming year.

Download the February report below. For more information regarding the WASDE reports, visit http://www.usda.gov/oce/commodity/wasde/

With all the news of floods in Australia decimating the country’s wheat crop and adverse weather in the US cutting corn and soybean harvests, commodities prices across the globe are again seeing drastic increases, raising fears that we may be witnessing a return of widespread food insecurity and subsequent political and economic turmoil. Moreover, the FAO’s recent statement that global food prices reached a record high in December 2010 has sparked the memory of the crisis in 2007–08 and turned global attention back to the issue of food security.

As global food prices continue to surge, individuals and families in the developing world may be facing a new food reality. Fluctuations in the price of staple commodities may benefit some households’ welfare (producers) while hurting others (consumers). Understanding how price increases affect the developing world on a household level can pose a major challenge to global policymakers as they strive to respond to global and national food crises.

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