Food security has been a constant topic in the media in recent weeks as commodity prices continue to climb following the drought in the Midwestern US. While the causes of this most recent commodity price spike seem clear - negative weather in the US and South America impacting crop yields, as well as decreased export sales from some of the world's largest exporters - a new tool provides insight into another potential factor in food price spikes and price volatility: the media itself.
The Food Security Media Analysis System (FOMA) , developed by IFPRI in collaboration with Sophic Systems Alliance Inc. (Sophic Intelligence), examines the extent to which perceptions of the global food security situation, as presented by the daily media, align with the actual current food security environment (food prices, stocks, etc.). This research supports the premise that a lack of accurate information regarding agricultural markets and global food stocks may contribute to driving up food prices by leading governments to engage in harmful policies such as export bans and panic buying.
This phenomenon was seen during the Russian drought and wildfires of 2010 , when that country banned wheat exports to protect its domestic stock levels. Although global wheat stocks could have more than compensated for the decline in exports, the wheat futures market began experiencing high volatility for several days after Russia announced the ban. IFPRI research suggests that this market overreaction was driven in part by overwhelming media attention on the damaging effects of the wildfires, and the concurrent lack of attention on the reality of existing global stocks and market situation. From August-October 2010, every media article covering the price of wheat was accompanied by a spike in price volatility; 57 percent of these articles forecast an increase in global wheat prices ( GHI 2011 ). The lack of information regarding the reality of global production and stocks led to knee-jerk responses by governments across the globe to engage in panic buying that only served to drive up prices further.
By scanning daily media articles from multiple international outlets, FOMA can identify the factors presented by the media as impacting food prices; these factors can then be compared to other variables, such as global stock levels, to determine whether the media's presentation is accurate or is in fact contributing to an information gap. Decreasing any potential information gaps may be a key step in calming food markets and preventing further price volatility.
Download the paper and watch a presentation on the research showing the importance of media on food prices.
Watch a video tutorial of FOMA below.
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