Policies, Institutions, and Global Initiatives

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:

First, price levels and price volatility are different concepts. In recent months, markets have been characterized by very high price levels, but volatility “although high these past few years, is not out of line with historical experience and is generally lower than it was in the 1970s.”

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.

The US Senate on Thursday voted to eliminate billions of dollars in federal ethanol subisidies, making it unlikely that the current 45-cent-per-gallon subsidy for refiners and 54-cent-per-gallon tariff on imported ethanol will be extended beyond the end of the year.

With food security remaining a critical issue for both developed and developing countries, the Meeting of G20 Agriculture Ministers met on June 22-23 to discuss food price volatility and improved sustainable agricultural policies. The Action Plan developed at the meeting highlights greater sustainable productivity, better market information, more open trade, comprehensive rural development and agricultural policies, and sustained investment in agricultural development.

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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.