Policies, Institutions, and Global Initiatives

Increasing food prices present both challenges and opportunities for the developing world. Just as the transmission of global prices to domestic prices can differ by country and commodity, the effects of changes in food prices within a country can differ from household to household. The welfare of urban and rural households may be affected differently, as will the welfare of net consumers compared to that of net producers.

Sustainable agricultural growth and fair, stable global markets are key to maintaining global food security and reducing hunger and poverty, as well as to fulfilling the G20 commitment to worldwide economic growth and development. How to encourage growth and maintain stable markets, however, is a complex and widely debated issue. Reliable, objective research is needed to address the concerns of both the developed and the developing world and to ensure that domestic needs are not protected at the cost of global stability.

As food prices rose in 2010, the issue of food security was once again brought to the forefront of global attention. Wildfires in Russia, floods in Pakistan and Australia, and drought in China contributed to widespread concern about the cost and sustainability of the world’s food supply. With high and volatile food prices causing potential long-term problems for economic growth and poverty reduction, particularly in the developing world, the need for research-based policy responses is clear.

Worldwide climatic events in 2010 made it clear that food security can be greatly impacted by unexpected changes in climate. Wildfires in Russia, floods in Pakistan and Australia, and drought in China led to increases in the price of staple agricultural commodities and caused widespread fear about the recurrence of a world food crisis. As the world's population continues to grow, a changing climate will present more and more challenges to sustainable agricultural growth and food security.

Emergency food reserves, or strategic reserves, have received considerable attention since the 2007-08 food crisis. Since that time, many countries have either established new strategic reserve programs or scaled up their existing programs by increasing stock levels. The rationale behind these policies is that, with increasing international food price volatility, governments must be prepared to protect their most vulnerable populations from food price shocks, declining purchasing power, and famine.