Evidence-Based Research

In June, the US Senate voted in favor of a deal to end a 45-cent-per-gallon subsidy for the ethanol industry, as well as a 54-cent-per-gallon ethanol tariff. Originally decried by Agriculture Secretary Tom Vilsack as a move that would cost American jobs, lead to less choice for consumers, and further dependence on foreign oil sources, the proposal is seen as progress by those who fear that using crops for fuel can destabilize the food and feed markets and lead to higher food prices.

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:

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.”

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.