Since the poor spend a greater share of their household incomes on purchasing food, higher food prices must exacerbate poverty, right? Wrong . . . at least over the medium term. In my most recent paper, I find that the opposite is true: higher domestic food prices predict reductions in poverty. The methods in this paper are fairly simple. I take World Bank national poverty estimates for a broad swathe of countries and regress changes in poverty against changes in domestic food prices (the ratio of the food CPI to the non-food CPI).

Global food prices are becoming less volatile compared to recent years, according to a new FAO report. The November 2013 Food Outlook credits the more balanced markets to the recovery of global cereal inventories. 2013 has seen a significant increase in cereal production, largely based on increased maize crops in the US and record wheat crops in CIS countries.

Highlights for other crops include:

By Luca Salvatici

High food prices affect poor populations in a variety of ways. While households that only consume food suffer as a result of rising food prices, households that also produce food can actually benefit from price increases. But there is another, less recognized avenue through which high food prices can impact the poor: rural wages. The lion's share of the world's poor relies on agricultural jobs to make a living; whether or not agricultural wages increase as a result of rising food prices therefore has significant implications for how those price increases will help or hurt.

Cross-posted from University of Bonn's Center for Development Research

Summary of the international expert consultation organized by the Center for Development Research (ZEF) and International Food Policy Research Institute (IFPRI) held at ZEF in Bonn, Germany on January 31 and February 1, 2013.

By Joachim von Braun (ZEF) and Maximo Torero (IFPRI)

The GIEWS Global Food Price Monitor, released today, has seen a slight decline in international maize prices from their near-record highs in August. However, the report also cites increasing global rice export prices, as well as strengthening wheat export prices. Domestic wheat prices in several regions (Asia, CIS, and South America) also rose in September, reflecting higher prices in international and regional export markets.

In recent years, the world has faced continuing food security challenges. The food price spikes of 2007-2008 and 2010-2011 brought lasting impacts in the form of increasingly high food prices and price volatility, overwhelmingly harming the world's poorest producers and consumers. Guarding against price volatility to protect the world's most vulnerable populations will require restructuring global agricultural and financial markets, a need that global leaders are now beginning to recognize and address.

With the price of basic food items on the rise, global policymakers are again faced with the need to protect the world’s most vulnerable populations. Women and young children tend to be most negatively impacted by sharp increases in the price of food. However, while extensive research has been conducted on the causes and consequences of the 2007-08 food price crisis, little of that research has focused specifically on the impact of the crisis on women, and whether the impact differs for women compared to men.

Improving global food security and ending hunger worldwide are daunting tasks, and policymakers striving toward these goals face many obstacles, from changing climate conditions to increasing financial speculation to highly concentrated export markets. These factors and more can contribute to high, and highly volatile, food prices, threatening global food security and causing widespread human suffering.

The ongoing crisis in the Horn of Africa has shown that the challenge of food insecurity is alive and well. The 2011 G20 meetings have paid particular attention to the issues of high food prices, food price volatility, and food insecurity. G20 leaders have involved leading international institutions, such as the FAO, IFAD, WFP, and IFPRI, and have established several action plans to address these important issues.

View a presentation by Maximo Torero (Division Director, Markets, Trade and Institutions Division, IFPRI) on food security and the G20.