Climate change poses both challenges and opportunities for sustainable agricultural growth, particularly in the developing world. As was witnessed during the 2010 droughts in Russia and floods in Pakistan, major climatic events can have significant negative impacts on agricultural markets, forcing global food prices higher and threatening the world’s food security.

As climate change continues to present new constraints to traditional agriculture, appropriate responses will require complementary policies at the farm-, country-, and global levels.

How is a country affected by changes in the world price of the commodities that it exports and imports? What is the effect on prices when a country’s food supply is increased by the release of stocks? What is driving changes in world commodity prices, and how do trends for one commodity compare with trends for another?

The FAO has released its Food Price Index for January, 2011. This report provides a measure of the monthly change in international prices for major food commodities. The January Price Index rose for the seventh consecutive month, showing a marked increase in the global price of all major commodities. Such an increase makes this month's Price Index the highest (in both real and nominal terms) since the index was first backtracked in 1990.

Agricultural trade plays an important role in the establishment of a fair, well-functioning global economy. At the same time, agricultural trade can also have a detrimental effect on global price stability and food security if policies are enacted that protect one region at the expense of another. Protectionist policies such as export bans or restrictions can actually increase global price volatility and lead to further food insecurity, particularly for developing nations.