When the Price is Not Right

The state of food security in 2011 has been projected to become worrying trend especially with regards to food prices. Implications of the 2008 global food crisis – such as riots in several developing countries – still linger. Whilst it is apparent that price volatility of food commodities affects food security and the general welfare of society, the discourse still revolves around the drivers of price spikes or concerns of its impacts on economic growth, leaving no sign of new and innovative approaches in governing the global food system. The increasing demand for biofuels was accused to be the driver for the 2008 crisis, yet it was later challenged by the argument that drought and oil prices were in fact the drivers. In the same year subsequently, it was suggested that the causes of high food prices are:

• Rising living standards in some developing countries;
• Rapid depreciation of the dollar against the euro and some other currencies;
• Government policy that encourages the use of corn-based ethanol in the US;
• Speculation on food commodities price by financial players;
• High price of fossil-fuels.

The existing policy responses were claimed in the FAO policy brief to have frequently failed. Interventions such as subsidies, safety nets, reserves, and boosting agricultural productions are implemented at a macro level to create a more resilient global food system but not to take the most vulnerable consumers including small scale farmers to a level where they become more adaptive to price volatility. While recognition of price spikes’ effects on the poor in developing countries has somewhat been made, the challenge remains for states and global governance on food to protect the poor and vulnerable consumers. This can be done by providing incentives for them to take their own initiatives to become part of the solution rather than be left suffering.

In a recent FAO policy brief, the global food system is postulated to be increasingly vulnerable due to extreme weather events and a dependence on new exporting zones. The former can be considered as an uncontrollable factor whereas the latter – including reliance on international trade, growing demand from energy sector or monetary policy shifts – is a factor which could be harnessed to create a more favourable state that reduces the vulnerability of the global food system. However, it would seem that there is no silver bullet to fix this.