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The High Level Panel of Experts on Food Security and Nutrition of the FAO’s Committee on World Food Security reports in detail on reasons for increased food price volatility. They suggest three linked problems: underlying agricultural price volatility, low agricultural investment and the start of a new era of relative food scarcity. The report states that, “#Biofuel support policies in the United States and the European Union have created a demand shock that is widely considered to be one of the major causes of the international food price rise of 2007/08.” It notes that because food demand elasticity reduces as wealth increases, poor people’s consumption must adjust disproportionately in the event of price shocks, and that inelastic demand from biofuel mandates exaggerates this. On the other hand, it suggests that from the end of the 70s to the mid–90s there was low agricultural investment alongside restricted public support in some regions. Increased prices may trigger an investment rush that would lower prices in due course.
The report has several recommendations – including new multilateral trade rules recognising the special needs of poorer countries and groups; international cooperation on stock levels; regulation of the futures market; incentives to reduce food wastage; and investment in agriculture. Notably for those interested in #biofuels, the report calls for the Committee on Food Security to “demand of governments the abolition of targets on biofuels and the removal of subsidies and tariffs on biofuel production and processing.”
Lots more interesting reading at: http://bit.ly/qckK7Z