Just three years after the 2007-08 food crisis, the food security of poor people and vulnerable groups, especially women and children, is again threatened as the prices of basic food items increase rapidly and become more volatile. Expanding biofuel production, rising oil prices, U.S. dollar depreciation, export restrictions, and panic purchasing are again driving up food prices—to the particular detriment of the world’s poorest consumers, who spend some 50-70 percent of their incomes on food. While global food prices dropped slightly in March, they remain 37 percent higher than they were one year ago.
Research shows that when food prices change quickly, as they continue to do at present, poverty increases in the vast majority of cases. High food inflation is affecting not only small countries but also those with large numbers of poor people such as India, China, and Indonesia. For example, food inflation rose to 10 percent in China and 18 percent in India between December 2009 and December 2010. It is often said that poor agricultural producers benefit from higher food prices through higher incomes, but this is only possible if they are net sellers of food and if their input costs do not also rise. In recent years, however, the cost of inputs such as fertilizer and transport has also been high and volatile. Increasing costs, coupled with the uncertainty that stems from excessive price volatility in input and output markets, can reduce farmers’ profit margins, distort long-term planning, and dampen investment in improved productivity.
Decisive action is needed to prevent recurring food crises. Given the complex web of factors affecting global food security, governments and international organizations must adopt a comprehensive approach. Such an approach should incorporate seven principal elements.
1. Effective policies and technology investments to minimize food–fuel competition.
2. Social protection, especially social safety nets, for the most vulnerable groups.
3. Transparent, fair, and open global trade.
4. A global emergency physical grain reserve.
5. Policies and investments to promote agricultural growth, in particular smallholder productivity, in the face of climate change.
6. Investments by national governments in climate change adaptation and mitigation using the full potential that agriculture offers.
7. An international working group to regularly monitor the world food situation and trigger action to prevent excessive price volatility.
This is of particular importance to the success of the G20, as widespread food insecurity can have drastic economic, political, and social effects which could pose significant challenges to the G20 goals of worldwide economic growth and development.
As meetings leading up to the 2011 G20 summit continue in the face of a potential new global food crisis, the need for reliable research to inform the G20 discussions and to help policymakers determine appropriate, effective food security strategies is clear. Since the 2007-08 food crisis, our knowledge of the causes and effects of food insecurity has increased greatly. We now know more about how and to what extent prices are transmitted from global to domestic markets, how protectionist trade policies can negatively impact global food prices, and how abnormalities in commodities returns can be identified. These and other issues are critical to the global food security discussion and, by extension, to the success of the G20.
The Road to the G20 timeline now featured on the Food Security Portal homepage, is designed to highlight and track this ongoing food security research. Encompassing IFPRI publications, policy analysis tools , and videos by leading researchers, this new feature provides one-stop access to the most important food security topics leading up to the 2011 G20 Summit.