Rebalancing the negative impacts of food price volatility

Real progress has been achieved in development: the percentage of absolute poor has been halved since 1990, from 43 to 21 percent. Now the world is debating about future development goals, post 2015. Poverty reduction should remain at the top of the agenda. Ending the extreme poverty of one euro (1.25$) a day and ending hunger are now realistic goals for 2030. But tackling the remaining half-that is to say, bringing the above mentioned 21 percent close to zero-will require bigger and smarter development actions. The UN has launched the debate around the next Millennium Development Goals (MDGs). The Rio+20 Conference in 2012 initiated a debate on a set of sustainable development goals (SDGs). One coherence-seeking debate is needed, not two. Sustainability requires a long term perspective without neglecting the poor's livelihood constraints of today. The main forces for achieving sustainability are science and technology, and change in consumption on the part of the richer sections of world society. The larger contexts around the goals also need to be considered: for example, the goal of access to clean drinking water for all requires consideration of the sustainability of larger water systems, and access to healthy and sufficient food for all requires consideration of markets that are not too volatile. This time, an implementation concept has to be tabled together with the goals, and the accountability of all actors needs to be made clear. The world market prices for wheat, rice, corn, and soybeans , which together provide about three quarters of the world population's calorie requirements, have rised rapidly since 2007. Additionally, the volatility of market prices increased, i.e. in terms of fluctuations around their long-run trend. Global price changes also affect local prices since trade links local markets in developing countries to the world market (see figure 1). These global price changes have various consequences for food production, nutrition security, and therefore political stability in developing countries. What are the impacts of price fluctuations? The goal of ZEF's research project on ''Volatility in commodity markets, trade policy and the poor " is to investigate the causes and impacts of increasingly volatile prices. Research results so far suggest that volatility has negative effects on both producers and consumers. Global investigations reveal lower production and investments by farmers if prices at harvest time are difficult to estimate during the planting season. But, in spite of high prices, production is not keeping …