Price Volatility from a Global Perspective

For most of the past fifty years, real agricultural commodity prices followed a downward trend punctuated by short-lived peaks that were not matched by equally pronounced and short-lived price falls but rather were separated by extended price troughs. Since 2000 it appears that prices have departed from their long-term downward trend and have become increasingly volatile (Figure 1). Prices increased between late-2006 and mid-2008 to their highest level in thirty years, fell sharply through 2009 then regained their 2008 peak in late2010-early 2011. The resurgence of high food prices in 2010 prompted fears of a repeat of the 2007-8 food crisis threatening increasing food insecurity, rampant food price inflation and civil unrest. Fortunately, the worst fears have not materialized generally. However, the OECD-FAO Agricultural Outlook expects prices to remain above their historical trend levels and to continue to be volatile in the medium term. High and volatile agricultural commodity prices are likely to persist and continue to challenge the ability of consumers, producers and governments to cope with the consequences.