A high-level seminar on Food Price Volatility took place in Madrid on March 27-28 2014, where discussions focused on policy responses to address the causes and effects of food price volatility.
The event, co-organized by the ULYSSES project, the Forum for Agricultural Risk Management and Development (the World Bank) and the Food and Agriculture Organization of the United Nations (FAO), brought together private and public sector specialists from around the world to share ideas and discuss recent developments in food and agricultural market volatility. Presentations and debates focused on the most recent and relevant research findings and viable policy responses to address the causes and effects of food price volatility.
Based on the evidence presented during the seminar, experts agreed that unexpected market spikes and extreme volatility should be the primary source of policy concern. Because food represents a large share of farmer income and budget of poor consumers, price volatility – especially unexpected and extreme price movements - leaves smallholder farmers and poor consumers increasingly vulnerable to poverty. In order to reduce these risks in developing countries, transparency and monitoring, together with addressing market inefficiencies, logistics and transportation are of key importance.
This conclusion is in line with the approach of the Monitoring and Analysing Food and Agricultural Policies (MAFAP) programme which seeks to strengthen national policy monitoring systems that measure effects and thereby identify systemic bottlenecks affecting the competitiveness of agricultural producers, especially smallholders. This innovative programme, which is amongst FAO’s initiatives to provide timely information and monitoring, presented findings that highlight the link between price volatility and price incentives. In particular MAFAP has found that policy incoherence with regards to price incentives remains a key issue, demonstrating that policy monitoring is the essential first step in mitigating high price volatility.
The turmoil of 2007/08 was not an isolated incident and future market behavior is likely to continue with high volatility. Therefore it is essential to define appropriate policy frameworks which although will be country specific, should take into account a few key elements. First, market information and transparency are essential to facilitate rapid market adjustment and price transmission. Secondly, policy should focus on coping strategies, targeting farmers, and the most vulnerable consumers, both in the EU and in the rest of the world. And thirdly, safety nets for both consumers and producers, and emergency food reserves should be seriously considered.
To learn more about the International seminar on price volatility, including the agenda and presentations of ULYSSES and MAFAP, please click here.