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Food Security, Price Volatility and Trade: Some Reflections for Developing Countries

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Market / Trade
Nutrition / Food Systems
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Risk assessment
Fisheries & Aquaculture
Díaz-Bonilla and Juan Francisco Ron
Inter-American Development Bank (IADB)

The main document discusses what food security is, highlights the heterogeneity of food insecurity situations, and analyzes global trends in the related variables. Then, it focuses on price trends and price volatility and the implications for food security.

Given that background the main document moves first to the consideration of agriculture and development strategies for poverty alleviation and food security, and then discusses trade issues. In what follows the executive summary focuses on those two issues.

The importance of agriculture in lower income developing countries is undeniable due to the large percentage of the poor that live and work in agriculture and the positive multiplier effects of agriculture for the rest of the economy. But while recognizing that a strategy based on support to agricultural producers is generally appropriate for many developing countries, it is also crucial to consider the fate of poor consumers, both urban and rural, who may suffer from malnutrition and hunger. Poor households may spend as much as 70 percent of their income on food. Landless rural workers, poor urban households, and many poor small farmers tend to be net buyers of food, and there has been a steady shift in the locus of poverty in developing countries from rural to urban areas. Therefore there is a policy dilemma between high food prices that benefit food producers (other things equal), and low food prices that may help poor consumers. Any approach that deals with this dilemma must maintain a reasonably neutral system of price incentives and, at the same, promote investments in the agricultural sector and rural areas and generate employment opportunities for the poor.

The full document develops those topics in greater detail. The next question is what role may trade policies play in that context.