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What can the international community do to help developing countries manage food price instability?

Published by:
Publication date
Number of Pages
Type of Publication:
Working Papers & Briefs
Focus Region:
Focus Topic:
Market / Trade
Nutrition / Food Systems
Type of Risk:
Type of Risk Managment Option:
Risk coping
Franck Galtier

Food price instability poses an extremely serious problem for developing countries (DCs). Firstly, it hits DC consumers hard as they often devote a large proportion of their income to the purchase of food1 . This generates serious food security problems (under-nutrition, malnutrition) and sometimes political instability (price surges in 2008 sparked riots in cities across some forty DCs). Producers are also affected. By making investment in agriculture a very risky undertaking, price instability obstructs green revolutions. As these green revolutions are now widely considered to be a necessary step in economic development, this is also brought to a halt by price instability. Finally, for certain importing countries rendered vulnerable by their low foreign exchange reserves, price instability may also generate macroeconomic problems (import rationing, reduced exchange rate).

The international community therefore must assume the major responsibility of helping DCs manage food price instability. Fortunately, the discussions taking place this year in the G20 and in the FAO’s Committee on World Food Security (CFS) are creating favorable conditions for international mobilization in this field.

But if we are to meet the threat that price instability poses for global food security and  agricultural modernization in DCs, we must find new solutions. The aim of this note is therefore precisely to develop such proposals and six in all will be put forward2. The first two are devoted to mechanisms designed to protect DC population from the effects of food price instability. The second two are designed to reduce grain price instability in DCs and on international markets. The last two concern the necessary re-balancing of WTO rules, allowing countries the possibility to protect themselves from international price instability while at the same time preventing them from excessively increasing this instability.