Beginning in 2007, the world has suffered three rounds of high food prices. These crises were caused by a variety of factors—from extreme weather events to civil conflict—but poor policies by affected countries exacerbated the problem, according to an expert on the subject who spoke at IFPRI last week.
According to former IFPRI Director General Per Pinstrup-Andersen, many policymakers responded to the food price crises in an ad-hoc and self-serving way, enacting policies geared toward protecting their own national interests, and ultimately contributing to more extreme food price volatility.
Pinstrup-Andersen presented findings from a 14-country study that looked at policy responses to price crises in the United States, the European Union and 14 middle- and low-income countries throughout Asia, Latin America, and Africa south of the Sahara. The study investigated why policymakers from different countries responded differently to the crises, and to glean lessons for the international community. Pinstrup-Anderson’s main concern is not high prices but price volatility, which generates uncertainty, lost incomes and shortages making it harder for poor people to cope.
Pinstrup-Andersen and his colleagues found that these responses generally fell into two categories: policies designed to (1) slow down domestic food price increases, and (2) reduce the negative effects of high food prices on certain groups. But policymakers made mistakes with both of these responses. The policies to slow price spikes interfered with market signals, and ended up “telling producers to produce less—and consumers to consume more—than they otherwise would.” Policies to boost production did so through short-term subsidies instead of longer-term research and development, and unfairly favored larger-scale farmers. Attempts to directly control prices failed.
Cash transfers and food subsidies, meanwhile, benefitted urban low- and middle- class residents—not the rural poor, who most needed them.
To read more about Pinstrup-Anderson’s presentation see here.
To see his presentation slides see here.