Navigating the Perfect Storm: Reflections on the Food, Energy, and Financial Crises

The closely interlinked food, fuel and financial crises pose a significant new challenge to the global effort to reduce poverty. In short run, the oil-biofuels nexus was clearly the driving force behind the surge in food prices, but export restrictions and panic purchases turned a tightened market situation into a crisis. New evidence reveals that food prices rose sharply in many countries, and that global poverty levels have increased markedly. The good news is that the supply response in many countries was strong. The impacts of the financial crisis on poor countries have yet to fully roll out, but it is clear that additional people will fall into poverty and become food insecure. Lastly, the global food system is fundamentally changing in a number of dimensions. Biofuels are here to stay, and energy and food prices have adjusted to a higher equilibrium, albeit with large volatility. Trade protection has also resurfaced, but so too have renewed investments in the agricultural sector. These fundamental shifts bring with them opportunities and risks that require internationally coordinated responses with strong national buy-in, as well as timely and relevant research.