Managing High and Volatile Food Prices

The recent period of high and volatile food prices has cast doubt on many longstanding assumptions such as the inevitability of declining real food prices, and brought to an end a long period of food price stability. Some of the key driving forces appear to have been declines in yield growth for major commodities and the rapid growth of biofuels. Both high and volatile food prices are justly causes for concern. Key elements of the cure for high food prices include a strong focus on agricultural research and development, as well as rural development more generally, and a reconsideration of the role of biofuels. The best cures for food price volatility aim to reduce it by improving market information and reducing output volatility. Social safety nets are the best policy for coping with its effects, while the widely-used trade and storage policy measures have many complex and uncertain effects.