This International Food Policy Research Institute report analyzes how the global food crisis happened and recommends how the next one can be prevented.
Cheap food has been taken for granted for almost 30 years. From their peak in the 1970s crisis, real food prices steadily declined in the 1980s and 1990s and eventually reached an all-time low in the early 2000s. Rich and poor governments alike therefore saw little need to invest in agricultural production, and reliance on food imports appeared to be a relatively safe and efficient means of achieving national food security. However, as the international prices of major food cereals surged upward from 2006 to 2008 these perceptions quickly collapsed. Furthermore, although food prices are now lower than their 2008 peak, real prices have remained significantly higher in 2009 and 2010 than they were prior to the crisis, and various simulation models predict that real food prices will remain high until at least the end of the next decade.
Needless to say, the stability and effectiveness of the world food system are no longer taken for granted. For researchers and policymakers alike, the food price crisis presented nothing but puzzles. Many possible causes have been identified, but their relative importance is uncertain. A number of studies estimated the impacts of rising food prices, but these simulations often generated unconvincing results, and most were limited by the absence of general equilibrium effects, country-specific price changes, and other relevant shocks, such as rising fuel prices. Moreover, while the recent crisis closely resembled the 1974 crisis, international policymakers still failed to prevent history from repeating itself. In this research monograph the authors explore these puzzles through a review of the existing literature and fresh analysis. While hardly the last word on the subject, this timely and unusually comprehensive assessment of the crisis will be a valuable resource both for researchers trying to make sense of current problems and for policymakers deciding how to prevent future crises.