Food prices are exceeding record highs—prompting policymakers worldwide to take action. A recent meeting of the G-20 agriculture ministers has given reason for hope, but many obstacles to less expensive food remain.
According to the BBC, 44 million people were driven into poverty last year by food price volatility — increasing the risk of conflict and adding to human suffering. Rising food prices also threaten to derail the fragile global economy, acting like an extra tax on consumers, says World Bank head, Robert Zoellick.
"We have been in a period of extraordinary volatility in food prices, which poses a real danger of irreparable harm to the most vulnerable nations and people. High, uncertain and volatile food prices are the single gravest threat facing the most vulnerable in the developing world."
The severity of the crisis has prompted the G-20 and the World Bank to push forward a number of non-contentious initiatives, three of the most important being:
- To reduce the impact of food price variability through loans . Called Agriculture Price Risk Management, the idea is to reduce farmer risk and thereby increase production of staple crops like wheat, rice, corn, and soybeans.
- To reduce food price volatility via information sharing. Known as the Agricultural Market Information System, according to The Wall Street Journal, this initiative encourages collaboration among nations to mitigate the affects of panic buying and export bans (among others), which often exacerbate a food crisis. Click here to observe food price fluctuations around the world.
- Eliminating export restrictions for food aid programs. The G-20 agricultural ministers agreed to abandon export restrictions on food aid bought by the World Food Program, states The Wall Street Journal.
Despite these promising developments, the most contentious issues will be left to future meetings. Of these, three of the most important are:
- The restriction of bio-fuel production. Food production advocates want subsidies eliminated for grains grown for fuel, says the Christian Science Monitor. However, the delegates were unable to reach consensus on reducing farm subsidies for biofuel production.
- Increased regulation of commodity speculators. Derivatives markets played a major role in causing the recent recession, and policymakers around the developed world are passing legislation to mitigate their harmful impact (including on food prices). Policymakers are stepping lightly, afraid over-regulation could stifle production.
- Creation of an African food bank. According to The Christian Science Monitor, member African nations (and international backers) would build up a continental food reserve which could be tapped into when a supply shortage occurs. The risk of underfunding and the politics behind "who pays for what" could prove fatal to this proposal.
Of course, imbalances in population growth and food supply is a major problem too, but that's another story. In general, the G-20 and World Bank's increased focus on food prices has been well-received. "People are hungry for food and for action on a global level," says Robert Zoellick, according to the BBC.