Preventing Food Prices from Creating Poverty and Malnutrition

The recent surge in food prices is causing acute hardship and social unrest around the world. The poor, who spend large shares of their income on food, are most adversely affected. Since rising food prices command a larger share of a limited budget, the poor are forced to shift their expenditures to cheaper diets with less proteins and micronutrients, to reduce their expenditures on investment goods like education and health care, and to compromise on buying insurance against unemployment or on saving for retirement.

As a result, soaring food prices threaten to undo much of the progress developing countries have made in fighting chronic malnutrition and persistent poverty over the past decade, especially among the urban poor. At the same time, higher food prices are boosting the incomes of the producers of food, providing a unique opportunity for promoting agricultural and rural development in many low-income countries.

Which policies are needed to help the most vulnerable people in the short run and to increase agricultural production in the long run? Which measures can be taken to maximise the benefits of rising food prices for rural smallholders in the developing world? How should agricultural trade policies and subsidy schemes be redesigned to ensure long-term global food security?