Washington, D.C -- Growing demand for biofuels, extreme weather and climate change, and increased financial activity through commodity futures markets are the main causes of high and volatile food prices, according to a report by the International Food Policy Research Institute (IFPRI).
The 2011 Global Hunger Index report, The Challenge of Hunger: Taming Price Spikes and Excessive Food Price Volatility was issued in conjunction with World Food Day 2011 (October 16).
These challenges are exacerbated by historically low levels of grain reserves, export markets for staple commodities that are highly concentrated in a few countries, and lack of timely, accurate information on food production, stock levels, and price forecasting, which can lead to overreaction by policymakers and soaring prices said the report.
'The poorest and most vulnerable people bear the heaviest burden when food prices spike or swing unpredictably,' said Klaus von Grebmer, lead author of the report and IFPRI Communications Director.
'This report calls for action on several fronts to build resilience and mitigate the effects of volatility, particularly in countries where hunger is most severe.'
To tame food price volatility and protect the poor against future shocks, the report makes several policy recommendations focused on the three levels of action:
- addressing the drivers of food price volatility;
- tackling global market characteristics affecting volatility, including building up stocks by coordinating international food reserves and sharing information on food markets; and
- building resilience for the future.
'To tackle the main drivers of excessive volatility, policymakers need to curtail biofuels subsidies and mandates, discourage the use of food crops in biofuels production, regulate financial activity in food markets, and reduce the incentives for potential excessive speculation in food commodities,' said Maximo Torero, co-author of the report and Director of the Markets,Trade, and Institutions Division at IFPRI.
'They also need to invest in climate change adaptation and mitigation and safeguard smallholder farmers against extreme weather-related shocks.'
'We already know a great deal about how to reduce vulnerability and effectively tackle poverty and hunger,' said Klaus von Grebmer. 'Now is the time to apply this knowledge so that everyone, everywhere, has access to sufficient, safe, and nutritious food at all times so that they can live healthy and productive lives.
In response to the food versus fuel issue surrounding biofuels, second and third generation biofuels, made from substances such as wood fibre and algae, are set to steal an increasing share of the global energy mix. A special Conference session at GLOBE 2012, taking place in Vancouver, Canada, March 14-16, 2012 will explore the role that next generation biofuels will play in driving the development of a lower carbon economy.