World Food Policy Volume/Issue 2-2/3-1 Fall 2015/Spring 2016 | Page 135

World Food Policy - Volume 2 Issue 2/Volume 3 Issue 1, Fall 2015/Spring 2016

Food Security in an Age of Falling Commodity and
Food Prices
Stefan TangermannA

International prices of food and agricultural commodities had reached an
extremely high level in 2007-08 and subsequent years, but have more recently
embarked on a declining trend. It is, though, not certain that they will reach the
lower levels again that prevailed before the price peak. It appears conceivable
that international markets have experienced a structural shift towards a longerterm higher price level. While there is no certainty that prices will remain at
such a higher level it appears that the international community should at least
be prepared for such an outcome. High international food prices can undermine
global food security as developing countries overall, and low-income countries
in particular, are net importers of food and agricultural products. Their net
imports keep growing, above all those of cereals. In many developing countries,
even rural households are net buyers of food. An increase in food prices reduces
welfare and impacts negatively on food security in net importing countries and
among net-buying households. As far as policy implications are concerned, this
means that high-price policies, implemented through import tariffs and domestic
measures, cannot be recommended for developing countries. The international
community needs to invest more in agricultural development and food security
in developing countries. We must not repeat he experience of the mid-1970s,
when the promises to do more for agricultural development after a similar
period of food price peaks were soon forgotten after prices declined again.

I

Keywords: International food prices; global trends on food markets; net imports
of food in developing countries; welfare implications of changing food prices;
policies to improve food security

n recent years, international markets
for commodities and food have gone
through exciting if not worrying price
swings. The well-known secular decline
of prices in real (i.e., inflation corrected)
terms and a period of several years of price
depression were suddenly interrupted by a
dramatic increase of prices in 2007. Food
prices, in particular those of cereals and

rice, reached a peak in 2008, far above the
real prices that had prevailed in the last
20 years or so. In a number of developing
countries food security was severely
threatened or actually undermined.
Several governments around the world
responded in panic and adopted measures,
both domestically and at the border, aimed
at keeping food prices under control. The

A

Professor Emeritus, Department of Agricultural Economics and Rural Development, University of
Göttingen, Göttingen, Germany. Paper presented at the World Food Policy Conference, 17–18 December 2015, Bangkok.
doi: 10.18278/wfp.2.2.3.1.9
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