Food price volatility and financial speculation

Global price of many foods shot to historic highs in 2008. Following a sharp fall thereafter, prices began to rise in 2009, spiking again in 2010. After another decline, prices have again risen sharply in 2012. Price volatility has been unusually high. Many have pointed to major changes in supply and demand conditions as the primary cause. Others identify financial speculators as the culprits. Establishing cause and effect has proven to be impossible. Opinion has become polarised and oppositional.

What is not in dispute is the huge increase in financial investments of various forms in futures markets, including food. Some point to the correlation between these flows and price movements, arguing that some financial speculators (i.e. index funds) increase net demand and therefore prices, while others (i.e. hedge funds) increase volatility. While the correlations are not disputed, the direction of causality is: opponents counter that rising prices have attracted investors, and that food markets have always been characterised by price volatility, and that hedge funds are attracted to volatile markets

This article is available at: http://www.future-agricultures.org/publications/research-and-analysis/working-papers/doc_download/16...

The State of Food Insecurity in the World

With the volatility of the food prices which seems is likely to continue and possibly increase, more poor farmers, consumers and countries will be more vulnerable to poverty and food insecurity. Small, import-dependent countries, particularly in Africa, are especially at risk. Many of them still face severe problems following the world food and economic crises of 2006-2008, the UN Food and Agriculture Organization (FAO), the International Fund for Agricultural Development (IFAD) and the World Food Programme (WFP) said in "The State of Food Insecurity in the World 2011" (SOFI), an annual flagship report which they jointly produced this year. The report is available on the FAO website.

The Poverty Impacts of Climate Change

The last century has seen a sustained decline in the proportion of people living in poverty in the world. However, there is an increasing concern that climate change could slow or possibly even reverse poverty reduction progress. Given the complexities involved in analyzing climate change impacts on poverty, different approaches can be helpful; this note surveys the results of recent research on climate change impacts on poverty. Access this article at:http://siteresources.worldbank.org/EXTPREMNET/Resources/EP51_v4.pdf