A falling global food price trend during the period 1974-2000 was unsustainable and resulted in artificially low food prices by 2000. An adjustment in the trend was needed and began to take place in an orderly fashion during the period 2000-2005. Since then, the adjustment process has been replaced by drastic food price increases and decreases and the global food system is now characterized by very volatile food prices caused by extreme weather events, oil price fluctuations, abrupt expansion of the production of biofuel, speculation and government policies. The price volatility is accompanied by an upward food price trend reflecting increasing food, feed and biofuel demand and a reduced rate of growth in agricultural productivity.
Only a fool would try to predict food prices 40 years into the future. However, there is reason to believe that the current food price volatility will continue, primarily because of expected production volatility caused by extreme weather events associated with climate change and amplified by government policy. Whether such a volatile price will be accompanied by a rising or falling food price trend will depend on action taken or not taken by the public and private sectors.
There is little doubt that the increase in food demand can be met by an equal increase in supply. The earth’s productive capacity is far from fully utilized. The gaps between actual and potential yields are large, and continued public and private investment in productivity-increasing research and technology can elevate food production per unit of land and water almost everywhere. Cutting food waste and losses, which are estimated to be about one-third of the food produced, offers another opportunity to meet future food demand. The key question is whether appropriate investments and policies will be made to exploit the capacity to produce the food needed in a sustainable manner. Failure to pursue sustainable management of natural resources and policies to mitigate and adapt to climate change undermines the production foundation for agriculture and makes it increasing difficult to meet future food needs. Smallholder farm families in developing countries, many of whom are at risk of malnutrition, are particularly vulnerable.
The extent to which changes in international food prices are transmitted to domestic markets varies greatly among countries and over time, making it difficult to estimate how poor people and their nutrition will be affected by international food price volatility. Two groups of countries are likely to have a relatively low food price transmission: the poorest countries, many of which are only weakly integrated with the international food markets, and large middle-income countries such as China and India. The latter may use trade policy, such as export restrictions or import subsidies, to reduce price transmission when international prices are high, e.g., the food price spikes during 2007-08 and 2010-11, thus protecting domestic consumers from large price fluctuations while reducing incentives and incomes for domestic farmers. Therefore, international food price changes may be a poor indicator of country-specific price changes and related nutrition effects. National and local factors may play a much bigger role than world market prices.
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Prioritizing expanded global and national food production instead of improved food security and nutrition may bypass opportunities to improve nutrition. Food production is a means to an end and not an end in itself. Pursuing the goal of expanded food production while ignoring food security and nutrition goals may in some cases result in more food insecurity, a worsening of the nutritional problems and more overweight, obesity and chronic diseases. Recent and on-going international land acquisition in low-income countries resulting in capital-intensive agricultural production for export to middle-income countries and the removal of smallholder families from the land, they have cultivated but to which they do not have legal title, is an illustration of the trade-off between expanded food production and improved nutrition.
A clear specification of the pathways between the food system and human health and nutrition is essential to strengthen the impact of changes in the former on the latter. While specific pathways are context specific, an understanding of the behavior of food system agents, e.g. producers, traders and consumers, is critical. Irrespective of their starting point in the food system, e.g. agricultural production or post harvest activities, most pathways work through the following five entry points: food availability, incomes, prices, knowledge and time allocation. Gender-specific time demands and power structures should be included in the assessments along with the impact of non-food nutrition factors such as sanitation, water quality and child care.
The above is a short summary of a presentation at DFID, October 4, 2011.