FAO Calls on Countries to Adapt to Food Price Volatility

08 Oct 2013 --- The world’s food price problems are not over despite a current market lull, FAO Director-General José Graziano da Silva told a ministerial meeting on international food prices today attended by some 30 agriculture ministers.

The Director-General acknowledged that this year’s meeting was taking place in a less troubled climate than the first event in October 2012, when ministers came together in response to the third spike in international grain prices in five years.

“The outlook for international food commodity markets finally looks calmer this year,” he said. “Grain production has rebounded and higher stock-to-use ratios should bring greater stability to prices. The FAO Cereal Price Index is 20 percent lower than one year ago."

But although prices have stabilized, the Director-General cautioned against dropping the guard.

“International prices have declined but they are still above their historical levels. And prices are expected to remain volatile over the next years,” he warned.

Lasting solutions

But Graziano da Silva also underscored that while lower food prices brought relief to poor consumers, higher prices were not necessarily all bad news as they came after three decades of stagnant prices that negatively affected the agricultural sector in many poor countries.

He urged countries to take advantage of the comparative calm to prepare for future market turbulence and find lasting solutions to the issues surrounding food price volatility.

“If higher and volatile prices are here to stay, then we need to adapt to this new pattern,” he underlined.

The two critical issues for countries to address are how to help poor small-scale farmers benefit from the higher food prices, and how to protect low-income families who suffer as a result of them, he said.

“The current situation offers an opportunity for farmers to reinvest in agriculture,” he continued, calling for a right set of policies to ensure that small-scale farmers have the means to take advantage of it.

Social protection

Low-income families must meanwhile be shielded by strengthening social protection programmes, including cash transfers to extremely poor households, and creating new ways to link social protection and support for agricultural production, the Director-General said.

“Countries throughout the world are having great success when using this menu of social protection and productive support to fight hunger and poverty,” he added.

Global governance

Improved global governance has played an important role in warding off additional food price spikes since July 2012, Graziano da Silva said.

In particular, the Agricultural Market Information System (AMIS) created by the G20 in 2011 has proved an effective new weapon in the arsenal to fight against excessive price volatility, providing reliable information and increasing transparency in the international food market, according to the Director-General.