Food price volatility in the last few years is a result of demand and supply factors, augmented by policies. Demand for grains has been increasing at higher rates due to changes in eating habits in fast-growing developing countries and due to the rise in the production of biological fuels. Supply did not catch up with the rise in demand because of several long-run processes and because of natural disasters and increasing input prices.
Price volatility has been augmented by local protection policies of grain-exporting countries and by speculative activity in commodity markets. The poor, especially in developing countries, suffer the most from the price fluctuations. The long-run solution relies upon increasing grain supply, especially in developing countries. This requires a combination of investment in infrastructure and technology, and adequate trade policy.
Ayal Kimhi is Associate Professor in the Department of Agricultural Economics and Management of the Hebrew University, and serves as Sir Henry d’Avigdor Goldmid Chair in Agricultural Economics. He also serves as Deputy Director at the Taub Center for Social Policy Studies and as Director of Research at the Center for Agricultural Economic Research. He previously served as editor-in-chief of the Journal of Rural Cooperation. Professor Kimhi holds a PhD in Economics from the University of Chicago. His main areas of research are poverty and inequality, time allocation, intergenerational transfers, and structural changes in agriculture in developed, developing and transition countries. He has also written about health and nutrition, agricultural policy reforms, and labor supervision.
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