Primary Commodity Prices and Global Food Security: Why farmers still struggle when food prices rise

Thomas Lines -

Agricultural inputs like fertilisers and oil have risen much faster. This has created a world crisis for farming, a crisis of reduced agricultural incomes, and an ageing farming population. The author argues that a new approach is needed, building on known methods – a greater variety of staple crops, traditional farming techniques and agro ecology – to create a food system which is economically as well as ecologically more resilient and sustainable.

Over the last six years there has been a severe shock to global food supplies and prices, which was felt especially hard by the poorest countries and the most vulnerable people. However, we have to be careful in defining what the shock was.

This paper examines what in fact has happened to the prices of commodities used in the world food economy, and what the changes imply. It compares two recent periods about 30 years apart, and considers how price changes affected poor developing countries and food security within them.

We found that the world prices of cereals largely held their own in relation to manufactures but they fell sharply against the prices of leading inputs to agriculture. This tendency was even stronger among major export crops of poor countries. Many farmers and farmworkers therefore failed to gain full benefit from rising food prices, as their inputs rose more in price than their produce.

All of this suggests not so much a crisis of agriculture or food supplies in general as of high-input, intensive agriculture in particular. This is reflected in continuing low farm incomes worldwide. It is especially damaging for the numerous countries where food imports have grown while the real prices of exports have fallen. For most developing countries the price shock was transmitted from the world economy. They need to be protected from that quarter in order to reduce the risk of such shocks in the future, and to decrease their severity if and when they occur. These approaches are recommended:

  • Reduce reliance on rice, maize and wheat - the major globally traded cereals
  • Review the balance between domestic food production and crops for export
  • Reduce reliance in agriculture on oil, agro-chemicals and fertilisers. The following policies would help
  • In food and agriculture, give precedence to trade with neighbouring countries and to domestic trade
  • Permit greater leeway for border controls in agricultural trade
  • Switch incentives to encourage the production and consumption of non-traded and traditional crops
  • Reduce reliance on mineral and chemical fertilisers by promoting green manures, agroforestry and other ecologically sustainable techniques
  • Build up natural resilience and sustainability by using traditional crops and methods, and agroecology.