Economic Find: The Food Price Crisis

Since 2005, global food commodity prices have been increasingly volatile and, on the whole, rising rapidly. The answer to what causes these changes is of course extraordinarily complex. Rising oil prices, a widespread reduction in agricultural investment, a massive increase in futures market speculation, increased scarcity of natural resources like water and land, a global shift in diets as more people eat like Westerners, and even more all contribute to these price spikes.

This kind of price behavior has a fearsome impact on food security; it can push vulnerable people deep into the mires of poverty and starvation. This is especially true for a country like Ethiopia, which has seen its grain prices double and sometimes triple.  Ethiopia has no food reserves so they are highly dependent on food imports and food aid, and little money to spend when prices for those imports spike.

Are there solutions to the global food price crisis?  Yes, but it involves nothing short of revamping our food system to include better regulation of markets, more sustainable agriculture and locally developed food systems, and the understanding that food is a universal human right.

Food Price Volatility

Created by Member Economist Sue Holmberg

September 2011


The FAO Food Price Index measures the change in international prices of a basket of five food commodity groups.



Committee on World Food Security. July 2011. Price Volatility and Food Security. High Level Panel of Experts on Food Security and Nutrition.

Food and Agriculture Organization.

Institute for Agriculture and Trade Policy. September 2008. “The Global Food Price Crisis.” Trade and Global Governance Division.