Tackling rural poverty, together

Extract

Food price risks and instability are perennial issues that have dogged food policy debates for decades. Their persistence is understandable, given the continued importance of food staples as a wage good, their high share of national income and expenditures in low-income countries, and political sensitivities to sharp changes in food prices. This new study aims to provide guidance on how to make the transition from state-dominated markets to private markets in ways that do not expose producers and consumers to the risk of unacceptable price spikes and collapses. Five key questions are addressed:

1. What are the sources and magnitudes of food price shocks?
2. What are the magnitudes (actual and potential) of the economic and social costs stemming from food price instability inlow-income countries?
3. What is the status of food market reforms, and what can be learned from the experience to date?
4. How can countries sequence reforms in ways that promote efficient market development and protect the interests of the poor?
5. What are appropriate policy responses to food price instability and risk in a liberalized market environment?

This report marshals the “best thinking” globally to outline a framework for analyzing policy responses – conventional and emerging. The report also reviews experiences with policy reform across low-income countries of Asia and Africa, including relevant experience from other regions (particularly Latin America, where most countries have implemented extensive reforms). The report draws extensively on contributions from academics and practitioners who shared their knowledge at an international workshop on this theme held in Washington, D.C., from February 28 to March 1, 2005.  Finally, this report draws on the broader knowledge base within the World Bank and the wider development community.