The Intersection of Trade Policy, Price Volatility, and Food Security

Posted: 8 Oct 2014

See all articles by Kym Anderson

Kym Anderson

University of Adelaide - Centre for International Economic Studies (CIES); Centre for Economic Policy Research (CEPR); Australian National University

Date Written: November 2014

Abstract

The volatility of food prices has always concerned national governments, especially those of open developing economies, as it undermines their perceived national food security. A common policy approach has been to partially insulate their domestic market from international food price fluctuations by varying restrictions on their imports or exports. Unfortunately, such domestic stabilization measures amplify international price fluctuations. This article explains conceptually, and illustrates empirically, how insulation measures do little to advance national food security and collectively imperil global food security. Many countries also intervene to alter the trend level of domestic farm product prices, again most commonly with the use of trade restrictions. The latter policies have the unintended consequence of thinning international food markets, adding to their volatility. The article concludes by pointing to alternative ways for governments to boost food security for vulnerable households; such alternatives have become far more feasible in recent times, thanks to the information and communication technology revolution.

Suggested Citation

Anderson, Kym, The Intersection of Trade Policy, Price Volatility, and Food Security (November 2014). Annual Review of Resource Economics, Vol. 6, Issue 1, pp. 513-532, 2014, Available at SSRN: https://ssrn.com/abstract=2507238 or http://dx.doi.org/10.1146/annurev-resource-100913-012600

Kym Anderson (Contact Author)

University of Adelaide - Centre for International Economic Studies (CIES) ( email )

School of Economics
Adelaide SA 5005
Australia
+61 8 8313 4712 (Phone)
+61 8 8223 1460 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Australian National University ( email )

Arndt-Corden Dept of Economics
Coombs Building
Canberra, AK ACT 2600
Australia
+61 8 8313 4712 (Phone)

HOME PAGE: http://publicpolicy.anu.edu.au/crawford_people/content/staff/acde/kanderson.php

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