Policy guide for countries hit hard by high food prices

Baku, January 26 (AZERTAC). FAO has called upon countries to carefully examine the implications of high food prices and not to take any policy actions that might appear useful in the short term but could have harmful, longer-term effects or even aggravate the situation.

The agency today published an updated guide for policy-makers in developing countries to assist them in addressing the negative impacts of high food prices or to tap into their opportunities.

"The experience of the 2007-2008 food crisis shows that in some cases, hastily taken decisions by governments to mitigate the impact of the crisis, have actually contributed to or exacerbated the crisis and aggravated its impact on food insecurity," said Richard China, Director of FAO`s Policy and Programme Development Support Division.

"Export restrictions, for example, applied by some surplus food-producing countries, exacerbated the global food market situation during the 2007/2008 crisis. FAO strongly advises against such measures, as they often provoke more uncertainty and disruption on world markets and drive prices up further globally, while depressing prices domestically and hence curtailing incentives to produce more food."

The FAO Food Price Index, a measure of basic food prices at international level, peaked in December 2010. "With this new price shock only two years after the crisis in 2007/08 there is a serious concern now about implications for food markets in vulnerable countries," added China.

The guidelines stress that low-income food-deficit countries have been hit hard by high food prices in recent years. Many of these countries have to pay larger food import bills when food prices are soaring. Almost all countries in Africa are net importers of cereals.

The people most affected by higher food prices are net food buyers such as urban residents and small farmers, fishers, foresters, pastoralists and agricultural labourers who do not produce enough food to cover their needs. The poorest among them spend more than 70-75 percent of their income on buying food.

Net food-exporters should benefit from high food prices and could experience an improvement in their terms of trade and more income. However, experience of the 2007-8 food crisis showed that a variety of supply side constraints limited the supply response to higher prices in most developing countries.

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