How Do Governments Respond to Food Price Spikes? Lessons from the Past

Food prices in international markets spiked upward in 2008, doubling or more in a matter of months. Evidence is still being compiled on policy responses over the following two years, but lessons can be learned from the price spike in 1973, the magn...

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Main Authors:	Anderson, Kym, Nelgen, Signe
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	AGRICULTURAL ECONOMICS AGRICULTURAL POLICIES AGRICULTURAL POLICY AGRICULTURAL PRICE AGRICULTURE BEEF CHANGES IN PRICES CLIMATE CLIMATE CHANGE COCOA COMMODITIES COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICES COMPARATIVE ADVANTAGE CONSUMER PRICES CONSUMER SPENDING CONSUMERS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES DOMESTIC PRODUCTION ECONOMIC WELFARE ELASTICITY EXOGENOUS SHOCKS EXPORTS EXTREME WEATHER EXTREME WEATHER EVENTS FOOD MARKETS FOOD POLICIES FOOD PRICE FOOD PRICES FOOD RIOTS FREE MARKETS FREE TRADE GDP GENERAL EQUILIBRIUM MODEL GOVERNMENT ACTIONS GOVERNMENT INTERVENTION GRAINS GROUNDNUT GROUNDNUT OIL GROUNDNUTS IMPORTS INCOME INCOMES INEFFICIENCY INSURANCE INTERNATIONAL COMMERCE INTERNATIONAL MARKETS INTERNATIONAL TRADE LIVESTOCK PRODUCTS LOW-INCOME COUNTRIES MAIZE MARKET DISTORTIONS MARKET FAILURE MARKET PARTICIPANTS MARKET STABILIZATION MONOPOLY OUTPUT PER CAPITA INCOME POLICY MAKERS POLITICAL ECONOMY PRICE CHANGES PRICE DISTORTION PRICE DISTORTIONS PRICE MOVEMENT PRICE STABILIZATION PRODUCER PRICE PRODUCER PRICES RISING PRICE SOYBEAN STABILIZATION POLICIES SUGAR TAX TAX RATE TAXATION TOTAL CONSUMPTION TRADE NEGOTIATIONS TRADE POLICIES TRADE POLICY TRADE REFORMS TRADE TAX TRANSPARENCY URUGUAY ROUND VOLATILITY WHEAT WORLD MARKETS WORLD TRADE WORLD TRADE ORGANIZATION WTO
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100825101222 http://hdl.handle.net/10986/3887

id	okr-10986-3887
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spelling	okr-10986-38872021-04-23T14:02:13Z How Do Governments Respond to Food Price Spikes? Lessons from the Past Anderson, Kym Nelgen, Signe AGRICULTURAL ECONOMICS AGRICULTURAL POLICIES AGRICULTURAL POLICY AGRICULTURAL PRICE AGRICULTURE BEEF CHANGES IN PRICES CLIMATE CLIMATE CHANGE COCOA COMMODITIES COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICES COMPARATIVE ADVANTAGE CONSUMER PRICES CONSUMER SPENDING CONSUMERS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES DOMESTIC PRODUCTION ECONOMIC WELFARE ELASTICITY EXOGENOUS SHOCKS EXPORTS EXTREME WEATHER EXTREME WEATHER EVENTS FOOD MARKETS FOOD POLICIES FOOD PRICE FOOD PRICES FOOD RIOTS FREE MARKETS FREE TRADE GDP GENERAL EQUILIBRIUM MODEL GOVERNMENT ACTIONS GOVERNMENT INTERVENTION GRAINS GROUNDNUT GROUNDNUT OIL GROUNDNUTS IMPORTS INCOME INCOMES INEFFICIENCY INSURANCE INTERNATIONAL COMMERCE INTERNATIONAL MARKETS INTERNATIONAL TRADE LIVESTOCK PRODUCTS LOW-INCOME COUNTRIES MAIZE MARKET DISTORTIONS MARKET FAILURE MARKET PARTICIPANTS MARKET STABILIZATION MONOPOLY OUTPUT PER CAPITA INCOME POLICY MAKERS POLITICAL ECONOMY PRICE CHANGES PRICE DISTORTION PRICE DISTORTIONS PRICE MOVEMENT PRICE STABILIZATION PRODUCER PRICE PRODUCER PRICES RISING PRICE SOYBEAN STABILIZATION POLICIES SUGAR TAX TAX RATE TAXATION TOTAL CONSUMPTION TRADE NEGOTIATIONS TRADE POLICIES TRADE POLICY TRADE REFORMS TRADE TAX TRANSPARENCY URUGUAY ROUND VOLATILITY WHEAT WORLD MARKETS WORLD TRADE WORLD TRADE ORGANIZATION WTO Food prices in international markets spiked upward in 2008, doubling or more in a matter of months. Evidence is still being compiled on policy responses over the following two years, but lessons can be learned from the price spike in 1973, the magnitude and speed of which were similar to those experienced around the 2008 spike. In developing countries, policy responses to the earlier spike lowered the (negative) nominal assistance coefficient for agriculture by one-third between 1972 and 1974 before it was returned to the same level by 1976. That was twice the extent of the fall and recovery of the (positive) nominal assistance coefficient for high-income countries. However, the trade and welfare effects of those changes were much less for developing than high-income countries, suggesting the dispersion of distortion rates among farm industries decreased in developing countries. The adjustments were virtually all due to suspension and then reinstatement of import restrictions, with changes in export taxation by developing countries playing an additional (but minor) role during 1972-74. This beggar-thy-neighbor dimension of each government s food policies is worrying because it reduces the role that trade between nations can play in bringing stability to the world s food markets. More effort appears to be needed before a multilateral agreement to desist can be reached. 2012-03-19T18:41:35Z 2012-03-19T18:41:35Z 2010-08-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100825101222 http://hdl.handle.net/10986/3887 English Policy Research working paper ; no. WPS 5403 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	AGRICULTURAL ECONOMICS AGRICULTURAL POLICIES AGRICULTURAL POLICY AGRICULTURAL PRICE AGRICULTURE BEEF CHANGES IN PRICES CLIMATE CLIMATE CHANGE COCOA COMMODITIES COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICES COMPARATIVE ADVANTAGE CONSUMER PRICES CONSUMER SPENDING CONSUMERS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES DOMESTIC PRODUCTION ECONOMIC WELFARE ELASTICITY EXOGENOUS SHOCKS EXPORTS EXTREME WEATHER EXTREME WEATHER EVENTS FOOD MARKETS FOOD POLICIES FOOD PRICE FOOD PRICES FOOD RIOTS FREE MARKETS FREE TRADE GDP GENERAL EQUILIBRIUM MODEL GOVERNMENT ACTIONS GOVERNMENT INTERVENTION GRAINS GROUNDNUT GROUNDNUT OIL GROUNDNUTS IMPORTS INCOME INCOMES INEFFICIENCY INSURANCE INTERNATIONAL COMMERCE INTERNATIONAL MARKETS INTERNATIONAL TRADE LIVESTOCK PRODUCTS LOW-INCOME COUNTRIES MAIZE MARKET DISTORTIONS MARKET FAILURE MARKET PARTICIPANTS MARKET STABILIZATION MONOPOLY OUTPUT PER CAPITA INCOME POLICY MAKERS POLITICAL ECONOMY PRICE CHANGES PRICE DISTORTION PRICE DISTORTIONS PRICE MOVEMENT PRICE STABILIZATION PRODUCER PRICE PRODUCER PRICES RISING PRICE SOYBEAN STABILIZATION POLICIES SUGAR TAX TAX RATE TAXATION TOTAL CONSUMPTION TRADE NEGOTIATIONS TRADE POLICIES TRADE POLICY TRADE REFORMS TRADE TAX TRANSPARENCY URUGUAY ROUND VOLATILITY WHEAT WORLD MARKETS WORLD TRADE WORLD TRADE ORGANIZATION WTO
spellingShingle	AGRICULTURAL ECONOMICS AGRICULTURAL POLICIES AGRICULTURAL POLICY AGRICULTURAL PRICE AGRICULTURE BEEF CHANGES IN PRICES CLIMATE CLIMATE CHANGE COCOA COMMODITIES COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICES COMPARATIVE ADVANTAGE CONSUMER PRICES CONSUMER SPENDING CONSUMERS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES DOMESTIC PRODUCTION ECONOMIC WELFARE ELASTICITY EXOGENOUS SHOCKS EXPORTS EXTREME WEATHER EXTREME WEATHER EVENTS FOOD MARKETS FOOD POLICIES FOOD PRICE FOOD PRICES FOOD RIOTS FREE MARKETS FREE TRADE GDP GENERAL EQUILIBRIUM MODEL GOVERNMENT ACTIONS GOVERNMENT INTERVENTION GRAINS GROUNDNUT GROUNDNUT OIL GROUNDNUTS IMPORTS INCOME INCOMES INEFFICIENCY INSURANCE INTERNATIONAL COMMERCE INTERNATIONAL MARKETS INTERNATIONAL TRADE LIVESTOCK PRODUCTS LOW-INCOME COUNTRIES MAIZE MARKET DISTORTIONS MARKET FAILURE MARKET PARTICIPANTS MARKET STABILIZATION MONOPOLY OUTPUT PER CAPITA INCOME POLICY MAKERS POLITICAL ECONOMY PRICE CHANGES PRICE DISTORTION PRICE DISTORTIONS PRICE MOVEMENT PRICE STABILIZATION PRODUCER PRICE PRODUCER PRICES RISING PRICE SOYBEAN STABILIZATION POLICIES SUGAR TAX TAX RATE TAXATION TOTAL CONSUMPTION TRADE NEGOTIATIONS TRADE POLICIES TRADE POLICY TRADE REFORMS TRADE TAX TRANSPARENCY URUGUAY ROUND VOLATILITY WHEAT WORLD MARKETS WORLD TRADE WORLD TRADE ORGANIZATION WTO Anderson, Kym Nelgen, Signe How Do Governments Respond to Food Price Spikes? Lessons from the Past
geographic_facet	The World Region The World Region
relation	Policy Research working paper ; no. WPS 5403
description	Food prices in international markets spiked upward in 2008, doubling or more in a matter of months. Evidence is still being compiled on policy responses over the following two years, but lessons can be learned from the price spike in 1973, the magnitude and speed of which were similar to those experienced around the 2008 spike. In developing countries, policy responses to the earlier spike lowered the (negative) nominal assistance coefficient for agriculture by one-third between 1972 and 1974 before it was returned to the same level by 1976. That was twice the extent of the fall and recovery of the (positive) nominal assistance coefficient for high-income countries. However, the trade and welfare effects of those changes were much less for developing than high-income countries, suggesting the dispersion of distortion rates among farm industries decreased in developing countries. The adjustments were virtually all due to suspension and then reinstatement of import restrictions, with changes in export taxation by developing countries playing an additional (but minor) role during 1972-74. This beggar-thy-neighbor dimension of each government s food policies is worrying because it reduces the role that trade between nations can play in bringing stability to the world s food markets. More effort appears to be needed before a multilateral agreement to desist can be reached.
format	Publications & Research :: Policy Research Working Paper
author	Anderson, Kym Nelgen, Signe
author_facet	Anderson, Kym Nelgen, Signe
author_sort	Anderson, Kym
title	How Do Governments Respond to Food Price Spikes? Lessons from the Past
title_short	How Do Governments Respond to Food Price Spikes? Lessons from the Past
title_full	How Do Governments Respond to Food Price Spikes? Lessons from the Past
title_fullStr	How Do Governments Respond to Food Price Spikes? Lessons from the Past
title_full_unstemmed	How Do Governments Respond to Food Price Spikes? Lessons from the Past
title_sort	how do governments respond to food price spikes? lessons from the past
publishDate	2012
url	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100825101222 http://hdl.handle.net/10986/3887
_version_	1764388859252047872

How Do Governments Respond to Food Price Spikes? Lessons from the Past

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