[Working Paper No. 08/2009]
The dramatic rise and fall of world food prices in 2007-08 was largely a result of speculative activity in global commodity markets, enabled by financial deregulation measures in the US and elsewhere. Despite the recent fall in agricultural prices in world trade, the food crisis has exacerbated in many developing countries where food prices remain high and even continue to increase. The financial crisis also directly operates to increase food insecurity by imposing constraints on fiscal policies and food imports in balance of payments-constrained developing countries, causing exchange rate devaluation through capital flight and adversely affecting employment, thereby reducing the ability of vulnerable groups to purchase food.
08_2009 (Download the full text in PDF format)