An October 13 New York Times headline article warned that an increasing volatile market for grains could lead to a repeat of the 2008 food price run-up. That price spike left over 1 billion people in a state of food insecurity-a threshold symbolic in its extreme order of magnitude and in the challenges it presents for combating global hunger in the future. In a paper released December 20 in Population and Development Review FSE director Rosamond L. Naylor and deputy director Walter P. Falcon provide insight into the causes and consequences of these volatile events.

"Price variability, particularly spikes, has enormous impacts on the rural poor who spend a majority of their income on food and have minimal savings," said Naylor. "Impacts at the local level have not been well measured, yet are key to improving food security globally." 

Expectations--often faulty--have played a key role in price volatility over the past decade. Uncertain exchange rates and macro policies added to price misperceptions, as did flurries of speculative activity in organized futures markets, particularly as a result of the growing biofuels market.

"These events highlight new linkages between agriculture-energy and agriculture-finance markets that affect the world food economy today," explained Falcon. "More importantly, volatile markets compound problems of low crop productivity, increase reliance on food imports, and aggravate other internal causes of instability--conflict, weak institutions, and inadequate infrastructure--that typically plague the world's poorest countries."

To see how the rural poor were impacted on a local scale, Naylor and Falcon looked at Ghana, Uganda, Malawi, Guatemala, and India. Price changes at the local level during the 2008 price spike were frequently half that of international prices, primarily as a consequence of domestic food and trade policies.

"The price bubble was undeniably grim for poor consumers, particularly for households living under $1/day or $2/day, but not as debilitating as many commentators suggested," said Falcon. "Unfortunately, most price stabilization efforts aimed at the poor, however well intended, ended up helping larger net producers much more than those at the margin."

Additionally, domestic self-sufficiency polices tended to have long-term negative impacts on the international market when governments lacked the resources to defend a targeted price or were ‘large actors' with significant shares of global production or consumption.

For example, in the spring of 2008, the Indian government placed a ban on rice exports--a major staple in the country--when it feared significant increases in grain prices and a spread of Ug99 (wheat rust). This ban affected food prices from Asia to Africa, created mini-panics within food importing countries, and added to global grain price variability. It underscored the growing food-security and crop interdependencies among nations arising from pathogens, prices, and policies.

The extreme heat wave that hit Russia and Eastern Europe in the summer of 2010, coupled with floods in Pakistan, declining estimates of maize stocks in the U.S., and uncertainties about global GDP growth have captured the attention of many analysts and policymakers. What will happen to prices in terms of spikes, trends, and variations during 2011-2013 and beyond is uncertain.

What is known, said Naylor, is that the causes and consequences of food-price variability deserve much more attention if we are going to alleviate global food insecurity in the future.

Rosamond L. Naylor discussed the multiple challenges for achieving food security in this century‐‐ranging from economic volatility to climate change‐‐and highlighted ways in which the boundaries of analysis and action in the agricultural development community must change to address these challenges. She used a series of project and policy examples to illustrate the changes needed from international to local scales. The talk was part of a 2010 series sponsored by the SMEP Academy titled "Taking Sustainability Seriously: The Role of Knowledge Institutions".

Lori McVay, associate director for finance and administration at the Freeman Spogli Institute for International Studies' Program on Food Security and the Environment (FSE), is one of two recipients of the Marsh O'Neill Award for outstanding contributions to Stanford's research mission.

This year, two staff members - one in the Freeman Spogli Institute for International Studies and another in the School of Medicine - will receive Marsh O'Neill Awards.

Now in its 20th year, the award honors staff members who have made outstanding contributions to Stanford's research mission.

This year's honorees are Lori McVay, associate director for finance and administration at the Program on Food Security and the Environment, a joint program of the Freeman Spogli Institute for International Studies and the Woods Institute for the Environment; and Kathleen Thompson, director of the Research Management Group in the School of Medicine.

The dean of research established the Marsh O'Neill Award in 1990. It was named for its first recipient, Marshall D. O'Neill, who retired that same year after nearly four decades as associate director of the W. W. Hansen Experimental Physics Laboratory. A faculty panel chooses the award winner.

McVay and Thompson will be the 30th and 31st staff members to receive the award.

The award presentation - which includes a check for $5,000 for each winner - will take place at 4 p.m. Monday at the Faculty Club. Anyone who knows either of the winners and would like to congratulate them is welcome to attend.