This book examines the issue of price volatility in agricultural commodities markets and how
this phenomenon has evolved in recent years. The factors underlying the price spike of 2007-08
appear to be global and macroeconomic in nature including the rapid growth in demand by
developing countries the international financial crisis and exchange rate movements. Some of
these factors are new appearing as influences on price volatility only in the last decade.
Although volatility has always been a feature of agricultural commodity markets the evidence
suggests that volatility has increased in certain commodity markets. A growing problem is that
agricultural price shocks and volatility disrupt agricultural markets economic incentives and
incomes. With increased globalization and integration of financial and energy markets with
agricultural commodity markets the relationships between markets are expanding and becoming
more complex. When a crisis such as a regional drought food safety scare or a financial crisis
hits a particular market policy-makers often do not know the extent to which it will impact on
other markets and affect producer consumer and trader decisions. Including contributions from
experts at the World Bank the Food and Agriculture Organization of the United Nations the
USDA and the European Commission the research developed throughout the chapters of this book
is based on current methodologies that can be used to analyze price volatility and provide
directions for understanding this volatility and the development of new agricultural policies.
The book highlights the challenges facing policy makers in dealing with the changing nature of
agricultural commodities markets and offers recommendations for anticipating price movements
and managing their consequences. It will be a practical guide for both present and future
policy-makers in deciding on potential price-stabilizing interventions and will also serve as
a useful resource for researchers and students in agricultural economics.
