In their IFPRI Research Monograph, “Reflections on the Global Food Crisis: How did it happen? How has it hurt? and How can we prevent the next one?,” Derek Headey and Shenggen Fan examine the various potential causes of the 2006-2008 run-up in the price of agricultural commodities.
They assert that, as a result of the decline in real food prices between the peak of the 1970’s crisis and 2005, “rich and poor governments alike…saw little need to invest in agricultural production, and reliance on food imports appeared to be a relatively safe and efficient means of achieving national food security.”
Then came the surge in agricultural commodity prices beginning in the fall of 2006 and continued high prices since. As a result, Headey and Fan write: “needless to say, the stability and effectiveness of the world’s food system are no longer taken for granted.” In their monograph they assess “existing explanations of the crisis” in order to identify the most important, with an eye toward proposing solutions that would, in their view, prevent a repeat of the crisis in the future.
While Headey and Fan are willing to accept that falling real prices resulted in declining investment in agricultural production, they do not find that these shrinking real prices caused the crisis as the result of “productivity decline and falling research and development” in the agricultural sector.