Food Security In an Age of Falling Commodity and Food Prices : The Case of Sub-Saharan Africa
But , prices of food commodities have started to decline since the beginning of 2011 and they have suddenly fallen steeply since May 2014 . The nominal FAO Food Price Index ( FPI ) ( FAO b , 2016 ) has fallen , almost uninterruptedly , between March 2014 and the beginning of 2016 . For instance , the FPI lost ~ 50 points ( a quarter of its value ) between 2014 and 2015 and recently slumped to a 6 year low of 149,3 points in January 2016 .
A statistically significant upward shift in trend is as remarkable from August 2006 to January 2011 as a downward shift from January 2011 to the present . As the following graph indicates , the FPI as well as the rice price index decreased sharply since 2011 ( rice being a major cereal in the diet of a large part of SSA population , especially in urban areas which include > 50 % of population ).
As the FAO indicates , since 2008 , the cereal indices have exhibited progressively lower volatility after each successive change point and price behavior has reverted to that before the 2008 episode , in which prices were widely regarded as falling and with lower volatility . Rice is the only commodity showing a comparable change in trend . In terms of variability , both grains and rice exhibit behavior similar to the FPI , but with an additional change point during the period of elevated volatility .
The fall in the FPI is the result of sharp declines in the prices of rice , grains , sugar , and vegetable oils , but not all foodstuffs have followed these trends . According to the FAO , agricultural commodities are going through a period of lower and less volatile prices .
The Driving Forces of the Decline of Food and Commodity Prices
This decline of food prices is similar to the decline of the prices of commodities . The index underwent statistically significant changes both in trend and volatility : a period of higher volatility between 2006 and 2011 coincides with an upward trend , followed by a downward trend and lower volatility starting in 2011 .
In the most recent period ( April 2011 to October 2015 ), the commodity price index decreased from 208 to 100 with a sharp decline from summer 2014 . Going back to the driving forces that explained the 2008 sudden escalation of food prices , it seems useful to examine which of these driving forces have lost all pertinence and reversed drastically during the last two years and subsequently , explore the opposite forces that could explain the down trend in the last period . Then it could be of interest to assess the prospective impact of some remaining forces still pertinent today , if any .
Conjectural and structural driving forces could explain the 2008 price surge ( Azoulay 2012 ). Several conjectural forces occurs : a reduced production due to climatic change ( floods in Australia and Argentina , dry weather drought and fires in Russia , and jellies threatening crops in Europe and North America ); the levels of historically low stocks ( 19.4 % in 2007 / 2008 ); the higher cost of energy and transport ( the Reuters-CRB energy index having tripled since 2003 ); an increased production of bio fuels ( 100 million tons of cereals , 4.7 % of the global production of cereals were used in 2007 – 2008 , a large diversion of agricultural land to
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