In proposing measures to curb erratic swings in food prices, global leaders have conflated high prices with unstable ones. That's a mistake. In fact, the real problem is expensive food, so policies aimed at curbing volatility -- such as export bans, price stabilization schemes, and subsidies for farmers -- won't help those who need it.
At the end of 2010 and beginning of 2011, world food prices rose sharply, hitting an all-time high in February 2011. The spike arose from an unlucky combination of increased consumer demand due to rapid economic growth in emerging markets in Asia; the diversion of food crops toward biofuel production in the United States and elsewhere; poor harvests due to bad weather in key grain exporting zones such as Australia, Russia, and South America; and increased speculation in agricultural commodity markets, as investors fled a weak dollar.
