Welcome to the Research Project "Analysis and Implementation of Measures to Reduce Price Volatility in National and International Markets for Improved Food Security in Developing Countries"

Volatility describes price fluctuation around a long-term trend. After a long period of low and stable prices, food price levels increased in 2007 and 2008 and remain volatile. Excessive volatility – sudden and extreme food price shocks – threatens the food security in particular of poor people who spent 60-70 percent of their income for food. As they lack financial resources and buffer mechanisms, calorie intake and the quality of the diet with respect to micronutrients are reduced with long-lasting impacts for health, motoric and mental development for children. Excessive price shocks make production, investments, storage and trade more complex as uncertainty about future prices increases.

The volatility research project analyzes the drivers of food prices and price volatility ranging from speculation, storage and trade, production and demand shocks, its impacts on food security and food production as well as policy and risk management strategies to reduce volatility and better deal with volatile prices. The research focuses on international commodity markets and case studies in selected countries. The aim of the project is not only to better understand causes and impacts of price shocks and price risk but also to develop and provide tools for identifying upcoming crises.