Book Review: Agricultural Markets Instability:Revisiting the Recnt Food Crisis
IDSAsr | 15 Mar 2016

Food market is the developing world's gas station. Since the financial and food price crises of 2007, market instability has been a topic of major concern to agricultural economists and policy professionals. This volume provides an overview of the key issues surrounding food prices volatility, focusing primarily on drivers, long-term implications of volatility and its impacts on food chains and consumers.

The book explores which factors and drivers are volatility-increasing and which others are price level-increasing, and whether these two distinctive effects can be identified and measured. It considers the extent to which increasing instability affects agents in the value chain, as well as the actual impacts on the most vulnerable households in the EU and in selected developing countries. It also analyses which policies are more effective to avert and mitigate the effects of instability.

This book seeks to improve the understanding of what happened (and why) on both world and domestic markets during at post the food crisis 2007-2008. It is the final output of the research project ULYSSES (Understanding and coping with food markets voLatilitY towards more Stable World and EU food SystEmS). This project's goal was to provide general, but sufficiently detailed responses to the main questions that have been recently posed in the literature and debated in the political sphere: what caused the food crises 2006-2008? Why markets became more volatile? Are there also long-term factors evolving in a way that they will make markets more vulnerable to supply or macro-economic shocks? How do agents in the value chain respond to markets instability? How do food consumer prices respond to changes in food prices? To what extent are households in LIC and HICs affected by food price increases? Covering a wide range of issues (drivers, spill-over effects, fundamentals, transmission, value chain agents' perspective, impact on consumers, and policies) and from different time perspectives (short-, medium- and long-term); geographical (EU, low- and middle- countries and global); market-base (frequent market data, weekly, monthly and annual prices; EU and international markets), ULYSSES aimed at drawing also policy relevant conclusions.

The book is structured into three parts. Part I contains six chapters devoted to synthesizing the current knowledge in four domains: volatility drivers, long-term factors, food supply chain and contextual facts and impacts on consumers. Chapter 2 review the literature qualifying the findings based on the degree of consensus among different authors about similar questions. The chapter's main contribution is to identify question in need of further investigation. Chapter 3 reviews the concepts and measurement approaches of price volatility, ask whether agricultural market's volatility has increased since 2007 and analyses spillovers within products of related markets. Chapter 4 turns on major midterm drivers of markets' instability, offering sets of stimulation projections of climate change on the main commodities' price level and variability. Chapter 5 summaries the main conclusions of the EUPROJECT TRANSFOP and draws some policy lessons coming from very detailed and thorough analyses of the functioning of several food chains in selected EU counties. The chapter looks at the impact of business concentration and food supply consolidation and how these influence price transmission and adjustment. Building on pioneering analyses of retail scanner prices and food supply chain in Europe, the chapter concludes by making four recommendations for improving EU food supply. Chapter six looks at the contextual factors that drive volatility of prices in food supply chains. It reviews the factors affecting price level and volatility transmission that can have desirable effects on one type of transmission, but may have the opposite effects on the other type of transmission and also cover the role of contractual tools to manage price risks. Chapter 7 reviews the literature on the impact of increased consumer price and volatility in both the EU and developing countries. The significant findings is that consumer price of food and staples behaved quite differently across counties regardless of their income level or whether they share a common currency(euro).Chapter also reviews the literature on food price behaviour and the welfare effects on consumers in the EU and in low income countries.

Part II with five shorter chapters provide the view of an officer of EU about markets financialization (chapter 8); two representative organization of EU agricultural producers German Pigs (chapter 9) and European cereals (chapter10); an EU dairy processor (Chapter 11) and an NGO with intense activity in sub-Saharan Africa (Chapter 12).

Part III consisting of two chapters, focuses on business and policy strategies to manage and cope with agricultural and food price instability (chapter 13) is focused on LIC's and chapter 14 on business strategy for supply agents in the EU. The main policy conclusion of the chapter is that actors' perception of price volatility can suggest when market interventions are needed. CAP measures encouraging producer organization and inter branch organizations are useful policy measures to increase cooperation in the chain. Another area of policy support concern future markets. Actors in Dutch dairy and Bulgarian wheat sectors expressed an interest in future market and policy makers could therefore consider investigating the needs and possibilities for the establishment of such markets.

Developed from the work of the European-based ULYSSES project, the book synthesizes the most recent literature on the topic and presents the views of practitioners, businesses, NGOs and farmers' organizations. It draws policy responses and recommendations for policy makers at both European and on international levels. It is a good reading when one is attempting to understand about controversies and issues related to agricultural market instability.