The Environmental Food Crisis

STABILITY OF FOOD SUPPLY The second dimension of food security is the stability of food supply. Temporary disruption of supplies can have long-term impacts. The two options for fulfilling demand – food imports and domestic production – imply several reasons for instability of food supplies. Amajor reason for instability in food supply is high fluctuation in food prices (price volatility). Volatile prices lead to poor investment strategies of producers and immediate impacts on consumers, especially in developing countries where consum- ers spend a large share of their income on food. Another source of instability is conflicts, which increase food supply risks.

PRICE VOLATILITY

Low and fluctuating prices are a core problem for stable food production. Agricultural price volatility increases the uncer- tainty faced by farmers and affects their investment decisions, productivity and income. Lagging investments can be a con- straint in meeting changing consumer demands. For willing- ness to invest it is the volatility of the revenue flows that mat- ters. Instability in prices is related to factors in the agricultural domain as well as in other sectors.

83