Chapter 08: Food Price Volatility and Policy Responses: Food price volatility and policies

The issue of food price volatility poses an important problem regarding food security, economic stability, and well-being of households in developing and emerging economies like Pakistan. This chapter is an exhaustive analysis of existing literature about food price volatility including factors that affect it and consequences for different sectors, based on evidence from the international, regional, and Pakistani context. Volatility can be affected by supply side issues, which include climatic variations, production-related problems, along with demand side and macroeconomic conditions. Based on the literature review of existing research, one can conclude that food price variability has a negative impact on household well-being, food security, and nutrition outcomes, especially concerning more vulnerable groups. With the increase in prices, there is a change in consumers' behavior; specifically, people switch to a less diverse diet with lower quality products. Food price variability also influences the economy by affecting industries and macroeconomic stability. However, there are several approaches policymakers may adopt to overcome this problem, including subsidies, tariffs, and other policy tools. The chapter points out important areas requiring further research, such as the gender issue and disparities between urban and rural areas. The importance of evidence-based policymaking that considers an integrated approach to food security is highlighted.