"Knowledge as a First Step Towards Less Volatile Markets" presentation by David Laborde at Launch of IFPRI Office for West and Central Africa on 17 May 2011

1. Knowledge as a first step towards less volatile markets David Laborde Senior Research Fellow Markets Trade and Institutions division International Food Policy Research Institute Panel discussion “Rising global food prices: Causes, Impacts, and Response Strategies” Dakar, May 17, 2011

2. A globalpublic goods story Reducing price instability is a global public good Benefits consumers and producers On the short run and the long run (less risk = more investment) As any public good, how to provide it? Who is going to pay for it?  Global Governance Do we need policies? Yes, if they are supported by scientific evidences Promote the few good ones, deter the others Role of knowledge to Target and reduce market imperfections (e.g. asymmetry of information) Provide right signal to policy makers Build the global governance and promote enlightened negotiations (e.g. trade rules) Information and a safe and fair trading system are global public goods too!

3. New York Times "No Wheat Shortage, but Prices May Rise" Financial Times Russia grain export ban sparks price fears Published: August 5 2010 10:50 Voice of America "Wheat Prices Soar after Russia Bans Exports" WSJ Wheat Prices Hit 2-Year Highs Following Russian Ban Aug 5, 2010 Economic Times (India) "Russian Crisis Won’t Impact Global Wheat Supplies, Prices" The Diane Rehm Show (USA) "World Wheat Supplies" Radio France Internationale, English to Africa service "Russia Wheat Ban Raises Food Security Fears" Radio France Internationale, Latin America Service Asia Sentinel "Is Another Food Crisis Coming?" BBC World News America "From Farmers to Bakers: What the Wheat Shortfall Means“ Financial Times Prospect of Russian grain imports lifts wheat Published: August 19 20 Bloomberg Wheat Prices Jump Most in Week as Argentina, Russia Crops Hurt by Drought Public Good #1 Relevant and accurate Information

4. CBOT wheat prices From Torero 2011 Page 4

5. CBOT wheat prices Promote transparency From Torero 2011 Page 5

6. CBOT wheat prices – IFPRI model to detect abnormal spikes 95th Percentile Drought in Russia began + Locus in Australia Abnormalities Source, Martins-Filho, Torero, Yao (2010) Define and Detect Volatility Page 6

7. Public Good #2 Global Governance for a fair and stable trade system

11. Explosion of biofuel production and consumption Effects on Food/Feed prices and their volatility All Biofuels are not equals (e.g. ethanol less strong effects on food prices than biodiesel) Large distortions: protection, subsidies, mandates A collection of bad policies that create negative externalities for Food/Feed consumers without maximizing environmental gains See Al Riffai, Laborde and Dimaranan 2010, Laborde 2011 New domestic policies = New externalities Liberalize trade in Biofuels and its feedstocks to avoid concentration on food/feed related products Bring more flexibilies in existing policies: eliminate mandates on biofuels and remove subsidies

12. IFPRI as a knowledge brokers with African partners A long partnership New channels: www.foodsecurityportal.org New opportunities: The AGRODEP project as a support to CAADP Next workshop in June in Dakar with sessions on methodologies to address Food prices.