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Market responses and climate change are endangering the poor
Production shortfalls in global maize supplies and increasing input prices have grave consequences for
developing countries. Along with prices of other commodities, maize prices have more than doubled
over the past 10 years (Index mundi 2010) and may do so again by 2050. Such increases will impose
great hardships on the poor, as the food price surges of 2008 and 2010/2011 made abundantly clear. In
addition, lagging domestic production will place a huge and politically risky burden on developing
country economies, driving up their maize imports from 5% of today’s demand to 24% in 2050, a
proportion that will be priced at around USD 30 billion (Rosegrant et al. 2008).
Even more worrisome, events between 2008 and 2011 showed that food price developments are much
more complex than had previously been assumed. Global food price changes are affected by energy
prices, through their impact on input prices and increasing demands for biofuels, and increasingly by
production conditions and profitability assessments of crops in a relatively small number of global
“bread baskets.” Moreover, traditional market behavior may have been derailed by the speculative
decisions of millions of financial market participants and panic responses of governments with
inadequate access to accurate production and demand information. Maize prices in 2011 were already
as high as had been previously predicted for 2050, based on long‐term supply/demand projections.
Markets lack transparency due to inadequate production/stock/demand estimates and high private
sector involvement. Actual or perceived physical stocks have fallen so much that even relatively small
production fluctuations cause major price fluctuations. Nearly 60% of global maize production comes
from just two countries―the USA, China―even while maize figures among the top three food staples in
56 low‐ and middle‐income countries. Poor harvests in a major US or Chinese breadbasket have caused
much of the production variation in the past (Figure 3); with depleted global stocks, such perturbations
could imply political turmoil for many maize‐importing countries. It seems that the realities of financial
markets and human behavior have overtaken the economic ideals of comparative advantage and
unfettered international trade. An excessive focus on a few breadbaskets has exposed us to an
inacceptable risk that affects the poor and political stability.
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