The G 20 s efforts will culminate in the Cannes Summit in November. But, when it comes to specific policies, caution will be very much in order, for there is a long history of measures aimed at reducing commodity price volatility that have ended up doing more harm than good.

With regard to commodity prices it was suggested that income, rather than price, fluctuations are the real problem.

CAMBRIDGE The prices of hydrocarbons, minerals, and agricultural commodities have been on a veritable roller coaster. While commodity prices are always more variable than those for manufactured goods and services, commodity markets over the last five years have seen extraordinary, almost unprecedented, volatility.

Popular discontent over food prices has fueled political instability in some countries, most notably in Egypt and Tunisia. Even agricultural producers would prefer some price stability over the wild ups and downs of the last five years.

Food prices have increased by 400 per cent.

Rising energy costs have directly affected prices for basic necessities and food.

(e) Price volatility

But primary product prices remain much more volatile than the prices of manufactured goods and services, causing large fluctuations in producers incomes. This exaggerates the effects of booms and busts.

This relatively inexpensive product has made successful inroads to the Spanish and Italian markets, particularly the catering sector.

Can Food Prices Be Stabilized?

For consumers, the costs are in terms of higher prices and less variety.

Here, the Fed is making a fatal mistake, as it relies heavily on a timeworn inflation forecasting methodology that filters out the special factors driving the often volatile prices of goods like food and energy. The logic is that the price fluctuations will eventually subside, and headline price indicators will converge on the core rate of inflation.

Not only do these industries have lower income elasticity in the international market but they are also subject to fluctuations in the demand and the prices of primary commodities.

The trade of African countries is still dominated by commodities, which are subject to volatile price movements beyond their control.

It is a sector marked by strong price and volume fluctuations.

Prices of food, even staple foods, have shot up beyond the reach of average citizens.

Now, the price of food, many people complain about, but in fact, the price of food is going down, and that's odd because in fact, consumers are not paying for the true cost of food.

It's because of the way the government commodifies food, and the cheap corn and cheap soy that are pushed into our food supply that makes these non nutrient foods really, really cheap.

Tons of food gets plowed under the ground because there s so much of it farmers can t get the prices they want. Tons of cheap food (corn, for instance) is used to create more expensive food (like steak).

Chapter 3. Price control measures Measures intended to control the prices of imported articles for the following reasons (i) to sustain domestic prices of certain products when the import price is inferior to the sustained price (ii) to establish the domestic price of certain products because of price fluctuations in the domestic market or price instability in the foreign market and (iii) to counteract the damage caused by the application of unfair practices in foreign trade.

To achieve stable conditions in commodity trade, including avoidance of excessive price fluctuations, at levels which would

Although these factors insulate the US from the inflationary pressures stemming from exchange rate fluctuations, they increase the vulnerability of other countries, especially emerging economies. Because the dollar prices of most of these countries imports are not very responsive to exchange rate movements, the pass through of those movements into import prices denominated in their home currencies is close to 100 .

WEST LAFAYETTE, INDIANA Food prices have in many cases surpassed the peak levels reached in July 2008. At that time, food price increases were attributed to growing global demand for food commodities, a major decline in the value of the US dollar, crop failures in some parts of the world, and biofuels.

For pork and other commodities with tight supply and quicker price increase, the frequency of inspections should be increased, and illegal activities such as hoarding, raising prices, and colluding with price increases shall be seriously investigated and handled.

Moreover, those countries did not have a diversified export base and were very vulnerable to fluctuations in commodity prices.

Rendahnya harga komoditas dengan penurunan peak to trough lebih dari 30 berlangsung selama durasi yang sama, rata rata sekitar tujuh tahun. Kini kegagalan tersebut memasuki tahun keempatnya dan harga komoditas non minyak (dibandingkan harga ekspor barang manufaktur) telah merosot sekitar 25 .

DPKO has advised OIOS that a subsequent bidding exercise resulted in a higher price for those products.

Apart from wood, gold and diamonds, agricultural production is subject to the vagaries of climate and fluctuations in world commodity prices.

Why Are Commodity Prices Falling?

Wal Mart alone accounted for a nearly 10 per cent drop in food prices in the United States.

For most non oil exporting developing countries, the improvement in commodity prices stimulated 2004 growth, outweighing the negative effects of higher oil prices.

Heavy snow blocked district roads and prevented the movement of food, causing shortages and steep price rises.

In particular, the volatility of food and commodity prices, including petroleum prices, is seriously denting the financing capacity of many poor countries.

If we allow food to be used to produce bio fuels, food prices will be linked to the oil price, as the head of the German farmers association happily announced. Indeed, food prices are currently increasing in Europe, because more and more farmland is being used for bio fuels instead of for food production.

And in the food sector, declining incomes may cause change in consumption patterns towards more traditional diets, thus reducing the imports of high value products.

Security problems and disruptions in production also increased price volatility.

Second, because most exporters also import intermediate inputs that are priced in dollars, exchange rate fluctuations have a limited impact on their costs and thus on their incentive to change dollar prices. And, third, exporters who wish to preserve their share in world markets where prices are largely denominated in dollars choose to keep their dollar prices stable, to avoid falling victim to idiosyncratic exchange rate movements.

In fact, most dollar commodity prices have fallen since the first half of the year. Though a host of sector specific factors affect the price of each commodity, the fact that the downswing is so broad as is often the case with big price swings suggests that macroeconomic factors are at work.

The prices of tropical agricultural products had also fallen against those of temperate agricultural products, and the prices of generic manufactures from developing countries had declined against the prices of manufactures associated with strong intellectual property rights, which basically preserved technological monopolies.

The gap between prices for agricultural produce and for goods it consumes has widened to reach an inadmissible level.

Change due to fluctuation in the cost of fuel and lubricants.

While it is fairly easy to obtain information on the price paid by the importers of a good, it might become difficult to obtain the corresponding price prevailing in the domestic market, especially at a fairly disaggregated level.

The objective was to insulate the consumer from the high cost of foodstuffs resulting from shortages.

In the US, the core inflation rate (which strips out changes in volatile energy and food prices) was 1.6 over the last 12 months. Moreover, the US Federal Reserve, the Bank of England, and the European Central Bank understand that even if energy prices do not rise in the coming year, a stable price level for oil and other forms of energy will cause the inflation rate to rise.

Faced with the erratic nature of agricultural markets, regulation is needed to soften the impact on poorer countries of volatile food prices. This does not mean that protectionism is the way forward, only that taking account of specific issues that affect international farm trade weather, price volatility, or health risks may be necessary from time to time.