Double-Edged Prices

The recent sharp increase in food prices should have benefited millions of poor people who make their living from agriculture. However, decades of misguided policies by developing country governments on agriculture, trade, and domestic markets—often promoted by international financial institutions and supported by donor countries—have prevented poor farmers and rural workers from reaping the benefits of higher commodity prices. As a result, the crisis is hurting poor producers and consumers alike, threatening to reverse recent progress on poverty reduction in many countries. To help farmers get out of poverty while protecting poor consumers, developing country governments, with the support of donors, should invest now into smallholder agriculture and social protection.