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83

STABILITY OF FOOD SUPPLY

The second dimension of food security is the stability of food

supply. Temporary disruption of supplies can have long-term

impacts. The two options for fulfilling demand – food imports

and domestic production – imply several reasons for instability of

food supplies. Amajor reason for instability in food supply is high

fluctuation in food prices (price volatility). Volatile prices lead to

poor investment strategies of producers and immediate impacts

on consumers, especially in developing countries where consum-

ers spend a large share of their income on food. Another source

of instability is conflicts, which increase food supply risks.

PRICE VOLATILITY

Low and fluctuating prices are a core problem for stable food

production. Agricultural price volatility increases the uncer-

tainty faced by farmers and affects their investment decisions,

productivity and income. Lagging investments can be a con-

straint in meeting changing consumer demands. For willing-

ness to invest it is the volatility of the revenue flows that mat-

ters. Instability in prices is related to factors in the agricultural

domain as well as in other sectors.