Trade policies that limit market access, increase the volatil-
ity of commodity prices, unfairly subsidize developed coun-
try exports and constrain the trade policy flexibility of the
developing world affect the stability and security as well as
overall economic wellbeing of developing countries. A quar-
ter of the world’s governments implemented some export
restrictions in the current period of high prices to ensure
domestic food security. The impacts of these restrictions
varied from panic-buying to the cultivation of smaller areas
due to high input costs and the expectation of low product
prices. These restrictions even increased price volatility of
food products on the world market, thereby decreasing the
food security of other countries (FAO, 2008). Earlier expe-
rience shows that attempts to gain domestic price stability
create global price instability (OECD, 2008; World Bank,
2008). Furthermore, once policies are established to pro-
tect food markets, they are not easily dismantled.
It should also be noted that global food prices are deter-
mined by a small share of food products that are traded
on the global market. The share of cereals traded com-
pared to the volume produced is small and has increased
slightly over the last four decades, from 9% to 13%. Annu-
al fluctuations in world cereal production are in the same
order of magnitude, varying from +9.8% to –3.9% of the
previous year’s production. This implies that supplies to
the world market (the sum of the surplus in the supply
of each region) can be reduced by one-third or increase
two-fold. Demand in the world market does not follow
this trend, however, and probably even moves in the op-
posite direction in case of poor harvests. These yearly
trends describe the risk of discrepancy between supply
and demand on the world food market. For this reason,
with open markets, developing countries are very vulner-
able to fluctuations in global food supply and prices and
temporary protection of their own agricultural markets is
promoted for these countries.
Supplies from food stocks can also buffer shortages on the
world market (FAO, 2008). Stocks of cereals and vegetable
oil have fallen to low levels relative to use, reducing the
buffer against shocks in supply and demand. Stocks are
not expected to be fully replenished over the coming 10
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