Trade, Competition, and the Pricing of Commodities Edited by Simon J. Evenett and Frédéric Jenny

Trade, Competition, and the Pricing of Commodities Edited by Simon J. Evenett and Frédéric Jenny

1 Introduction
Simon J Evenett and Frédéric Jenny
University of St Gallen and CEPR; ESSEC Business School
Having fluctuated in a relatively narrow band for almost 20 years, according to 
the UN Food and Agricultural Organisation, real food prices spiked in 2008 and in 
2010–11 (FAO, 2011). These spikes were not expected and there are no guarantees 
that food prices will return to their previous plateau. In its latest report on The 
State of Food Insecurity in the World, the FAO estimated that just under 240 million 
persons were undernourished in Africa in 2008; the comparable number for Asia 
was just over 560 million persons (FAO, 2011: 8). 
High food prices are not the only concern. According to the FAO, (2011) ‘Price 
volatility makes both smallholder farmers and poor consumers increasingly 
vulnerable to poverty,’ thereby compromising the ability of governments to 
reach one of the most important Millennium Development Goals. Policies 
were directly implicated in these developments. One of the FAO report’s ‘main 
messages’ was the following: 
Small import-dependent countries, especially in Africa, were deeply 
affected by the food and economic crises. Some large countries were able 
to insulate their markets from the crisis through restrictive trade policies 
and protect their consumers through safety nets. However, trade insulation 
increased prices and volatility in international markets (FAO, 2011: 8).
The purpose of this volume, composed of papers presented at a conference 
co-organised by CEPR and CUTS in Geneva in September 2012, is to identify 
and assess the importance of the factors responsible for the recent increases in 
the levels and volatility of commodity prices. While many have stressed the 
consequences of export restrictions and the like on such prices, the approach 
taken here is broader. In addition to considering the impact of commercial policies 
(see the chapter by Hoekman and Martin), the impact of financial speculation 
and anticompetitive practices on commodity prices are examined (for the former 
see the chapter by Radetski; for the latter see the four chapters by McCorriston, 
Connor, Jenny, and Mehta et al). 
Widening the scope beyond trade policy interventions is important because – to 
the extent that non-trade factors can be convincingly shown to have played an 
adverse role in raising the level and volatility of commodity prices – the design

of policy responses at the national and international level ought to take account 
of all of the relevant causes. Moreover, in the case of financial speculation and 
anticompetitive practices there are few, if any, major international accords to 
limit the harm done by them – on commodity prices or other outcomes for that 
matter. 
In principle, then, stabilising commodity prices may require developments in the 
international architecture of rules in a number of policy areas. Put another way, 
developments in recent years in commodity prices may well have revealed wide 
gaps in the rules governing the world economy. This volume will have served its 
purpose if it encourages greater consideration of these matters and the associated 
policy reforms. 
Now it should be stated that no single volume is going to definitively settle these 
matters. Others will want to collect their own data, probe the evidence further, 
and carefully assess the national and international policy implications. This 
process of refinement and reconsideration is essential to proper policymaking. 
Still, it is our hope that this volume widens and deepens the debate on a matter 
of considerable significance to developing countries and to the vulnerable 
everywhere.
Reference
FAO (2011), The State of Food Insecurity in the World, Rome. 

Trade, Competition, and the Pricing of Commodities Edited by Simon J. Evenett and Frédéric Jenny