The Economics of Food: How Feeding and Fueling the Planet Affects Food Prices

Chapter 3. Policies Matter

Nearly 40 percent of the world’s population earns a living by producing food, so government food policies matter—a lot.¹ Policies affect everything from basic agricultural research to the profitability of farming to whether the poor get enough food to survive. Almost all government food policies have some impact on food prices.

Some countries fix the price of basic foods. Tariffs drive up the price of imported food. Subsidies encourage increased food production and lower food prices. Biofuel policies mean crops are used to produce fuel rather than food, raising food prices. Food assistance programs make food more affordable for beneficiaries. Supply management programs pay farmers not to plant crops, reducing food ...