{ "title": "What Governments Should Do When Food Prices Surge", "publication": "IMF Blog, September 17, 2026", "sourceUrl": "https://www.imf.org/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge", "canonical": "https://www.imf.org/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge", "overlayPath": "/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge/index.md", "summary": "The right choice between subsidies, vouchers, or in-kind distribution can help countries save precious resources", "sections": [ { "heading": "Context and urgency", "content": "- Authors: David Amaglobeli, Rodrigo Cerda, Tewodaj Mogues, Patrizia Tumbarello\n- Date: September 17, 2026\n- Key contextual drivers:\n - The possibility of a stronger or even “super” El Niño renewing concerns about food security in vulnerable agricultural regions.\n - An escalation of the war in the Middle East could further disrupt fertilizer and energy supplies, increasing production costs for farmers, and potentially raising prices.\n- Historical impacts cited:\n - The last El Niño occurrence, in 2015-16, affected food security for about 60 million people worldwide.\n - The 2022 food-price spikes triggered by Russia’s war in Ukraine pushed about 71 million people into poverty worldwide, within three months.\n - When the war in the Middle East started earlier this year, prices for some fertilizers rose by almost 50 percent.\n- Vulnerable households: buying food sometimes accounts for more than half of a family’s spending." }, { "heading": "Decision framework for choosing assistance tools", "content": "- Four diagnostic questions governments should ask to determine the appropriate assistance modality:\n 1. Is food available?\n 2. Is affordability the problem?\n 3. Are markets functioning properly?\n 4. Can beneficiaries be targeted?\n- Recommended decision path: assess availability, affordability, market functioning, and administrative capacity before selecting policy responses.\n- Common mistake: in crises, speed can lead to overlooking the combination of these issues, resulting in expensive and poorly targeted measures maintained longer than necessary." }, { "heading": "Assessment of policy instruments", "content": "- Price subsidies:\n - Advantages: can be deployed quickly and require limited administrative targeting capacity.\n - Disadvantages: costly; often benefit richer households that consume more and are less price-sensitive.\n - IMF recommendation: price subsidies should be ideally avoided and, if used, should be exceptional, temporary, transparent, and tightly circumscribed.\n - Policy stance: allow domestic prices to reflect international costs while shielding vulnerable households and viable small businesses with temporary, targeted and tailored fiscal measures.\n- Food vouchers:\n - Better targeting potential, provided governments have sufficient administrative capacity (social registries and digital payment infrastructure).\n- In-kind (direct) food transfers:\n - Essential and lifesaving when food is physically unavailable.\n - Drawbacks: costly to implement; if used for too long, can suppress demand for locally produced food, reduce prices, and weaken incentives for domestic farmers and food producers." }, { "heading": "Market functioning and availability considerations", "content": "- Market disruptions occur when supply chains and distribution networks break down or food production is interrupted (conflict, inability to export/import, logistics disruptions, natural disasters).\n- Examples of availability-driven crises:\n - 2015-16 El Niño: severely reduced Vietnam’s rice production due to drought and saltwater intrusion; some farmers lost 90 percent of their harvest.\n - Southern Africa: 40 million people were affected by lower maize harvests because of droughts.\n - Heavy rain and floods caused agricultural losses in places including Ecuador and Somalia.\n- Policy implication: subsidies or vouchers are ineffective if there is not enough food to buy; direct in-kind transfers are required when availability is the constraint." }, { "heading": "Fiscal constraints and exit strategies", "content": "- Poorly designed food subsidy programs can absorb substantial fiscal resources and limit capacity to invest in long-term food security (agricultural research and infrastructure) and essential public services (health and education).\n- Governments in low-income countries already devote a significant share of their resources to generalized food subsidies, with spending often rising sharply during crises.\n- Risk of entrenchment: temporary crisis measures can become permanent entitlements and be difficult to unwind even when inefficient or inequitable.\n- Recommendation: design clear exit strategies and plan how to shift toward more targeted and efficient assistance, supported by stronger administrative systems, as emergencies subside." }, { "heading": "Operational recommendations and preparedness", "content": "- Invest in assessments of food support systems before shocks occur, guided by the four diagnostic questions.\n- Build administrative capacity (social registries, digital payment infrastructure) to enable better targeting (vouchers) and timely scaling down of generalized subsidies.\n- Prioritize time-bound support and proper diagnosis to choose the best policies that efficiently protect the most vulnerable at the lowest cost.\n\nSource: IMF blog — What Governments Should Do When Food Prices Surge (September 17, 2026). https://www.imf.org/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge\n\n---\n\n\n References\n\n- new IMF publication\n- IMF recommends\n\nSource: https://www.imf.org/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge" } ], "bullets": [ "[Markdown version](/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge/index.md)", "[Structured JSON version](/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge/index.json)", "[Bundle manifest](/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge/bundle-manifest.json)", "Authors: David Amaglobeli, Rodrigo Cerda, Tewodaj Mogues, Patrizia Tumbarello", "Published: September 17, 2026", "Authors: David Amaglobeli, Rodrigo Cerda, Tewodaj Mogues, Patrizia Tumbarello", "Date: September 17, 2026", "Key contextual drivers:", "Historical impacts cited:", "Vulnerable households: buying food sometimes accounts for more than half of a family’s spending.", "Four diagnostic questions governments should ask to determine the appropriate assistance modality:", "Recommended decision path: assess availability, affordability, market functioning, and administrative capacity before selecting policy responses.", "Common mistake: in crises, speed can lead to overlooking the combination of these issues, resulting in expensive and poorly targeted measures maintained longer than necessary.", "Price subsidies:", "Food vouchers:", "In-kind (direct) food transfers:", "Market disruptions occur when supply chains and distribution networks break down or food production is interrupted (conflict, inability to export/import, logistics disruptions, natural disasters).", "Examples of availability-driven crises:", "Policy implication: subsidies or vouchers are ineffective if there is not enough food to buy; direct in-kind transfers are required when availability is the constraint.", "Poorly designed food subsidy programs can absorb substantial fiscal resources and limit capacity to invest in long-term food security (agricultural research and infrastructure) and essential public services (health and education).", "Governments in low-income countries already devote a significant share of their resources to generalized food subsidies, with spending often rising sharply during crises.", "Risk of entrenchment: temporary crisis measures can become permanent entitlements and be difficult to unwind even when inefficient or inequitable.", "Recommendation: design clear exit strategies and plan how to shift toward more targeted and efficient assistance, supported by stronger administrative systems, as emergencies subside.", "Invest in assessments of food support systems before shocks occur, guided by the four diagnostic questions.", "Build administrative capacity (social registries, digital payment infrastructure) to enable better targeting (vouchers) and timely scaling down of generalized subsidies.", "Prioritize time-bound support and proper diagnosis to choose the best policies that efficiently protect the most vulnerable at the lowest cost.", "[new IMF publication](https://www.imf.org/en/publications/imf-how-to-notes/issues/2026/09/16/how-to-classify-and-choose-among-food-assistance-spending-modalities-practical-guidance-on-573032)", "[IMF recommends](https://www.imf.org/en/blogs/articles/2026/05/20/responding-to-the-energy-and-food-price-shock-getting-the-policy-details-right)" ], "alternates": { "markdown": "/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge/index.md", "json": "/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge/index.json", "bundleManifest": "/en/blogs/articles/2026/09/17/what-governments-should-do-when-food-prices-surge/bundle-manifest.json" }, "generatedAtUtc": "2026-09-17T23:55:33.401Z" }