Agricultural commodity markets are often volatile. Over the past 2 decades, they have experienced a higher degree of volatility than ever before. Their precarious nature has also been exacerbated in recent years by extreme weather events, the COVID-19 pandemic, and global geopolitical dynamics that have limited the availability and affordability of key inputs for agricultural production.
Disruptions in international commodity prices threaten livelihoods in producing and exporting countries in developing regions. Price volatility risks and market power are disproportionately distributed downstream in value chains, which means that smallholder farmers shoulder an unfair share of the risks of producing the food and goods we consume. Additionally, many farmers keep receiving low prices at the gate, and their production costs have increased, compromising their already meagre standard of living and holding them back from making much-needed investments in their farms.
