Price policies - the perils of keeping food prices low

If food prices are perceived as being ‘too high’ to provide food security, governments often intervene directly in markets to suppress or limit food prices. These policies benefit everyone in society regardless of their food security status. While such policies may provide short-term benefits over the long run they lead to shortages, queuing, rationing and grey markets. If food prices are kept low through subsidization, they may eventually lead to unsustainable budgetary costs for the government. If these policies have to be abandoned at some point, this can lead to civil unrest. In short, they may have considerable appeal to policy makers due to their simplicity but, once implemented, their unintended consequences carry considerable political risks.