ABSTRACT
The prices in world cereal markets are highly volatile, with adverse impact on the poor in developing countries, who spend 40-50 per cent of their income on cereals. Following the Uruguay Round of trade liberalization price instability is likely to persist even though the burden of adjustment to supply fluctuations will be shared widely among all trading nations and domestic markets will be less insulated. As a result of a fall in food supplies caused by a reduction in price support programmes, the world cereal stocks that tended to act as a cushion or buffer to absorb supply fluctuations will fall. Under the circumstances, to deal with the impact of price instability on poor countries, what is needed is international agreement to ensure adequate stocks as well as food aid or financial facility at times of high cereal prices as well as national measures to moderate high price instability without seriously jeopardizing commitment to a liberal regime.
