Recent analysis of domestic prices of key staple crops in several major retail markets in Mozambique finds that due to increased demand from both international and domestic sources, since 2008, the country’s consumers and producers of staple crops appear to have entered a new higher-price environment for domestic food staples. This situation creates both a challenge and an opportunity for Mozambique, which is commonly referred to as the food price dilemma. In short, the dilemma for the Government of Mozambique (GoM)policymakers is that urban consumers (and the majority of rural households who are net buyers of key staple foods like maize) prefer lower food prices (relative to other prices in the economy) as this improves their welfare.