The global food system and related government policies are in disarray. In response to expected increasing food prices and greater food price volatility, national governments are pursuing a variety of policies. Some policies amplify price fluctuations while others attempt to prohibit price signals from reaching domestic markets. Extreme weather events, irrational expectations by speculators, sensationalism by the news media, oil price fluctuations and the pursuit of self-interests by international organisations, NGOs and the private sector, have created a sense of uncertainty and heightened political risks among many governments, pushing governments towards crisis management, short-term political interventions and bandaid solutions. This paper discusses these interventions, the associated policy challenges and related policies. The paper will argue that food price volatility will continue to be with us, but that real food prices need not increase. It will further show that the main bottlenecks in expanding food production in most low-income developing countries are found outside the farm and that government intervention in the food system should focus on improvements in rural infrastructure, domestic markets and policies to facilitate efficiency and effectiveness in postharvest value chains and input sectors. Full costing of environmental damage is suggested to be pursued to help assure sustainability.