The EC has a significant impact on world agricultural markets because of its size. Protective CAP policies have tended to depress and destabilize world market prices. The empirical evidence reviewed suggests that these effects are significant, and that developing countries are affected, albeit not as much as developed ones. However, least developed food importing countries tend to be favoured by EC policies, especially since the EC has tended to compensate restrictive agricultural import policies with bilateral preferences. The nature of chronic and transitory food insecurity problem in developing countries is examined, and it is argued that consumption instability retards growth both of the very poor, as well as whole countries. It is argued that market based solutions do little to alleviate food insecurity, and that direct non-market approaches are preferable. It is suggested that a « food insurance fund » is instituted either unilaterally by the EC or in conjunction with other donors, as an effective means to improve worldwide food security.
