It is also compounded by low short run supply responses to price changes (i.e. low supply elasticity), when production decisions have already been taken. Demand responses for food are often also typically low given that food itself is an essential product. Under these basic circumstances, prices often react strongly under seemingly small shocks to demand and supply. The low elasticity of supply can be compensated partly by stock holding, which enables continued supply to meet demand. Hence, stocks play a critical role, unless they are reduced to low levels which limit their cushioning effect. Low levels are associated with periods of higher price volatility [see Deaton and Laroque (1992), Balcombe (2008), and Chavas and Kim (2006)].