Impacts of Food Price Volatility on Food Security and MDG Goals

1. Impacts of Food Price Volatility on Food Security and MDG Goals UAE December 2011

2. Context • High food and fuel prices reduce purchasing power of both the hungry poor and those who try to assist them • Unlike 2008 the price shocks of 2011 are not unexpected • Shocks not affecting all countries in the same way • Sustained increases in fuel prices may be more damaging than only food commodity prices. • Challenge is to identify regions and countries likely to be most affected both in terms of incidence and depth of food insecurity. • Which responses? Context Global Overview Concerns MDG Impact

3. Global Overview of Most Vulnerable Countries Price Volatility • 143 countries reviewed by WFP • Low income (40) • Lower medium income (55) • High medium income(58) • All upper high income countries excluded • All oil exporting countries excluded • Two vulnerability indices developed • Price Shock and Hunger Index • Food and fuel import levels and dependence, domestic • inflation, current account balances, foreign ex reserves, foreign • exchange fluctuation • Global Food Security Index • Food availability, access, utilization, stability Context Global Overview Concerns MDG Impact

4. Global Overview of Most Vulnerable Countries Price Volatility Several countries face chronic food security challenges occupiedPalestinian Territories Haiti Guinea-Bissau Djibouti Rwanda Sao Tome and Principe Burundi Comoros SolomonIslands Swaziland Undernourishment > 20% Lesotho Undernourishment < 20%

5. Many countries facing these challenges are in Africa Context Global Overview Concerns MDG Impact

6. Global Overview of Most Vulnerable Countries to Price Volatility Recent food price changes (Q3-2011) have moderate to high impact on the cost of food basket in several countries Context Global Overview Concerns MDG Impact

7. Major Concerns • Preparedness to respond • Price increases at local level • Interactions of price surges with other factors, such as unemployment, drought, and conflict • Irreversible nutritional impacts, especially in first 1000 days of life • Loss of hard-won gains on MDGs • Social cohesion • ... Context Global Overview Concerns MDG Impact

8. Major Concerns: Drought-Conflict-Price Volatility Central and Eastern Africa • Poor harvests due to below average rainfall in the HoA • Poor short rains in 2010 affecting agro/pastoral areas in a number of countries • Below average rainfall in 2011 • Food commodity export bans in the region • Substantial increases of cereal prices in recent months in most countries • Severe deterioration of purchasing power especially among pastoralists – selling twice as many animals in exchange of cereal • Increased levels of malnutrition esp. in pastoral areas • Massive displacement of conflict affected populations • Increased food insecurity and famine in the HoA Context Global Overview Concerns MDG Impact

9. Major Concerns: Price Volatility-Unemployment-Political Instability Middle East and North Africa • Most countries are major cereal importers, wheat • Erratic rainfall in 2010/11 • High cost of living due to high food prices, high youth unemployment rates and delayed political reforms resulting in civil unrests • Safety net measures in place but sustainability in question despite subsidies • Populations of particular concerns are displaced people Context Global Overview Concerns MDG Impact

10. Major Concerns: Economic Instability-Price Volatility Southern Africa • Bumper harvest in 2010 and large maize stocks • Favorable production in 2011 for most countries • Food not adequately accessed by selected population groups • Stable prices except for a few countries • Economic and financial crisis in some countries (e.g. Swaziland and Malawi) • Chronic malnutrition extremely high in a number of countries – rates of up to 50-60% Context Global Overview Concerns MDG Impact

11. Major Concerns: Drought-Price Volatility West Africa • Below average cereal production in Sahel countries in 2011 • Upward trends of seasonal prices in most countries in recent months • Prices of imported commodities – rice and wheat significantly increasing in selected countries • Youth unemployment, high chronic malnutrition Context Global Overview Concerns MDG Impact

12. MDG Impact of Food Price Volatility • Loss of hard-won gains on MDG1 • Irreversible nutritional impacts, especially in first 1000 days of life, i.e. increased proportion of underweight among children under five • Increased proportion of population below minimum level of dietary energy consumption, i.e. increased undernourishment • Adverse impacts on other MDGs • Negative incidence on education (MDG2), gender equality (MDG3), child mortality (MDG4), maternal health (MDG5) through use of negative coping mechanisms. Context Global Overview Concerns MDG Impact

13. Impact of Food Price Volatility on MDG1 Case of Pakistan Retail prices of wheat and rice increased significantly in 2009/10 from their baseline levels of 2005/06 Producer prices of wheat and rice also went up significantly in 2009/10 compared to 2005/06 But real wage rates barely increased in 2009/10 compared to 2005/06 Context Global Overview Concerns MDG Impact

14. Impact of Food Price Volatility on MDG1 Case of Pakistan The yearly average per capita consumption (in wheat equivalent) dropped by almost 10% in 2009/10, from 124 kg to 112kg The proportion of the population with caloric intake below 2350 Kcal/day increased The proportion of the population undernourished increased, more so in urban areas Context Global Overview Concerns MDG Impact

15. Concluding Remarks on Potential Actions • Strengthen early warning and preparedness systems • Production, prices, availability on markets, stocks... • Risk analysis, especially drought • Risk pooling and contingency funds • Emergency food reserves • Strengthen household-level vulnerability analysis and mapping • Develop targeted food safety net interventions • Support smallholder food production • Exempt humanitarian food from export restrictions