GLOBAL PRICE INCREASE Potential Impacts on Livelihoods Examples taken from 1 urban slum in Nairobi & 1 pastoral community in NE Kenya – Analysis of poor households

BASELINE AND SHOCK ANALYSIS We start by understanding how households normally live….

BASELINE AND SHOCK ANALYSIS …then we incorporate the impact of a change….

BASELINE AND SHOCK ANALYSIS …and finally look at how people might cope The analysis suggests that post-shock, households will not be able to maintain their normal livelihood assets without assistance. Livelihoods Protection Threshold Gap Survival Threshold

Analysis Assumptions – Price increase Price increase on global markets (United States) Maize: + 46% in April 2008 compared to April 2007 Price increase in Kenya No evidence so far In this exercise we ran 2 scenarios: Price increase of 25% Price increase of 50%

Urban Analysis – poor household 55% of the pop., rent houses, dirt floor, no electricity. HH size 6-7, single headed Food access – purchase 90-95% of food needs (74% of this are cereals) Economic activities – unskilled casual labour in industrial areas, kiosks, hawkers, porters – income range Ksh 40,000 – 100,000 per annum

Impact on urban poor – Mukuru Kwa Ruben Scenario - 25% price increase Impact on food sources Impact on expenditure Gap = 500-1000 They cope with increased expenditure on staples by: buying cheaper calories reducing expenditure on non- staple, social services & other The impact of the shock will cause households to have a 40% food deficit before coping

Impact on urban poor – Mukuru Kwa Ruben Scenario - 50% price increase Impact on food sources Impact on expenditure Gap = 6,000-7000/- They cope with increased expenditure on staples by: buying cheaper calories reducing expenditure on non- staple, social services & fuel relying on gifts The impact of the shock will cause households to have a 40% food deficit before coping

Implications of coping – Price increase Expand income by engaging in negative coping strategies - prostitution, brewing, theft Reduce quality of diet & # of meals – reduce expenditure on sugar, milk & oil (50%) and vegetables Reduce expenditure on soap, fuel & clothes etc (50%) Reduce expenditure on accessing social services – health, education, water Rely on gifts from rural home People will not die from hunger in case of price increase. However, the yearly lack of investment in human and productive assets is huge and will have the following consequences: Remaining low education and literacy level Frequent human health crises (Cholera, Diarrhoea…) No recovery of herds during good seasons, thus higher sensibility to droughts Increase of destitute households around “urban” centres

Assumptions for pastoral analysis 1) Food Aid 2008 Distribution has already decreased compared to 2007 – likely to decrease further? In this exercise, we assume that poor households (30% of population) reduce their access to food aid from 60% (baseline 06/07) to 34% in April 2008 - based on the fact that 23% of the population received a 75% ration in April 2008. 2) North Eastern province has been impacted by drought almost on a continuous basis since 2003 so livestock holdings have been depleted during times of drought with little time for recovery Here we consider that herd growth was constant

Impact in pastoral livelihood zone Scenario - 25% price increase & 60% food aid Impact on food sources Impact on expenditure Gap = 1 shoat They do this by: increasing self employment rely on gifts reduce expenditure on non-staple & other Sell 2 additional shoats The impact of the shock will cause households to have a 44% food deficit before coping

Impact in pastoral livelihood zone Scenario - 50% price increase & 60% food aid Impact on food sources Impact on expenditure Gap = 4 shoats They do this by: increasing self employment rely on gifts reduce expenditure on non-staple & other Sell 2 additional shoats (4-6) The impact of the shock will cause households to have a 44% food deficit before coping

Implications of coping – Price increase Expand on collection & sale of bush products – indirect costs Reduce expenditure on sugar, milk & oil (50%) Reduce expenditure on fuel & clothes etc (50%) Unsustainable off-take from herd sizes – 2 shoats is acceptable – 4 is detrimental No restocking People will not die from hunger but the annual lack of investment in human and productive assets is huge and will have the following consequences: Remaining low education and literacy level Frequent human health issues (Diarrhoea = malnutrition…) Depletion of assets - increased vulnerability Increase of destitute households around “urban” centres People will not die from hunger in case of price increase. However, the yearly lack of investment in human and productive assets is huge and will have the following consequences: Remaining low education and literacy level Frequent human health crises (Cholera, Diarrhoea…) No recovery of herds during good seasons, thus higher sensibility to droughts Increase of destitute households around “urban” centres