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

Context MDG Impact ConcernsGlobal OverviewContext 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?

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 MDG ImpactConcerns Global OverviewContext

Global Overview of Most Vulnerable Countries Price Volatility Several countries face chronic food security challenges Undernourishment > 20% Undernourishment < 20%

Many countries facing these challenges are in Africa Afghanistan Bangladesh Burundi Cambodia Central African Republic Chad Comoros Congo, Dem. Rep. Djibouti Eritrea Ethiopia Gambia Ghana Guinea Guinea-Bissau Haiti Kenya Lesotho Liberia Madagascar Malawi Mongolia Mozambique Nepal Niger Pakistan Papua New Guinea Rwanda Sao Tome and Principe Sierra Leone Solomon Islands Somalia Swaziland Tajikistan Tanzania Togo Uganda West Bank and Gaza Yemen Zimbabwe Note: Countries highlighted in red represent those with undernourished population > 20% MDG ImpactConcerns Global OverviewContext

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 MDG ImpactConcerns Global OverviewContext

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... MDG ImpactConcerns Global OverviewContext

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 MDG ImpactConcerns Global OverviewContext Major Concerns: Drought-Conflict-Price Volatility

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 MDG ImpactConcerns Global OverviewContext Major Concerns: Price Volatility-Unemployment-Political Instability

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% MDG ImpactConcerns Global OverviewContext Major Concerns: Economic Instability-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 MDG ImpactConcerns Global OverviewContext Major Concerns: Drought-Price Volatility

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. MDG ImpactConcerns Global OverviewContext

Impact of Food Price Volatility on MDG1 Case of Pakistan ProvinceArea% Change in real retail prices (2009/10 vs. 2005/06) % Change in real producer prices (2009/10 vs. 2005/06) % Change in real wage rates (2009/10 vs. 2005/06) Wheat flourRice BasmatiRice IRRIWheatRice SindhKarachi PunjabLahore Multan KPKPeshawar BalochistanQhetta 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 MDG ImpactConcerns Global OverviewContext

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 Geog. setting Per capita consumption (Kg wheat equivalent) % of Undernourished Population (<2350 Kcal/day) Number of Undernourished People (<2350 Kcal/day) (million) Baseline (2005/06) 2009/10% Change Baseline (2005/06) 2009/10% Change Baseline (2005/06) 2009/10Change Rural Urban National MDG ImpactConcerns Global OverviewContext

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