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Impacts of Food Price Volatility on Food Security and MDG Goals. UAE December 2011. 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 - PowerPoint PPT Presentation
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Impacts of Food Price Volatility on Food Security and MDG Goals
UAEDecember 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 excludedAll 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, foreignexchange fluctuation
Global Food Security Index Food availability, access, utilization, stability
MDG ImpactConcerns Global OverviewContext
Global Overview of Most Vulnerable Countries Price VolatilitySeveral countries face chronic food security challenges
occupiedPalestinian
Territories
Haiti
SolomonIslands
Sao Tome and Principe
Comoros
Djibouti
Rwanda
Burundi
Swaziland
Lesotho
Guinea-Bissau
Undernourishment > 20%Undernourishment < 20%
Many countries facing these challenges are in Africa
AfghanistanBangladeshBurundiCambodiaCentral African RepublicChadComorosCongo, Dem. Rep.DjiboutiEritreaEthiopiaGambiaGhanaGuinea
Guinea-BissauHaitiKenyaLesothoLiberiaMadagascarMalawiMongoliaMozambiqueNepalNigerPakistanPapua New GuineaRwanda
Sao Tome and PrincipeSierra LeoneSolomon IslandsSomaliaSwazilandTajikistanTanzaniaTogoUgandaWest Bank and GazaYemenZimbabwe
Note: Countries highlighted in red represent those with undernourished population > 20%
MDG ImpactConcerns Global OverviewContext
Global Overview of Most Vulnerable Countries to Price VolatilityRecent 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 MDG1Case of Pakistan
Province Area % 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 flour Rice Basmati Rice IRRI Wheat Rice
Sindh Karachi 50.6 51.7 47.7 60.3 60.9 7.6
Punjab Lahore 42.9 55.1 58.7 152.5 48.8 -6.2
Multan 52.5 65.3 35.0 152.5 48.8 10.7
KPK Peshawar 49.0 83.0 75.2 54.6 60.7 16.3
Balochistan Qhetta 52.4 59.9 58.8 - - -6.8
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 MDG1Case 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)
2009/10 Change
Rural 135 123 -8.9 41.0 50.3 +22.7 45.7 55.7 +10.0
Urban 108 96 -11.1 50.6 55.4 +9.5 31.9 34.9 +3.0
National 124 112 -9.7 44.8 52.3 +16.7 77.6 90.6 +13.0
MDG ImpactConcerns Global OverviewContext
Concluding Remarks on Potential Actions
Strengthen early warning and preparedness systemsProduction, prices, availability on markets, stocks...Risk analysis, especially droughtRisk pooling and contingency fundsEmergency 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