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Food Security Fears Rise Along with Prices

April 1, 2011

  • Bank’s Global Food Crisis Response Program has helped 44 countries counter crisis by investing in agriculture, feeding programs.
  • Eight countries receiving help from G20-requested Global Agriculture and Food Security Program; 17 additional countries seeking assistance.
  • About 3.5 million children under 5 in developing countries die from undernutrition-related causes each year.

April 1, 2011— The 2008 food crisis hit poor people in Togo hard.

Floods drowned crops and the price of maize shot up 42% in a year. People ate seeds and sold their livestock to survive. Fifty thousand children under 5 were malnourished in the small West African country's hardest hit areas, many dangerously.

As part of the international response, the World Bank fast-tracked $5.2 million from the newly created Global Food Crisis Response Program (GFRP) to fund locally prepared school lunches for 21,000 children in the poor, flood-prone areas. School enrollment increased 13% over two years. The program was so successful it expanded to 40,000 children for the 2010-2012 school years.

Today, Togo is enjoying better harvests. But the country's food problems are far from over. Like many countries in Africa, much of Togo is food insecure – the result of low investment in agriculture over several decades, degraded soil, variable weather, and natural hazards.

Countries Seek Food Security Help

Togo is one of three African countries -- among eight countries around the world – now getting help from the Global Agriculture and Food Security Program (GAFSP), a fund created in 2010 at the request of the G20 to boost food security.

Another 17 countries are seeking assistance from GAFSP, so far supported by seven donors pledging $925 million to the fund (Canada, Spain, United States, Korea, Australia, the Bill & Melinda Gates Foundation and Ireland). 

GAFSP’s origins stem from the G8-plus meeting in L’Aquila, Italy, in July 2009, where leaders pledged more than $20 billion to boost food security and agriculture. The G20 requested GAFSP be set up at its meeting in Pittsburgh, Pennsylvania, in September 2009. The fund’s goals include boosting crop yields and incomes in developing countries where 75% of poor people live, and reducing risk from income and weather shocks.

Now, with world commodity prices again rising rapidly, it’s more urgent to scale up efforts further.

In February, World Bank President Robert Zoellick urged the G20 to "put food first" as food prices hovered just shy of their 2008 peak and an estimated 44 million people fell into poverty.

"Food security is now a global security issue," he said. "We need global action to ensure we do a better job of feeding the hungry before we face the future challenges of feeding the expected 9 billion people in the world in 2050."

The High Cost of Hunger

Behind the hunger statistics lie grim realities. About 3.5 million children under 5 in developing countries die from undernutrition-related causes each year. Those who survive aren’t likely to achieve their full potential if their food lacks adequate nutrients, and access to health services, clean water and sanitation is beyond their reach. Nutritionists say there is only a 1,000 day window between pre-birth and age 2 to change the course of a child’s life. “If we miss that opportunity, we miss an entire generation because the damage that happens in the early months is irreversible,” says World Bank Health and Nutrition Specialist Meera Shekar on a World Bank blog.

Economic losses in developing countries with the highest burden of maternal and early childhood undernutrition amount to between 2 and 3% of gross domestic product (GDP). The result is a “vicious cycle where poverty causes malnutrition, and malnutrition perpetuates poverty, “says Tamar Manuelyan Atinc, vice president of the World Bank’s Human Development Network.

Solutions include not only nutrition-specific measures such as vitamin A supplements, deworming and breastfeeding, but investments that improve food security and agriculture, social protection, health, education, water supply and sanitation, says Atinc.

Adds World Bank Health Specialist Tamer Samah Rabie: “We need to look at the link between the food crisis, poverty and nutrition. The most affected are the poor – those who are already vulnerable to under-nutrition. It's important to focus on the children who are the future, who will be responsible for most of the productivity in development.”

More than one billion people went to bed hungry during the 2008 food crisis. The number stands at more than 925 million now -- higher than before the food crisis. The UN’s Food and Agriculture Organization estimates two-thirds live in just seven countries – Bangladesh, China, the Democratic Republic of the Congo, Ethiopia, India, Indonesia and Pakistan – with over 40% in China and India alone. About 30% of Africa’s population is undernourished.

Trade Restrictions Worsen Food Insecurity

Food security could be improved by helping small-holder farmers, who provide the vast majority of food staples in poor areas, and by establishing humanitarian food reserves in disaster-prone areas, he said.

The G20 could agree to exempt humanitarian food aid from export bans; and give countries fast-disbursing support to help them avoid trade policies that “harm their own farmers and neighbors,” said Zoellick in a January 2011 Financial Times op-ed.

“The overarching goal should be to ensure that the most vulnerable people and countries are no longer denied access to nutritious food,” Zoellick said.

Defensive trade policies “contributed very substantially to increases in world prices of staple crops” in the 2008 food crisis, as well as in the food crisis of 1974, say economists Will Martin of the World Bank and Kym Anderson of the University of Adelaide, Australia. They estimate insulating policies such as export bans are responsible for 45% of the run-up in the international rice price, and for 30% of the wheat price increase in the 2008 crisis.

When world prices are high and local harvests are good, as they were in much of Africa over the last year, people eat lower-priced local foods instead of more expensive imports. When harvests are poor, crop surpluses in even neighboring countries won't reach the hungry if trade policies restrict the flow of goods, says Bernard Hoekman, director of the Trade Department in the World Bank's Poverty Reduction and Economic Management Vice Presidency.

“We'd like to see all these markets become much more interconnected,” says Hoekman. “If we could collectively agree not to restrict trade in food, we would give incentives for people to invest more in the production of food. The volume of food traded internationally would increase, and you would have less volatility of the type we've seen over the last four or five years.”

Rising Demand, Volatile Prices

Currently, food prices are expected to remain volatile for the foreseeable future. And one of the drivers of the market – increasing demand for grains – isn't likely to slacken greatly even in the face of higher prices, says Chris Delgado, strategy and policy adviser in the Bank's Agriculture and Rural Development Department.

"It's an inconvenient fact that every year we add somewhere in the vicinity of 1.5% more grain consumption, and this has to be met by some combination of increased production, food stock draw-downs, or decreased consumption by the poor who no longer can afford their basic diets. Clearly we would prefer that needs are met by increased production," says Delgado.

" We need global action to ensure we do a better job of feeding the hungry before we face the future challenges of feeding the expected 9 billion people in the world in 2050. "

Robert Zoellick

World Bank President

The UN's Food and Agricultural Organization estimates agricultural productivity will need to increase by 70% to meet future needs. At the same time, water and land resources are likely to become more constrained, and advances in agricultural productivity not as easy to achieve as during the “green revolution” of the 1960s and 1970s, Delgado says.

In Africa, seen as the next likely place for a green revolution, agricultural spending had fallen to 3 or 4% of national budgets before the 2008 crisis. International aid for agricultural development also fell to about the same amount.

The World Bank's $2 billion, GFRP fast-tracked emergency food security aid during the crisis – including farming inputs such as seed and fertilizer, and financial support for social safety nets. GFRP's assistance reached 44 countries worldwide and 20 in Africa.

The Bank Group also has worked with countries to increase financing for agriculture from $4 billion annually to between $6.2 and $8.3 billion in 2010 to 2012, including support for doubling rice production in Africa between 2008 and 2018.

Transformational Change

Now, GAFSP, for which the World Bank is trustee, is looking for longer-term, transformational change.

The program is specifically targeted to supporting food security in countries that have made credible efforts to devise and fund inclusive and peer-reviewed agricultural investment plans, says Delgado.

It will help people in rural areas by financing high-yield agricultural technologies, connecting farmers to markets, reducing risks and vulnerability to income shocks and weather events, improving off-farm livelihoods for people in rural areas, and providing technical assistance to help governments deal with food insecurity.

Togo’s $39 million will be used to increase crop yields on small farms of staples rice, maize, cassava, and the traditional export crops, cotton, coffee and cocoa, as well as grow a freshwater fish farming industry. Farmers will also get processing equipment and marketing help, among other assistance.

In Rwanda, $50 million is helping to stop erosion and sustainably increase agricultural productivity on hillsides. About a quarter of the funding is going to water management, and about half is for improved land rights and use. The rest will help farmers gain access to finance and markets.

Delgado says governments in Africa increasingly are committed to spending as much as 10% of their budgets on agriculture. “That's a big change,” says Delgado. “Countries have bought into the fact they really are running risks, and they have to do something.”