Latest Update – December 4, 2023
Domestic food price inflation remains high. Inflation higher than 5% is experienced in 61.9% of low-income countries (an increase of 9.5 percentage points since the last update three weeks ago), 80% of lower-middle-income countries (a decrease of 8.6 percentage points), and 50% of upper-middle-income countries (a decrease of 12 percentage points), and many experiencing double-digit inflation. In addition, 60% of high-income countries (a decrease of 7.3 percentage points) are experiencing high food price inflation. The most-affected countries are in Africa, North America, Latin America, South Asia, Europe, and Central Asia. In real terms, food price inflation exceeded overall inflation in 76% in 166 countries.
Since the last update two weeks ago, the agriculture and export price indices closed 2% and 6% higher, respectively, while the cereal price index closed 3% lower. The increase in the export price index was driven by increase in cocoa, coffee (Arabica), and cotton prices. Among cereals, maize and rice prices saw a decline of 5% and 2%, respectively, while wheat prices increased by 2% since the last update. On a year-on-year basis, maize and wheat prices are 30% and 31% lower, respectively, while rice prices are 36% higher. Compared to January 2021, maize prices are 13% lower, wheat prices are 16% lower, while rice prices are 20% higher. (See “pink sheet” data for agricultural commodity and food commodity prices indices, updated monthly.)
In the World Bank October 2023 World Food Security Outlook, updated estimates and projections highlight that global food security conditions are stabilizing slowly but that disparities between income groups are increasing. Preliminary estimates indicate that global food insecurity may have peaked at 11.9% during 2020 to 2022, with slight improvement to 11.8% expected for 2021 to 2023 and 11.6% for 2022/23, although the long-term outlook remains uncertain. These short-term improvements come after a sustained rise in food insecurity since 2014, projected to level off by 2024/25. There is a risk of these prevalence rate improvements stalling, with a new high of 943 million people facing severe food insecurity by 2025. Looking ahead to 2028, the global severely food-insecure population is projected to reach 956 million. In a downside economic scenario, if central banks fail to control inflation and respond with further tightening, leading to suppressed growth, this figure narrowly avoids reaching 1 billion in the forecast horizon.
Although global food security is expected to stabilize, data at the income-group level reveal that improvements in upper middle-income-countries predominantly drive this trend, with low-middle-income countries anticipated to experience only short-term improvements and an overall slowdown in the long-term upward trend and low-income-countries projected to witness further increases in their severely food-insecure populations. These disparities are wider than in previous outlooks.
A new Food and Agriculture Organization (FAO) report attempts to capture the “true cost” of global agrifood systems by analyzing the substantial hidden costs associated with the sector. According to its findings, these costs add up to approximately $12.7 trillion annually (2020 purchasing power parity, US$), or about $35 billion per day, equivalent to about 10% of GDP in 2020. High-income-countries and upper-middle-income countries account for most of these costs, generating 36% and 39% of total quantified hidden costs, respectively; low-middle-income countries contribute 22%; and low-income-countries contribute 3%, but the ratio of hidden costs to GDP is higher in low-income-countries, averaging 27%. By contrast, the ratio of hidden costs to GDP for all other country income groups is between 11% and 14%. The types of costs incurred vary according to country level income too. In high-income-countries, productivity losses from dietary patterns that lead to noncommunicable diseases are the most significant contributor to agrifood systems damages, followed by environmental costs. In low-middle-income-countries and low-income-countries, social hidden costs from poverty and undernourishment are more significant.
Following Russia’s invasion of Ukraine, trade-related policies imposed by countries have surged. The global food crisis has been partially made worse by the growing number of food trade restrictions put in place by countries with a goal of increasing domestic supply and reducing prices. As of November 27, 2023, 19 countries have implemented 27 food export bans, and 9 have implemented 17 export-limiting measures.
World Bank Action
In May 2022, the World Bank made a commitment of making available $30 billion over a period of 15 months to tackle the crisis. We have surpassed that goal. The World Bank has scaled up its food and nutrition security response, to now making $45 billion available through a combination of $22 billion in new lending and $23 billion from existing portfolio.
Our food and nutrition security portfolio now spans across 90 countries. It includes both short term interventions such as expanding social protection, also longer-term resilience such as boosting productivity and climate-smart agriculture.
The Bank's intervention is expected to benefit 335 million people, equivalent to 44% of the number of undernourished people. Around 53% of the beneficiaries are women – they are disproportionately more affected by the crisis. Some examples include:
- The $2.75 billion Food Systems Resilience Program for Eastern and Southern Africa, helps countries in Eastern and Southern Africa increase the resilience of the region’s food systems and ability to tackle growing food insecurity. Now in phase three, the program will enhance inter-agency food crisis response also boost medium- and long-term efforts for resilient agricultural production, sustainable development of natural resources, expanded market access, and a greater focus on food systems resilience in policymaking.
- A $95 million credit from IDA for the Malawi Agriculture Commercialization Project (AGCOM) to increase commercialization of select agriculture value chain products and to provide immediate and effective response to an eligible crisis or emergency.
- The $200 million IDA grant for Madagascar to strengthen decentralized service delivery, upgrade water supply, restore and protect landscapes, and strengthen the resilience of food and livelihood systems in the drought-prone ‘Grand Sud’.
- A $60 million credit for the Integrated Community Development Project that works with refugees and host communities in four northern provinces of Burundi to improve food and nutrition security, build socio-economic infrastructure, and support micro-enterprise development through a participatory approach.
- The $175 million Sahel Irrigation Initiative Regional Support Project is helping build resilience and boost productivity of agricultural and pastoral activities in Burkina Faso, Chad, Mali, Mauritania, Niger, and Senegal. More than 130,000 farmers and members of pastoral communities are benefiting from small and medium-sized irrigation initiatives. The project is building a portfolio of bankable irrigation investment projects of around 68,000 ha, particularly in medium and large-scale irrigation in the Sahel region.
- Through the $50 million Emergency Food Security Response project, 329,000 smallholder farmers in Central Africa Republic have received seeds, farming tools and training in agricultural and post-harvest techniques to boost crop production and become more resilient to climate and conflict risks.
- The $15 million Guinea Bissau Emergency Food Security Project is helping increase agriculture production and access to food to vulnerable families. Over 72,000 farmers have received drought-resistant and high-yielding seeds, fertilizers, agricultural equipment; and livestock vaccines for the country-wide vaccination program. In addition, 8,000 vulnerable households have received cash transfer to purchase food and tackle food insecurity.
- The $60 million Accelerating the Impact of CGIAR Research for Africa (AICCRA) project has reached nearly 3 million African farmers (39% women) with critical climate smart agriculture tools and information services in partnership with the Consortium of International Agricultural Research Centers (CGIAR). These tools and services are helping farmers to increase production and build resilience in the face of climate crisis. In Mali, studies showed that farmers using recommendations from the AICCRA-supported RiceAdvice had on average 0.9 ton per hectare higher yield and US$320 per hectare higher income.
- The $766 million West Africa Food Systems Resilience Program is working to increase preparedness against food insecurity and improve the resilience of food systems in West Africa. The program is increasing digital advisory services for agriculture and food crisis prevention and management, boosting adaption capacity of agriculture system actors, and investing in regional food market integration and trade to increase food security. An additional $345 million is currently under preparation for Senegal, Sierra Leone and Togo.
- A $150 million grant for the second phase of the Yemen Food Security Response and Resilience Project, which will help address food insecurity, strengthen resilience and protect livelihoods.
- $50 million grant of additional financing for Tajikistan to mitigate food and nutrition insecurity impacts on households and enhance the overall resilience of the agriculture sector.
- A $125 million project in Jordan aims to strengthen the development the agriculture sector by enhancing its climate resilience, increasing competitiveness and inclusion, and ensuring medium- to long-term food security.
- A $300 million project in Bolivia that will contribute to increasing food security, market access and the adoption of climate-smart agricultural practices.
- A $315 million loan to support Chad, Ghana and Sierra Leone to increase their preparedness against food insecurity and to improve the resilience of their food systems.
- A $500 million Emergency Food Security and Resilience Support Project to bolster Egypt's efforts to ensure that poor and vulnerable households have uninterrupted access to bread, help strengthen the country's resilience to food crises, and support to reforms that will help improve nutritional outcomes.
- A $130 million loan for Tunisia, seeking to lessen the impact of the Ukraine war by financing vital soft wheat imports and providing emergency support to cover barley imports for dairy production and seeds for smallholder farmers for the upcoming planting season.
In May 2022, the World Bank Group and the G7 Presidency co-convened the Global Alliance for Food Security, which aims to catalyze an immediate and concerted response to the unfolding global hunger crisis. The Alliance has developed the publicly accessible Global Food and Nutrition Security Dashboard, which provides timely information for global and local decision-makers to help improve coordination of the policy and financial response to the food crisis.
The heads of the FAO, IMF, World Bank Group, WFP, and WTO released a Third Joint Statement on February 8, 2023. The statement calls to prevent a worsening of the food and nutrition security crisis, further urgent actions are required to (i) rescue hunger hotspots, (ii) facilitate trade, improve the functioning of markets, and enhance the role of the private sector, and (iii) reform and repurpose harmful subsidies with careful targeting and efficiency. Countries should balance short-term urgent interventions with longer-term resilience efforts as they respond to the crisis.
Last Updated: Dec 04, 2023