Latest Update – September 18, 2023
Domestic food price inflation remains high around the world. Information from the latest month between May and August 2023 for which food price inflation data are available shows high inflation in many low- and middle-income countries, with inflation higher than 5% in 52.6% of low-income countries, 86% of lower-middle-income countries, and 64% of upper-middle-income countries and many experiencing double-digit inflation. In addition, 73.2% of high-income countries 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 (measured as year-on-year change in the overall consumer price index) in 81% of the 162 countries for which food CPI and overall CPI indexes are both available.
Since the last update on July 27, the agriculture and cereal price indices closed 6% and 10% lower, respectively, while the export price index closed at the same level. The decline in cereal price index has been driven by maize and wheat prices, which are 13% and 24% lower, respectively, since the last update. On a year-on-year basis, maize and wheat prices are also 28% and 31% lower. However, rice prices continue their rising trend since May and are 31% higher. Compared to January 2021, maize prices are 6% lower, wheat prices are 12% lower, while rice prices are 16% higher. (See “pink sheet” data for agricultural commodity and food commodity prices indices, updated monthly.)
The September 2023 edition of the Agricultural Market Information System Market Monitor highlights recent developments in agricultural commodity markets, which have been dominated by India's export restrictions on rice and the ongoing war in Ukraine. Wheat prices continue to face downward pressure from abundant Black Sea exports prior to the termination of the agreement, and the termination of the Black Sea Grain Initiative and Russian attacks on Ukrainian export facilities have increased market volatility, although prospects for global soybean and maize production this year are positive, with some stock rebuilding expected despite dry conditions in Argentina, parts of Europe, and North America. India announced bans on non-basmati white rice exports on July 20, 2023, and further restrictions on basmati rice exports on August 27, 2023, causing disruption and price spikes in rice markets. The Market Monitor highlights recent surges in agricultural input prices, particularly those linked to fossil fuel–based energy sources such as mineral fertilizers, and related concerns about global food security.
In the upcoming 2023-24 season, the global grain market is poised for improvement, primarily due to record-level production of three staple grains: wheat, maize, and rice. Record-high production of wheat is forecasted, which can be attributed to various factors: Argentina is recovering from a severe drought, which had hampered its wheat output; Canada anticipates near-record wheat production; and substantial harvests are expected in China, the European Union, and India. These combined conditions are expected to result in unprecedented global wheat production. Maize production is also forecasted to reach record levels in 2023/24. The driving forces include expected increases in production in Argentina, China, the European Union, and the United States. Pakistan is expected to recover from a poor harvest season for rice caused by extreme flooding, but India, which had been a significant contributor to global rice exports, has imposed a ban on non-basmati rice exports. This ban, accounting for nearly half of India's rice exports, has tightened global rice supplies, affecting the overall dynamics of the market. Despite these restrictions, it is anticipated that global grain supplies will grow by approximately 60 million tonnes in 2023/24, slightly exceeding long-term average annual growth.
The Food and Agriculture Organization (FAO) describes the varying regional impacts of the El Niño's phenomenon. In East Africa, the El Niño-induced above-average rainfall presents a mixed blessing. While it can aid in recovering from ongoing drought conditions and boost crop and livestock production, it also brings the risk of heavy rainfall, flooding, and landslides, particularly in areas like eastern Ethiopia, Kenya, Somalia, and southern Uganda. In Asia and the Pacific, the effects of El Niño vary across the region, impacting agriculture and food security differently. Southeast Asian countries anticipate drought-related losses in key cereal crops, pulses, and cash crops, as well as threats to the aquaculture sector from saltwater intrusion. Livestock mortality is expected due to higher temperatures and water scarcity. In Latin America and the Caribbean, El Niño's impacts include delays in planting, crop losses, and livestock challenges in countries like Bolivia, Colombia, Ecuador, Central American nations, Peru, and Venezuela.
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 September 11, 2023, 19 countries have implemented 27 food export bans, and 7 have implemented 12 export-limiting measures.
World Bank Action
As part of a comprehensive, global response to the food security crisis, in April 2022 the World Bank announced that it is making up to $30 billion available over a period of 15 months, including $12 billion in new projects. The financing is to scale up short- and long-term responses along four themes to boost food and nutrition security, reduce risks, and strengthen food systems: (i) support producers and consumers, (ii) facilitate increased trade in food and trade inputs, (iii) support vulnerable households, and (iv) invest in sustainable food and nutrition security. The Bank has now surpassed its target of $30 billion commitment for food and nutrition security response. Some examples include:
- 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.
- The $2.3 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. 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.
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: Sep 18, 2023