Latest Update – June 5, 2023
Domestic food price inflation remains high around the world. Information from the latest month between January 2023 and April 2023 for which food price inflation data are available shows high inflation in most low- and middle-income countries, with inflation higher than 5% in in 70.6% of low-income countries, 81.4% of lower-middle-income countries, and 84% of upper-middle-income countries, with many experiencing double-digit inflation. In addition, 80.4% 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 in 84.5% from 161 countries where data is available.
Download the latest brief on rising food insecurity and World Bank responses
The agricultural, cereal, and export price indices closed 4%, 3%, and 3% lower, respectively, compared to two weeks ago. Wheat prices saw a significant decrease of 11% compared to two weeks ago, while rice and maize prices were relatively stable. On a year-on-year basis, maize and wheat prices are 25% and 55% lower, respectively, while rice prices are 13% higher. Maize prices are 15% higher than in January 2021, while wheat and rice prices are 11% and 1% lower, respectively (See “pink sheet” data for agricultural commodity and food commodity prices indices, updated monthly.)
On May 17, 2023, Russia agreed to a two-month extension of the Black Sea Grain Initiative, a deal that has allowed Ukraine to ship grain through the Black Sea to parts of the world facing hunger, boosting global food security. Over 30 million tonnes of food have been exported under the initiative and is reaching some of the world’s most vulnerable people and places—including 30,000 tonnes of wheat recently exported from Ukraine to Sudan. Extending the initiative mainly provides relief for countries in Africa, the Middle East, and parts of Asia that rely on Ukrainian wheat, barley, vegetable oil, and other affordable food products, especially as drought takes a toll. The initiative helped lower prices of food commodities such as wheat over the last year, although domestic food price inflation remains high in many countries.
The Food and Agriculture Organization of the United Nations (FAO) and the World Food Programme (WFP) warn that food security is likely to deteriorate further in 18 hunger hotspots across 22 countries in the outlook period of June to November 2023:
- Afghanistan, Nigeria, Somalia, South Sudan, and Yemen remain of highest concern for the June to November 2023 outlook. Haiti, Sudan, and the Sahel region (Burkina Faso and Mali) have been elevated to levels of the highest concern.
- The Central African Republic, the Democratic Republic of the Congo, Ethiopia, Kenya, Myanmar, Pakistan, and Syria are of very high concern. All these hotspots have many people in IPC/CH Phase 4 (Emergency), coupled with worsening drivers that are expected to intensify life threatening conditions in the coming months.
- Guatemala, Honduras, and Malawi remain of high concern, with acute food insecurity likely to deteriorate further during the outlook period. El Salvador, Lebanon, and Nicaragua have been added to the list of hunger hotspot countries since the September 2022 edition.
In many of these countries, organized violence and armed conflict continue to be key drivers of acute food insecurity. Economic risks also factor into food insecurity trends, with the global economy expected to slow in 2023 amid monetary tightening in advanced economies, persistently high international commodity prices, and overall reduction in donor support to offset global hunger. Weather extremes remain significant drivers of food insecurity in some countries and regions.
The International Food Policy Research Institute (IFPRI) examines three factors that will affect global rice markets in the coming months: fertilizer availability for farming; El Niño and its likely impact on rice production; and trade policies of large rice-exporting countries. In terms of fertilizer availability, countries in South and Southeast Asia account for almost 60% of global rice production and over 80% of global rice exports, relying heavily on fertilizer imports. With sanctions placed on major exporters, rice producers adjusted by shifting to alternate suppliers. If shortages of fertilizer components persist into the new crop year, yields could be affected. In addition, an upcoming El Niño and a positive Indian Ocean dipole potentially resulting in warm, dry weather could affect rice production. In addition to these risks, trade restrictions pose a major threat to rice prices. A recent unpublished study estimated that a 5.5-percentage-point increase in food inflation increases the likelihood of a country imposing export restrictions on commodities by 37.8%. As such, a combination of El Niño and lack of fertilizers could increase prices; if countries restrict exports, prices could increase even further.
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 March 13, 2023, 20 countries have implemented 26 food export bans, and 10 have implemented 14 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 achieved its target of making $30 billion commitment for food and nutrition security response. Between April to December 2022, the Bank’s food and nutrition security commitments in new lending have passed the $12 billion mark – with almost half for Africa, which is one of the hardest hit regions by the food crisis. 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, 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: Jun 05, 2023
