The State Of Food Insecurity In The World 2008


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The State Of Food Insecurity In The World 2008

  1. 1. The State of Food Insecurity in the World 2008 High food prices and food security – threats and opportunities
  2. 2. Acknowledgements The preparation of The State of Food The analysis of the impact of high food Ricardo Sibrian, Cinzia Cerri, Rafik Insecurity in the World 2008 was carried prices at household level was carried Mahjoubi, Seevalingum Ramasawmy out under the overall leadership of out by the FAO Rural Income Generating and Nathalie Troubat (ESS) provided Hafez Ghanem, Assistant Director- Activities team led by Benjamin Davis vital support to the data analysis. General, and the guidance of the with the participation of Alberto Zezza, management team of the Economic and Gustavo Anriquez, Panagiotis Karfakis Valuable external comments and Social Development Department. The and David Dawe, while the section inputs were received from Hartwig technical coordination of the publication “Coping and nutritional outcomes” de Haen, Peter Hazell, Yasmeen Khwaja was carried out by Kostas Stamoulis received valuable contributions from and Andrew MacMillan. Bruce and Mark Smulders of the Agricultural Diego Rose of Tulane University, Brian Isaacson provided excellent editorial Development Economics Division (ESA). Thompson and Marie Claude Dop of the support. The staff of the Statistics Division (ESS) Nutrition and Consumer Protection generated the underlying data on Division, and Maarten Immink and The Electronic Publishing Policy and undernourishment, including the Cristina Lopriore (ESA). Support Branch of the Knowledge and estimates for 2007. Communication Department (KC) The chapter “Towards the Summit provided editorial, language editing, The chapter “Undernourishment around commitments” benefited from technical graphic and production services. the world” was prepared by the inputs by James Tefft, Panagiotis Translations were provided by the Economic and Social Development Karfakis, David Dawe and Alberto Meeting Programming and Department with key technical Zezza (ESA), and Andrew Shepherd Documentation Service of KC. contributions provided by Henri from the Rural Infrastructure and Josserand, Kisan Gunjal and Ali Gürkan, Agro-Industries Division. Overall funding was provided under the Markets and Trade Division (EST); FAO interdepartmental programme on Ricardo Sibrian (ESS); and Andrew Food Insecurity and Vulnerability Marx, Jeff Marzilli, Josef Schmidhuber Information and Mapping Systems and Jakob Skoet (ESA). (FIVIMS). Published in 2008 by the Food and Agriculture Organization of the United Nations Viale delle Terme di Caracalla, 00153 Rome, Italy The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not mentioned. The designations employed and the presentation of material in the maps do not imply the expression of any opinion whatsoever on the part of FAO concerning the legal or constitutional status of any country, territory or sea area, or concerning the delimitation of frontiers. Copies of FAO publications All rights reserved. Reproduction and dissemination of material in this information product for can be requested from: educational or other non-commercial purposes are authorized without any prior written permission from the copyright holders provided the source is fully acknowledged. Reproduction of material in this information product for resale or other commercial purposes is prohibited without written permission SALES AND MARKETING GROUP of the copyright holders. Applications for such permission should be addressed to the Chief, Electronic Communication Division Publishing Policy and Support Branch, Communication Division, FAO, Viale delle Terme di Caracalla, Food and Agriculture Organization 00153 Rome, Italy or by e-mail to of the United Nations © FAO 2008 E-mail: ISBN 978-92-5-106049-0 Fax: (+39) 06 57053360 Printed in Italy Web site: Photographs inter-e.htm From left to right on cover: FAO/22071/G. Bizzarri; FAO/24503/D. White; FAO/23283/A. Proto.
  3. 3. The State of Food Insecurity in the World 2008 High food prices and food security – threats and opportunities
  4. 4. About this report he State of Food Insecurity in T serious impact on the poorest smallholder agriculture in the the World 2008 represents populations in the world, developing world. FAO’s ninth progress report on drastically reducing their already As discussed in the report, world hunger since the 1996 World low purchasing power. High FAO’s undernourishment Food Summit (WFS). In previous food prices have increased estimates for the period 1990–92 editions, FAO has expressed deep levels of food deprivation, while to 2003–05 have been revised on concern over the lack of progress in placing tremendous pressure on the basis of new standards for reducing the number of hungry achieving internationally human energy requirements people in the world, which has agreed goals on hunger by 2015. established by the United Nations remained persistently high. This report also examines (UN) and 2006 revisions of UN This year’s report focuses on how high food prices present population data. high food prices, which are having a an opportunity to relaunch Key messages 1 World hunger is increasing. The World Food Summit (WFS) goal of halving the number of undernourished people in the world by 2015 is becoming more difficult to reach for many 4 Initial governmental policy responses have had limited effect. To contain the negative effects of high food prices, governments have introduced various measures, such as countries. FAO’s most recent estimates put the number of price controls and export restrictions. While hungry people at 923 million in 2007, an increase of more understandable from an immediate social welfare than 80 million since the 1990–92 base period. Long-term perspective, many of these actions have been ad hoc and estimates (available up to 2003–05) show that some are likely to be ineffective and unsustainable. Some have countries were well on track towards reaching the WFS and had damaging effects on world price levels and stability. Millennium Development Goal (MDG) targets before the period of high food prices; however, even these countries may have suffered setbacks. 5 High food prices are also an opportunity. In the long run, high food prices represent an opportunity for agriculture (including smallholder farmers) throughout the developing 2 High food prices share much of the blame. The most rapid increase in chronic hunger experienced in recent years occurred between 2003–05 and 2007. FAO’s provisional world, but they will have to be accompanied by the provision of essential public goods. Smallholder gains could fuel broader economic and rural development. Farming estimates show that, in 2007, 75 million more people were households can see immediate gains; other rural added to the total number of undernourished relative to households may benefit in the longer run if higher prices 2003–05. While several factors are responsible, high food turn into opportunities for increasing output and creating prices are driving millions of people into food insecurity, employment. worsening conditions for many who were already food-insecure, and threatening long-term global food security. 6 A comprehensive twin-track approach is required. Governments, donors, the United Nations, non- governmental organizations, civil society and the private 3 The poorest, landless and female-headed households are the hardest hit. The vast majority of urban and rural households in the developing world rely on food sector must immediately combine their efforts in a strategic, twin-track approach to address the impact of high food prices on hunger. This should include: (i) measures to purchases for most of their food and stand to lose from enable the agriculture sector, especially smallholders in high food prices. High food prices reduce real income and developing countries, to respond to the high prices; and (ii) worsen the prevalence of food insecurity and malnutrition carefully targeted safety nets and social protection among the poor by reducing the quantity and quality of programmes for the most food-insecure and vulnerable. food consumed. This is a global challenge requiring a global response. 2 The State of Food Insecurity in the World 2008
  5. 5. Contents Foreword 4 Millions more food-insecure – urgent action and substantial investments needed Undernourishment around the world 6 High food prices: another 75 million hungry 9 Driving forces of high food prices 12 Taking stock of world hunger: revised estimates 18 Hotspots and emergencies High food prices and food security 22 Poor households worst hit 28 Coping and nutritional outcomes Towards the Summit commitments 32 Policy responses: effective and sustainable? 34 Smallholder agriculture for poverty reduction 41 Ensuring access to food 43 Concluding remarks Technical annex 45 Updated parameters 48 Tables 56 Notes The State of Food Insecurity in the World 2008 3
  6. 6. Foreword Millions more food-insecure – urgent action and substantial investments needed S oaring food prices have Summit and Millennium Summit signal the desperation caused by triggered worldwide concern hunger reduction targets is soaring food and fuel prices for about threats to global food measured. Early gains in hunger millions of poor and also middle- security, shaking the unjustified reduction achieved in a number of class households. Analysis in this complacency created by many years developing regions by the mid-1990s report shows that high food prices of low commodity prices. From 3 to have not been sustained. Hunger has have a particularly devastating effect 5 June 2008, representatives of 180 increased as the world has grown on the poorest in both urban and countries plus the European Union, richer and produced more food than rural areas, the landless and female- including many Heads of State and ever in the last decade. As this report headed households. Unless urgent Government, met in Rome to express has pointed out many times, this measures are taken, high food prices their conviction “that the disappointing outcome reflects the may have detrimental long-term international community needs to lack of concerted action to combat effects on human development as take urgent and coordinated action to hunger despite global commitments. households, in their effort to deal combat the negative impacts of Soaring food prices have reversed with rising food bills, either reduce soaring food prices on the world’s some of the gains and successes in the quantity and quality of food most vulnerable countries and hunger reduction, making the consumed, cut expenditure on health populations”. At the G8 Summit in mission of achieving the and education or sell productive Japan in July 2008, the leaders of the internationally agreed goals on assets. Children, pregnant women world’s most industrialized nations hunger reduction more difficult. The and lactating mothers are at highest voiced their deep concern “that the task of reducing the number of risk. Past experience with high food steep rise in global food prices, hungry people by 500 million in the prices fully justifies such fears. coupled with availability problems in remaining seven years to 2015 will a number of developing countries, is require an enormous and resolute A strategic response: threatening global food security”. global effort and concrete actions. the twin-track approach Moving away from Poorest and most vulnerable The food crisis brought about by hunger reduction goals worst hit soaring food prices in many developing countries needs an The concerns of the international Food price increases have urgent and concrete response. At the community are well founded. For the exacerbated the situation for many same time, it should be recognized first time since FAO started countries already in need of that high food prices are the result of monitoring undernourishment emergency interventions and food a delicate balance between food trends, the number of chronically assistance due to other factors such supply and demand. These two facts hungry people is higher in the most as severe weather and conflict. show that, more than ever before, recent period relative to the base Countries already afflicted by the twin-track approach to hunger period. FAO estimates that, mainly as emergencies have to deal with the reduction advocated by FAO and its a result of high food prices, the added burden of high food prices on development partners is key to number of chronically hungry people food security, while others become addressing not only the threats to in the world rose by 75 million in more vulnerable to food insecurity food security caused by high food 2007 to reach 923 million. because of high prices. Developing prices but also the opportunities that The devastating effects of high countries, especially the poorest, arise. In the immediate term, food prices on the number of hungry face difficult choices between carefully targeted safety nets and people compound already worrisome maintaining macroeconomic stability social protection programmes are long-term trends. Our analysis and putting in place policies and urgently required in order to ensure shows that in 2003–05, before the programmes to deal with the that everyone is able to access the recent rise in food prices, there were negative impact of high food and fuel food they need for a healthy life. In 6 million more chronically hungry prices on their people. parallel, the focus should be on people in the world than in 1990–92, Riots and civil disturbances, which helping producers, especially small- the baseline period against which have taken place in many low- and scale farmers, to boost food progress towards the World Food middle-income developing countries, production, mainly by facilitating 4 The State of Food Insecurity in the World 2008
  7. 7. their access to seeds, fertilizers, At the same time, increased donors, United Nations agencies, animal feed and other inputs. This resources must be devoted to more international institutions, civil society should improve food supplies and sustainable technologies that and the private sector all have lower prices in local markets. support more-intensive agriculture important roles to play in the global In the medium-to-long term, the and that assist farmers to increase fight against hunger. focus should be on strengthening the the resilience of their food It is vital that the international agriculture sectors of developing production systems and to cope with community share a common vision of countries to enable them to respond climate change. how best to assist governments in to growth in demand. Expanding food eradicating chronic hunger, and that production in poor countries through A coherent and coordinated strategy all parties work together to translate enhanced productivity must is vital this vision into reality on the scale constitute the cornerstone of required. The situation cannot wait policies, strategies and programmes Many developing countries have any longer. seeking to attain a sustainable taken unilateral action in efforts to The resolve of world leaders at the solution for food security. High food contain the negative effects of June 2008 Summit on World Food prices and the incentives they high food prices, including the Security in Rome and the fact that provide can be harnessed to imposition of price controls and the G8 Summit placed concerns relaunch agriculture in the export restrictions. Such responses surrounding high food and fuel developing world. This is essential may not be sustainable and would prices at the top of its agenda not only to face the current crisis, actually contribute to further rises in demonstrates a growing political will but also to respond to the increasing world price levels and instability. to address hunger. Moreover, demand for food, feed and biofuel To face threats and exploit substantial commitments have been production and to prevent the opportunities posed by high food made for increased financial support recurrence of such crises in the prices effectively and efficiently, to developing countries to address future. strategies must be based on a the food security threats caused by Relaunching agriculture in comprehensive and coordinated high food prices. Nevertheless, developing countries is also critical multilateral response. unless this political will and donor for the achievement of meaningful Urgent, broad-based and large- pledges are turned into urgent and results in poverty and hunger scale investments are needed in real actions, millions more will fall reduction and to reverse the current order to address in a sustainable into deep poverty and chronic worrisome trends. This will entail manner the growing food-insecurity hunger. empowering large numbers of problems affecting the poor and The need for concerted action to small-scale farmers worldwide to hungry. No single country or combat hunger and malnutrition has expand agricultural output. Turning institution will be able to resolve this never been stronger. I am hopeful agricultural growth into an engine crisis on its own. Governments of that the global community will rise to for poverty reduction means developing and developed countries, the challenge. addressing the structural constraints facing agriculture, particularly for the millions of smallholder producers in agriculture-based economies. This calls for expanded public investment in rural infrastructure and essential Jacques Diouf services – in roads, irrigation FAO Director-General facilities, water harvesting, storage, slaughterhouses, fishing ports and credit, as well as electricity, schools and health services – in order to create favourable conditions for private investment in rural areas. The State of Food Insecurity in the World 2008 5
  8. 8. Undernourishment around the world High food prices: another 75 million hungry H igher food prices have triggered an increase in hunger worldwide. Provisional FAO estimates show that the number of chronically hungry people in 2007 increased by 75 million over and above FAO’s estimate of 848 million undernourished in 2003–05, with much of the increase attributed to high food prices (details in Table 1, page 48). This brought the number of undernourished worldwide to 923 million in 2007. Given the continued and drastic price rises in staple cereals and oil crops well into the first quarter of 2008, the number of people suffering from chronic hunger is likely to have increased further. At 923 million people, the number of undernourished in 2007 was more than 80 million higher than in 1990–92, the base period for the World Food Summit (WFS) hunger reduction target. This makes the task of bringing the number of undernourished to 420 million by 2015 more difficult, especially in an environment of high food prices and uncertain global economic prospects. The impact of rising food prices on the proportion of undernourished people (the Millennium Development Goal [MDG] 1 hunger indicator) is worrisome. Good progress in reducing the share of hungry people in the developing world had been achieved – down from almost 20 percent in 1990–92 to less than 18 percent in 1995–97 and just above 16 percent in 2003–05. The estimates show that rising food prices have thrown that progress into reverse, with the proportion of reduction targets has suffered a undernourishment is confirmed by undernourished people worldwide serious setback in terms of both the an analysis of household-level data moving back towards 17 percent. number of undernourished and the (pages 22–27). The analysis confirms Hence, amid soaring food prices, prevalence of hunger. a negative impact of soaring food progress towards achieving The estimated impact of high food prices, especially on the poor and internationally agreed hunger prices on the global estimates of most vulnerable. 6 The State of Food Insecurity in the World 2008
  9. 9. Price surge halts progress How FAO estimated the impact on undernourishment At the regional level, the largest increases in the number of The most recent complete estimates human consumption (accounting for undernourished people in 2007 of undernourishment at the country about 80 percent of dietary energy occurred in Asia and the Pacific level are those for the three-year supply). Combining the two was and in sub-Saharan Africa, the period 2003–05. These provide the basis necessary as FAO’s core database two regions that together for FAO’s regular monitoring and includes complete data only up to 2005; accounted for 750 million analysis on progress towards hunger the second database, while less (89 percent) of the hungry people reduction targets, and they are complete, includes estimates up to 2008, in the world in 2003–05. FAO presented in the section “Taking stock of hence capturing much of the period in estimates that rising prices have world hunger”. which food prices were rising rapidly. plunged an additional 41 million Responding to growing concerns A relationship between the historical people in Asia and the Pacific and about the implications of soaring food data contained in the two databases was 24 million in sub-Saharan Africa prices for world food security, FAO established in order to extrapolate the into hunger. developed a methodology to estimate the core database to 2007. Together, Africa and Asia account impact of high food prices on The 2007 estimates capturing the for more than three-quarters of the undernourishment in 2007, based on impact of food prices on hunger were developing world’s low-income partial data for 2006–08. Trends in generated at the global and regional food-deficit countries (LIFDCs). dietary energy supply derived from levels only, and are not available at the Africa is also home to 15 of the two different databases maintained by country level. As such, and given the way 16 countries where the prevalence FAO were used, namely: (i) detailed the 2007 data were computed, the of hunger already exceeded “supply utilization accounts” from FAO’s estimates should be considered 35 percent, making them core database (FAOSTAT) covering provisional. particularly vulnerable to higher hundreds of commodities per country; food prices. and (ii) more recent data covering While the numbers affected are cereals, oils and meats available for smaller, Latin America and the The State of Food Insecurity in the World 2008 7
  10. 10. Undernourishment around the world Caribbean and the Near East and more than a decade of steady worldwide in 2007 validate concerns North Africa regions have also progress toward the WFS goal). about a global food security crisis experienced increases in hunger as a Overall, the rising prevalence of following high food prices, at least in result of rising food prices (a sharp hunger and the estimated increase the short term. reversal for Latin America after of 75 million undernourished people Are FAO estimates conservative? The box on page 7 describes how FAO produced estimates on world Using a different methodology, the United States Department hunger for 2007. Partly as a result of the updated parameters, the of Agriculture (USDA) estimates that the impact of high food calculation of the number of undernourished is based on the prices has resulted in an increase in the number of assumption that the distribution of dietary energy intake within a undernourished of 133 million people in 70 countries analysed.1 country or region remained unchanged between periods of “low” A key distinction between the two approaches for estimating and “high” food prices. On the other hand, the household-level hunger relates to the way in which inequality in the distribution analysis (pages 22–27) shows that, as a result of higher food prices, of food available for human consumption is calculated. the poor are proportionately worse off than the rich in the short run. Compared with FAO, USDA uses a higher (and constant) In-depth analysis of eight countries has shown that the cut-off point for determining the hunger threshold. It uses a distribution of per person dietary energy supply among value of 2 100 kilocalories per person per day while FAO values households deteriorates following drastic increases in food depend on the age and gender distribution in each country, prices. Thus, FAO’s estimate of the global impact of high food typically ranging from as low as 1 600 to 2 000 kilocalories per prices on hunger may well be an underestimate. Therefore, it can person per day. safely be stated that high food prices have resulted in at least a 1 United States Department of Agriculture. 2008. Food Security Assessment, 2007, by S. Rosen, S. Shapouri, K. Quanbeck and B. Meade. Economic Research further 75 million hungry people – people being deprived of access Service Report GFA-19 (available at to sufficient food on a daily basis. GFA.PDF). 8 The State of Food Insecurity in the World 2008
  11. 11. Driving forces of high food prices A s agricultural commodity prices rose sharply in 2006 and 2007 and continued to rise even further in early 2008, the forces behind soaring food prices were examined from various perspectives in an effort to design response options. This section lists some of the main drivers behind soaring food prices.1 Medium-term projections indicate that, while food prices should stabilize in 2008–09 and subsequently fall, they will remain above their pre-2004 trend level for the foreseeable future.2 The FAO index of nominal food prices doubled between 2002 and 2008. In real terms, the increase was less pronounced but still dramatic. The real food price index began rising in 2002, after four decades of predominantly declining trends, and spiked sharply upwards in 2006 and 2007. By mid-2008, real food prices were 64 percent above their 2002 levels. The only other period of significantly rising real food prices since this data series began occurred in the early 1970s in the wake of the first international oil crisis. Be they policy measures, investment decisions or emergency interventions, appropriate actions to address the human and economic impacts of soaring food prices require a thorough understanding of the underlying driving forces. These driving forces are many and complex, and they include both supply-side and demand-side factors. Long-term structural trends underlying growth in demand for food have coincided with short-term Supply-side forces agriculture policies in recent years. cyclical or temporary factors One result has been significantly adversely affecting food supply, Stock levels and market volatility. lower levels of cereal stocks thus resulting in a situation where Several of the world’s major cereal compared with earlier years. The growth in demand for food producers (China, the European ratio of world cereal stocks to commodities continues to outstrip Union, India and the United States of utilization is estimated at growth in their supply. America) have changed their 19.4 percent for 2007/08, the lowest The State of Food Insecurity in the World 2008 9
  12. 12. Undernourishment around the world in three decades. Lower stock levels Food prices: from world to domestic markets contribute to higher price volatility in world markets because of uncertainties about the adequacy of Analysis of country data suggests an experienced an average real appreciation supplies in times of production incomplete transmission of world prices of 20 percent against the US dollar shortfalls. denominated in US dollars to domestic (compared with 18 percent for high- prices (expressed in local currency). Even income countries). Exchange rate Production shortfalls. Extreme before the price hikes of 2008, world appreciation nullified some of the weather events in 2005–07, including cereal prices had risen substantially increase in world market prices drought and floods, affected major between 2002 and 2007. In this period, (expressed in US dollars) for both food cereal-producing countries. World world market prices for rice, wheat and importers and exporters into 2007. Some cereal production fell by 3.6 percent maize increased by 50, 49 and 43 percent, trade policy and other commodity- in 2005 and 6.9 percent in 2006 respectively, in real US dollar terms. specific measures further limited price before recovering in 2007. Two However, the transmission to domestic transmission. successive years of lower crop yields prices was usually less than complete, While domestic policies and exchange in a context of already low stock with prices in local currency terms not rate movements mitigated the impact of levels resulted in a worrisome supply rising as much as the international world price increases for some time, situation in world markets. Growing market prices – as was the case with rice domestic prices eventually increased concern over the potential effect of in various Asian countries. substantially in many countries in late climate change on future Several factors contributed to this 2007 and early 2008. availabilities of food supplies dampening of the transmission of world aggravated these fears. to domestic prices. The US dollar has Source: FAO. 2008. Have recent increases in been depreciating for several years international cereal prices been transmitted to Petroleum prices. Until mid-2008, against a range of currencies, including domestic economies? The experience in seven the increase in energy prices had large Asian countries, by D. Dawe. ESA Working those of many developing countries. Paper No. 08–03 (available at been very rapid and steep, with one From 2002 to 2007, low-income countries docrep/fao/010/ai506e/ai506e00.pdf). major commodity price index (the Reuters-CRB Energy Index) more than tripling since 2003. Petroleum and food prices are highly correlated. The rapid rise in petroleum prices exerted upward pressure on food prices as fertilizer prices nearly tripled and transport costs doubled in 2006–08. High fertilizer prices have direct adverse effects on the cost of production and fertilizer use by producers, especially small-scale farmers. Demand-side forces Biofuel demand. The emerging biofuel market is a significant source of demand for some agricultural commodities, such as sugar, maize, cassava, oilseeds and palm oil. The stronger demand for these commodities caused a surge in their prices in world 10 The State of Food Insecurity in the World 2008
  13. 13. markets, which in turn has led to Other factors their increased volatility. Further higher food prices. While biofuel research is needed. The role of production and consumption is Trade policies. In an attempt to financial investors in influencing food supported by government policies in minimize the impacts of higher food prices and whether there is a need a number of countries, rapid prices on vulnerable population for appropriate regulations to limit increases in crude oil prices have groups within countries, a number of the impact of speculative bubbles on further contributed to growing governments and private-sector food prices are increasingly issues of demand for agricultural actors have taken measures that concern. commodities for biofuel feedstock. have at times exacerbated the effects Biofuel production will utilize an of the above-mentioned underlying Will high prices persist? estimated 100 million tonnes of trends on food prices in international cereals (4.7 percent of global cereal markets. The adoption of export Cereal production has recovered, production) in 2007–08. restrictions and bans by some increasing by 4.7 percent in 2007 and countries has reduced global a projected 2.8 percent in 2008. Consumption patterns. The first supply, aggravated shortages and However, although food prices may decade of this century has seen rapid eroded trust among trading fall from current high levels as some and sustained economic growth and partners. In some countries, such of the short-term factors behind the increased urbanization in a number actions have also reduced farmers’ high prices subside, real prices of of developing countries, most incentives to respond to higher food commodities for the next remarkably in large emerging international prices. Speculative decade are expected to remain above economies such as China and India. re-stocking or pre-stocking by large those of the previous ten years. These two countries alone account importers with relatively strong cash Three main assumptions underlie for more than 40 percent of the positions has also contributed to this expectation. First, economic world’s population. As the higher prices. growth in the developing world, purchasing power of hundreds of particularly in large emerging millions of people has increased, so Financial markets. The recent economies, is expected to continue has their overall demand for food. turmoil in traditional asset markets at about 6 percent per year, further This new wealth has also led to has had an impact on food prices, as raising the purchasing power and changes in diet, especially to greater new types of investors have become changing the dietary preferences of consumption of meat and dairy involved in derivates markets based hundreds of millions of consumers. products, which are heavily on agricultural commodities in the Second, biofuel demand is likely to dependent on cereal inputs. hope of achieving better returns than continue its rapid growth, partly However, the recent high those available on traditional assets. driven by high oil prices and commodity prices do not appear to Global trading activity in futures and government policies and partly by have originated in these emerging options combined has more than slow developments in widespread markets. Cereal imports by China doubled in the last five years. In the adoption of second-generation and India have declined from an first nine months of 2007, it grew by biofuels and technologies. According average of about 14 million tonnes in 30 percent over the previous year. to the International Energy Agency, the early 1980s to roughly This high level of speculative the share of the world’s arable land 6 million tonnes in the past three activity in agricultural commodity devoted to growing biomass for years, suggesting that changes in markets has led some analysts to liquid biofuels could triple in the next consumption patterns have largely indicate increased speculation as a 20 years.3 Third, in addition to land been met through domestic significant factor in soaring food and water constraints, increasing production. While continued strong prices. However, it is not clear costs of production, including higher economic development in China and whether speculation is driving prices fertilizer prices and rising India may increasingly affect food higher or whether this behaviour is transportation costs resulting from prices, this has not yet been an the result of prices that are rising in high petroleum prices, are likely to exceptional factor. any case. Either way, large inflows of affect food production adversely, funds could partly account for the compounding the challenge of persistence of high food prices and meeting global food demand.4 The State of Food Insecurity in the World 2008 11
  14. 14. Undernourishment around the world Taking stock of world hunger: revised estimates Global overview with large populations would obviously have an important impact F AO’s long-term estimates of on the overall reduction of hunger in undernourishment at the the world. Among these, China regional and country levels for has made significant progress in the period from 1990–92 to 2003–05 reducing undernourishment (using the FAOSTAT database) following years of rapid economic confirm insufficient progress growth. towards the WFS and MDG hunger The proportion of people who reduction targets even before the suffer from hunger in the total negative impact of soaring food population remains highest in sub- prices. Worldwide, 848 million people Saharan Africa, where one in three suffered from chronic hunger in people is chronically hungry. Latin 2003–05, the most recent period for America and the Caribbean were which individual country data are continuing to make good progress in available. This number is slightly hunger reduction before the higher than the 842 million people dramatic increase in food prices; who were undernourished in together with East Asia and the Near 1990–92, the WFS and MDG baseline East and North Africa, these regions period. maintain some of the lowest levels of The vast majority of the world’s undernourishment in the developing undernourished people live in world (Table 1, page 48). developing countries, which were home to 832 million chronically Sub-Saharan Africa overall and agriculture-sector hungry people in 2003–05. Of these development, placed a burden on people, 65 percent live in only seven Sub-Saharan Africa’s population hunger reduction efforts. However, countries: India, China, the grew by 200 million between the while the overall number of Democratic Republic of the Congo, early 1990s and 2003–05, to undernourished people in the Bangladesh, Indonesia, Pakistan and 700 million. This substantial region increased by 43 million Ethiopia. Progress in these countries increase, coupled with insufficient (from 169 million to 212 million), 12 The State of Food Insecurity in the World 2008
  15. 15. country, the Democratic Republic of product (GDP) has grown steadily. A Revised undernourishment the Congo. Fuelled by widespread recent World Bank study found that estimates and persistent conflict, the number more than twice as many Ghanaians of its chronically hungry shot up from are moving back into agriculture as Compared with estimates presented in 11 million to 43 million and the are leaving it. the 2006 edition of this report, data for proportion of undernourished rose In the 14 African countries on both the 1990–92 baseline and from 29 to 76 percent. The number of track to reach the MDG target of subsequent periods have been revised undernourished has risen in another reducing the prevalence of hunger by on the basis of the most recent 25 countries in the region since half by 2015, the agriculture sector standards for human energy 1990–92, presenting it with a major has achieved steady and relatively requirements and of new United Nations challenge in moving more rapidly rapid growth, characterized by gains population statistics incorporated into towards the WFS and MDG hunger in agricultural value added, food FAO’s undernourishment estimates. The reduction targets. production, cereal production and Technical Annex presents the overall At the same time, several of the cereal yields. This is in marked impact of the changes in these key countries that have achieved the contrast to the 14 African countries parameters, and how they have steepest reductions in the proportion that either have failed to reduce the influenced the estimates (pages 45–47). of undernourished are also located prevalence of undernourishment or It is emphasized that the analysis in this in sub-Saharan Africa. They include have seen it increase since 1990–92. section does not take into account the Ghana, the Congo, Nigeria, In these countries, food production effects of high food prices. Mozambique and Malawi, with Ghana has fallen sharply, while agricultural being the only country to have value added has edged up at less reached both the WFS and MDG than one-quarter of the rate targets. Key to Ghana’s success has achieved by the more successful sub-Saharan Africa did achieve some been robust growth, both in the group. Importantly, countries that progress in reducing the proportion economy at large and in the have scored successes include of people suffering from chronic agriculture sector in particular. several that emerged from decades hunger (down from 34 to 30 percent). Spurred by policies that provide a of civil war and conflict, offering Most of the increase in the larger return to producers and by striking evidence of the importance number of hungry people in sub- relatively strong cocoa prices, of peace and political stability for Saharan Africa occurred in a single Ghana’s agricultural gross domestic hunger reduction. The State of Food Insecurity in the World 2008 13
  16. 16. Undernourishment around the world Latin America and the Caribbean levels of national income, strong However, elsewhere in the region, economic growth and strong progress has not been as uniform. Among all the subregions, South productivity growth in their Costa Rica, Jamaica and Mexico America has been the most agriculture sectors, five countries in have joined Cuba on the list of successful in reducing hunger, with South America (Argentina, Chile, countries that successfully reached 10 out of 12 countries well on their Guyana, Peru and Uruguay) have both the WFS and MDG hunger way towards achieving the MDG 1 all reached the WFS and MDG reduction targets in 2003–05. target. Backed by relatively high targets. On the other hand, El Salvador, Guatemala, Haiti and Panama continue to experience difficulties in reducing the prevalence of hunger. Despite facing persistently high levels of political and economic instability, poverty and hunger, Haiti has seen a small reduction in undernourishment since 1990–92. However, with 58 percent of the population suffering from chronic hunger, it has one of the highest levels of undernourishment in the world. Near East and North Africa Countries in the Near East and North Africa region generally experience the lowest levels of undernourishment in the developing world. However, for the Near East as a whole, conflict 14 The State of Food Insecurity in the World 2008
  17. 17. has had an important impact, with the total number of undernourished people nearly doubling from 15 million in 1990–92 to 28 million in 2003–05. This has largely been due to conflict in Afghanistan and Iraq, where the numbers of undernourished people have increased by 4.9 and 4.1 million, respectively. The number of undernourished has also increased in Yemen, where one in three (6.5 million people) suffers from chronic hunger. For North Africa, FAO estimates that about 3 percent of the overall population were still chronically hungry in 2003–05 (4.6 million people as against slightly more than 4 million in 1990–92). While the prevalence of undernourishment is generally low, the entire Near East and North Africa region would have to reduce the number of chronically hungry people from the 33 million in 2003–05 to fewer than 10 million by 2015 for the WFS target to be reached. Asia and the Pacific Like other regions in the world, the Asia and Pacific region shows a mixed picture of success stories and setbacks in hunger reduction. Asia has recorded modest progress in reducing the prevalence of hunger (from 20 to 16 percent) and a moderate reduction in the number (e.g. India, Indonesia and Pakistan; China and India of hungry people (from 582 million see Table 1, page 48). On the to 542 million people). However, positive side, the Southeast Asia By virtue of their size, China and India with a very large population and subregion as a whole has been well combined account for 42 percent of relatively slow progress in hunger on track towards achieving the MDG the chronically hungry people in the reduction, nearly two-thirds of the hunger reduction target, with developing world. The importance of world’s hungry people still live in Viet Nam being the only country that China and India in the overall picture Asia. Among the subregions, South reached this target by 2003–05. warrants some analysis of the main Asia and Central Asia have suffered Some, including Thailand and driving forces behind hunger trends. setbacks in hunger reduction after Viet Nam, have made good progress After registering impressive gains achieving initial progress in some towards the more ambitious WFS between 1990–92 and the mid-1990s, countries with large populations target. progress in reducing hunger in India The State of Food Insecurity in the World 2008 15
  18. 18. Undernourishment around the world 16 The State of Food Insecurity in the World 2008
  19. 19. has stalled since about 1995–97. The the ageing population amount to Key monitoring ratios high proportion of undernourished in about 6.5 million tonnes per year in India in the base period (24 percent) cereal equivalent. Nevertheless, Both the WFS and the MDG targets combined with a high population the prevalence of hunger in India aim to “halve hunger” by 2015. The growth rate means that India has decreased from 24 percent in 1996 World Food Summit called for had a challenging task in reducing 1990–92 to 21 percent in 2003–05, the number of hungry people to be the number of undernourished marking progress towards meeting reduced by 50 percent by 2015, while (Table 1, page 48). the MDG hunger reduction target. under MDG 1, countries have The increase in the number of committed themselves to “halve, undernourished in India can be Progress and setbacks between 1990 and 2015, the traced to a slowing in the growth by country proportion of people who suffer from (even a slight decline) in per capita hunger”. To measure progress or dietary energy supply for human With the number of chronically setbacks in terms of achieving these consumption since 1995–97. On the hungry people in the world in targets, FAO calculates a simple set demand side, life expectancy in India 2003–05 at about the same level as of ratios for each country, dividing has increased from 59 to 63 years in 1990–92 and rising steeply with the estimate of the most recent since 1990–92. This has had an soaring food prices, the WFS target number or proportion of hungry important impact on the overall of halving that number by 2015 has people by the corresponding figure in change in population structure, with become much more challenging. the base period 1990–92. A value of the result that in 2003–05 the growth Barely one-third of the developing 0.5 (one-half) means that the target in minimum dietary energy countries included in FAO’s of “halving hunger” has been requirements had outpaced that of estimates have succeeded in reached. A value lower than 1.0 dietary energy supply. reducing the number of means that progress has been The combination of the declining undernourished people at all since achieved, while a value higher than per capita growth rate in total dietary 1990–92. Of those, only 25 were on 1.0 implies a setback. Figure 15 energy supply and higher per capita track in 2003–05, before the onset of presents the values for the WFS and dietary energy requirements resulted high food prices, to achieve the WFS the MDG hunger reduction targets in an estimated 24 million more target. The challenge will be all the separately for each country (data undernourished people in India in greater if high food prices persist, listed in Table 1 on page 48). 2003–05 compared with the base placing an even larger burden on period. The increased food needs of fighting hunger. The State of Food Insecurity in the World 2008 17
  20. 20. Undernourishment around the world Hotspots and emergencies T he above analysis of long-term monitors the situation on all measures to address hunger trends in undernourishment continents and maintains a list of hotspots. This analysis provides a highlights the marked countries that are in crisis. Many basis for assessing the impact of prevalence of chronic hunger in such countries remain on the GIEWS the sharp rise in agricultural countries that have experienced food list for a long time, or appear commodity, food and fuel prices on crises over several consecutive frequently, and are regarded as countries already in crisis (and on years. Food crises can emerge at any having “hunger hotspots” – areas many others highly vulnerable to time and anywhere in the world as a where a significant proportion of these price shocks). Given the consequence of severe adverse people are severely affected by uncertain impact of soaring food weather conditions, natural persistent or recurring hunger and and fuel prices on countries, disasters, economic shocks, conflicts malnutrition. Figure 17 shows a map households and individuals around or a combination of these factors. In of countries in crisis that require the world, the distinction between support of timely action to mitigate external assistance (33 countries as countries already “in crisis” and – and with the desire to prevent – of August 2008). others “at risk” has become much a further deterioration in the food A retrospective analysis of the less clear, and this presents a security situation of affected nature and underlying causes of past series of challenges for monitoring countries, the FAO Global and ongoing food crises is crucial to and for timely and appropriate Information and Early Warning the framing of appropriate early warning of impending food System (GIEWS) continuously emergency interventions and policy crises. 18 The State of Food Insecurity in the World 2008
  21. 21. Trends in crises have compounded natural ones, 1990s and 27 percent since 2000. ushering in complex and long-lasting Worldwide, flood occurrence has In 2007, a record number of crises. In other instances, human- risen from about 50 floods per year countries (47) faced food crises induced crises have been aggravated in the mid-1980s to more than requiring emergency assistance, by a natural disaster. Natural 200 today.5 Conversely, there has with 27 of these countries in Africa, disasters were the primary cause of been a decrease in food emergencies 10 in Asia and the remaining 10 in food insecurity until the early 1990s, caused by slow-onset natural other parts of the world. In the with human-induced crises disasters. As sudden-onset period 1993–2000, an average of becoming more prominent in the emergencies leave much less time 15 African countries faced food past decade. for planning and response than crises annually; that number has slow-onset ones, these trends have climbed to about 25 countries since Natural disasters. Natural important implications for mitigation 2001. Having faced severe food disasters can be classified as either measures and the mobilization of insecurity in one season, many “slow onset” (e.g. drought or resources needed to prepare for, and countries remain on the list for prolonged dry spells) or “sudden respond to, emergencies in order to several years owing to the lingering onset” (e.g. floods, cyclones, save lives and protect livelihood effects of drought and/or conflict and hurricanes, earthquakes and systems. low resilience. Others appear on the volcanic eruptions). While the list more sporadically and need proportion of natural disasters has careful monitoring. generally decreased over time, As the number of countries facing FAO/GIEWS data indicate that food crises has risen in the past two sudden-onset disasters – especially decades, the underlying causes have floods – have increased from become more complex. In many 14 percent of all natural disasters in cases, human-induced disasters the 1980s to 20 percent in the The State of Food Insecurity in the World 2008 19
  22. 22. Undernourishment around the world Socio-economic factors. Human- US$121 billion in 2007, a 40-percent For example, if one considers the induced crises can be divided into increase. The percentage rise for the nations that import most of their war or conflict-related ones and basic grains component of their food petroleum products and foodgrain disasters induced mostly by socio- imports is even greater – 50 percent. requirements and also have high economic shocks. The latter can in By the end of 2008, the food import rates of undernourishment, these turn stem from internal factors (such bills of LIFDCs could cost four times would include Eritrea, Haiti, Liberia, as poor economic or social policies, as much as in 2000, representing a the Niger, Sierra Leone and conflicts over landownership or a tremendous burden on these Tajikistan.7 Most are in sub-Saharan deteriorating public health situation) countries. Africa and many are already on the or from external factors. External While LIFDCs as a group are GIEWS list of countries in crisis. factors may include a collapse in a spending considerably more for country’s export commodity prices basic imported foods, there are large Investment implications resulting in a loss of export earnings differences among countries and or a sharp increase in the price of population groups. These differences Donor countries and development imported food commodities (as in the depend on many factors, including: agencies are particularly concerned last two years). The relative share of the degree of dependency on with the need to prioritize emergency food crises caused by socio- imports; food consumption patterns; assistance and investment decisions economic factors has risen in the the degree of urbanization; the in the context of the current global past three decades from about extent to which international prices food crisis, and they are calling for 2 percent in the 1980s to 11 percent have influenced domestic consumer lists of countries that are at risk. in the 1990s and 27 percent since and producer prices for basic FAO has recently completed an 2000. Although the relative share of commodities (degree of price analysis of key factors determining countries with food crises caused by transmission); real exchange-rate the degree to which countries are war and conflicts has declined, the movements; and the effectiveness of vulnerable to high food prices, taking absolute number of such crises has policy measures taken by into account the extent to which they risen in the same period, with huge governments to deal with the crisis. are net importers of energy products loss of life, destruction of assets and displacement of populations. New dimensions of Informal cross-border flows vulnerability High food prices have affected Pakistan provides an illustration of the in Pakistan are still much lower than in countries in various ways, but their complexity of commodity price dynamics neighbouring countries, particularly impact has been felt more severely at the national and regional levels. Afghanistan (which has been struggling in countries with a structural deficit The country is a relatively large regional with a combination of unfavourable in food production, where incomes producer and consumer of wheat, weather and insecurity). The large price are low, and where most households usually in a surplus situation. Wheat differentials between the two countries spend a high proportion of their production in 2008 is down just over have resulted in substantial informal limited budgets on food. Many of 6 percent from last year’s record level, cross-border flows and in Pakistan these countries already have high but wheat imports are expected to be importing wheat from international rates of undernourishment. Most between 2.5 and 3 million tonnes. markets. At the same time, a reduced actually fall within a typology Despite the government’s strong capacity to subsidize fertilizer has developed by FAO in the 1970s intervention in the domestic wheat resulted in a 60-percent increase in (following a previous global food sector, prices have increased sharply di-ammonium phosphate (DAP) fertilizer crisis) known as low-income food- since mid-2007. Indeed, by June 2008, prices at the producer level, which has deficit countries, or LIFDCs.6 In 2008, they had nearly doubled their levels of a led to a sharp drop in its use and affected a total of 82 LIFDCs are expected year earlier in deficit provinces. In this yields adversely. to spend nearly US$169 billion on case, a major factor is that wheat prices food imports compared with 20 The State of Food Insecurity in the World 2008
  23. 23. precarious position or worsen the Countries most at risk of deteriorating food security situation in other countries to the due to high food prices extent that they become countries in crisis. In food crisis At high risk GIEWS monitors food production, Central African Republic Cameroon maintains supply and demand Democratic Republic of the Congo Comoros balances at the national level and Côte d’Ivoire Djibouti produces global aggregates. In Eritrea Gambia addition, it regularly monitors, Ethiopia Madagascar analyses and reports on the world Guinea Mongolia Guinea-Bissau Mozambique commodity markets and trade Haiti Nicaragua situation (including food prices) and Kenya Niger provides prospects for the overall Lesotho Occupied Palestinian Territory food situation. In order to strengthen Liberia Rwanda these functions, while also providing Sierra Leone Senegal policy advice and technical Somalia Solomon Islands assistance to countries in a context Swaziland Togo of high food prices, GIEWS has been Tajikistan United Republic of Tanzania reinforcing its data collection and Timor-Leste Yemen Zimbabwe Zambia analysis capacity in three main Source: FAO. areas: • monitoring international and domestic commodity/food prices, including at the subnational level; and of cereals (weighted by the late 2007, but with a clear indication • monitoring policy measures taken proportion of cereals in dietary that the food security situation is by countries in response to high energy intake), relative levels of improving. Bangladesh also food prices; poverty and the prevalence of features on the list of countries • analysing the impact of high food undernourishment. Results indicate severely affected by high food prices on urban and rural that, in addition to countries already prices, which calls for continued households, taking into account in crisis and requiring external close monitoring of the situation. In the variables mentioned above. assistance (some of which are listed other instances, food price In keeping its finger on the pulse on the left in the table), many others increases in a given country are of a continuously changing global have been severely affected by high strongly influenced by the situation food situation and in monitoring the commodity prices, in particular of across its borders, as is the case of many risk factors that make basic energy and food products. wheat prices in Pakistan. countries vulnerable to a possible These include countries listed on the sudden deterioration in their food right in the table.8 Implications for security situation, GIEWS helps keep Importantly, some countries not early warning the world abreast of the latest featuring on a list today may still fall developments. into a food security crisis tomorrow, Given such a highly dynamic global possibly owing to a sudden natural food situation, the GIEWS concept disaster, an outbreak of civil unrest, of “countries in crisis requiring a financial crisis or a combination of external assistance” has had to be factors. Bangladesh is one such revisited. In addition to crises example; the country still features in induced by natural events and the GIEWS list of countries occasional economic shocks, strong experiencing “severe localized food and sustained impacts of high food insecurity” following past flooding prices will put some countries and the impact of cyclone Sydr in already in crisis in a more The State of Food Insecurity in the World 2008 21
  24. 24. High food prices and food security Poor households worst hit F AO global estimates show that appropriate policies and programmes female-headed households that are high food prices have increased to target those most in need. most vulnerable to sharp rises in world hunger. While stories FAO has examined the impact of basic food prices. The relative impact abound in the media about affected high food prices on household is not uniform, even among poor individuals, families and welfare. The empirical analysis households, and depends on a communities, it is important to described in this section shows that, number of factors. understand who ultimately gains and in the short term, the vast majority of Particularly important is the who loses from high food prices, poor urban and rural households are extent to which households produce especially among the poor, and why. hit hardest by higher prices. Among food for their own consumption This knowledge will enable the poor, it is the landless and compared with what they buy in the marketplace. A household is defined as a net food buyer when the value of food staples it produces is less than Philippines: rice price increasing poverty the value of food staples it consumes. Poor households tend to be net buyers of food, even in rural Soaring rice prices are pushing more National Coordinator of the Global Call to areas where agriculture and staple families in the Philippines into poverty, Action against Poverty in Philippines, said food production determine the making it more difficult for the country to that “income is barely enough for daily principal livelihoods for many. achieve MDG 1 (halving the proportion of needs yet there is a decrease in According to FAO data from nine people living on less than US$1 per day by [household] purchasing power”. developing countries, about three- 2015). More than 24 percent of Philippine Leonardo Zafra, a security guard in quarters of rural households and families were living in extreme poverty in Manila, said that his household’s only 97 percent of urban households are 1991, and while that rate had declined to option was to borrow from moneylenders net food buyers (see table). 13.5 percent in 2003, it has started rising at exorbitant interest rates: “Our debts Net food buyers stand to lose from again. are piling on top of each other”. His wage an increase in the price of food Inflation rose by nearly 2 percentage of 260 pesos per day (about US$6.50) was staples. The extent of the impact points to 8.3 percent from March to April not enough to pay the bills for utilities, depends in part on dietary patterns. 2008 and reached 9.6 percent in May, the education and food. Households that spend a large highest level since 1999. Joel Saracho, Source: IRIN news service, May/June 2008. proportion of their income on internationally traded food staples (such as wheat, rice and maize) are more likely to suffer a decline in overall welfare. These include most Net buyers of staple foods urban households. The extent of this decline depends on the ability of a All households Poor households household to shift consumption Urban Rural All Urban Rural All towards less-expensive foods that do (Percentage) not generally enter global markets, Albania, 2005 99.1 67.6 82.9 * * * such as roots and tubers. In contrast, Bangladesh, 2000 95.9 72.0 76.8 95.5 83.4 84.2 households with land and those that Ghana, 1998 92.0 72.0 79.3 * 69.1 * Guatemala, 2000 97.5 86.4 91.2 98.3 82.2 83.1 derive some income from the Malawi, 2004 96.6 92.8 93.3 99.0 94.8 95.0 production and sale of food staples Nicaragua, 2001 97.9 78.5 90.4 93.8 73.0 79.0 that are also traded internationally Pakistan, 2001 97.9 78.5 84.1 96.4 83.1 85.4 could benefit from higher world Tajikistan, 2003 99.4 87.0 91.2 97.1 76.6 81.4 prices. However, high fuel and Viet Nam, 1998 91.1 32.1 46.3 100.0 40.6 41.2 fertilizer prices are likely to offset Unweighted average 96.4 74.1 81.7 97.2 87.9 78.5 some of these gains. In the medium * Insufficient data. Source: FAO. term, most farmers tend to shift production towards more profitable 22 The State of Food Insecurity in the World 2008
  25. 25. crops. This could enable them to services needed to facilitate change different types of households in move from being net buyers to net (see pages 34–40). urban and rural areas (see box for sellers of staple foods. Their ability FAO has simulated the short-term methodology). It was not possible to to change depends on the movement impact of a 10-percent increase in use actual price changes in each in relative prices as well as their the price of key internationally country as local currency prices do access to land, resources and traded staple foods on the income of not always reflect world prices in a Welfare impacts of a price rise in basic staples Using representative household survey data from a number of beans); Malawi and Nicaragua (maize, rice and beans); Pakistan countries, the likely short-term welfare impact of rising food and Tajikistan (wheat, rice and beans); and Viet Nam (rice, maize prices was calculated for groups of households differentiated by and beans). income, landholdings and livelihood strategies. The welfare The reported results refer to the short-term impact of high impact in this case is the amount of income needed to restore a food prices only. Household responses that involve changes in household to its position prior to the income shock of high prices, production and consumption behaviour over time are not and therefore the real income lost to high food prices. This is included. Moreover, it is possible that price increases become illustrated in Figures 20–23 as a percentage change in total more generalized over time in some countries, eventually consumption expenditure. This estimate is determined by affecting staples that are not internationally traded, e.g. cassava. comparing how the shares of the main staple products in In this case, the results may be underestimates for those groups household consumption and income vary following a 10-percent of households that spend substantial shares of their income on increase in the prices of the main staple products. The non-tradable staples. Finally, for simplicity, the simulation methodology employed is similar to that in Deaton1 and in Minot assumes that price changes are transmitted equally to different and Goletti.2 types of households, be they urban consumers or smallholder In each country, the main staples were chosen based on their farmers in remote areas. importance in the share of total food expenditure as follows: 1 A. Deaton. 1989. Rice prices and income distribution in Thailand: a non- parametric analysis. The Economic Journal, 99(395): 1–37. Albania (wheat, maize and rice); Bangladesh (rice, wheat and 2 N. Minot and F. Goletti. 2000. Rice market liberalization and poverty in pulses); Ghana (maize and rice); Guatemala (maize, wheat and Viet Nam. IFPRI Research Report No. 114. Washington, DC, IFPRI. The State of Food Insecurity in the World 2008 23
  26. 26. High food prices and food security consistent manner (see box on page In terms of the percentage loss in number and/or the diversity of meals 10) and the increases in staple food income, the results show that the they consume, or to reduce prices vary among locations within poorest households are hit hardest expenditure on essential non-food countries. Using a uniform by rising food prices in both urban items, such as health care and 10-percent increase illustrates how and rural areas. This is a cause for education. the effects are distributed among concern because the erosion of their Households tend to be less different household groups and real income harms not only their affected in countries where the diet allows more meaningful cross- current ability to cover basic needs consists largely of food staples that country comparisons. Simulating but also their prospects of escaping are not internationally traded. For the higher price increases occurring poverty. In order to cope with the example, Ghanaian households in many countries would yield added stress of high food prices, appear to be relatively insulated higher impacts, but the distribution poor households may be forced to from swings in international food among household groups would sell assets that would reduce their markets because a large share of remain the same. livelihood base, to reduce the their diet is based on local staples 24 The State of Food Insecurity in the World 2008
  27. 27. such as cassava and sorghum. egalitarian distribution of land, with household income, high rice prices Should the price of these local most farmers participating in the have a substantially different impact staples also increase as demand for production and sale of rice. With on rural welfare in the two countries. them grows, rising food prices would impressive gains in smallholder In Viet Nam, even the poorer rural have a much stronger impact. productivity in recent decades, the households gain from rising prices. The effects of rising food prices country has become one of the In Bangladesh, the impact is largely may also vary substantially among world’s leading rice exporters. In negative across income groups, and countries that have similar dietary contrast, most farmers in it is particularly high for the poorest patterns but differ in terms of land Bangladesh have limited access to and landless households. distribution and productivity levels. land, often only through tenure Access to key productive assets, In Bangladesh and Viet Nam, rice is arrangements such as especially land, influences the extent the major food staple and also the sharecropping. Given the different to which households, even at similar main food crop grown by small land tenure arrangements and, thus, levels of income, are affected farmers. Viet Nam has a fairly the importance of agriculture in positively or negatively by higher The State of Food Insecurity in the World 2008 25