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Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
Protecting Poor People Against Food Price Volatility
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Protecting Poor People Against Food Price Volatility

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"Protecting Poor People Against Food Price Volatility" presentation by Shenggen Fan at the launch of IFPRI Office for West and Central Africa on 17 May 2011

"Protecting Poor People Against Food Price Volatility" presentation by Shenggen Fan at the launch of IFPRI Office for West and Central Africa on 17 May 2011

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  • The Bangladesh study examined two components of the Vulnerable Group Development (VGD) program: (1) Income-Generating VGD (IGVGD) and (2) Food Security VGD (FSVGD). Both target poor women. IGVGD has a built-in mechanism to provide credit and training on income-generating activities in agriculture; The FSVGD program provides a combination of food and cash to program participants.
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    • 1. Protecting Poor People Against Food Price Volatility
      Shenggen FanDirector General
      International Food Policy Research Institute
      Panel discussion: Rising Global Food Prices: Causes, Impacts, and Response Strategies
      Dakar, May 17, 2011
    • 2. Key messages
      Food price hikes and volatility are increasingly frequent.
      A complex web of factors drive food price volatility.
      High and volatile food prices hurt poor consumers and producers.
      Urgent actions are needed to address food price volatility and protect poor people.
    • 3. Global food price hikes and volatility
      Global hikes since June 2010*
      Maize: 100%
      Wheat: 94%
      Source: Data from FAO 2011; Note:: *As of early May 2011
    • 4. Domestic prices are also high and volatile
      Wholesale prices in Ethiopia, Addis Ababa
      Retail prices in Niger, Niamey
      Retail prices in Senegal, Dakar
      Source: Data from FAO 2011
    • 5. Food price volatility drivers
      Stronger link between oil and food prices
      Extreme weather events—droughts, floods, and cyclones—lead to production losses
      Trade restrictions
      Market speculation?
      Climate change (in the long run)
    • 6. Stronger link between oil and food prices influence food security
      Rising oil prices cause food prices to increase, rather than the reverse. (Heady and Fan 2010)
      Rising oil prices make biofuels more profitable, rather than agricultural production more expensive. (Abbott, Hurt, and Tyner 2008)
      Source: Data from IMF 2011
      Note: Oil = Average crude oil price of U.K. Brent, Dubai, and West Texas Intermediate
    • 7. Climate change will add pressure
      • Increased frequency and intensity of extreme weather events
      Lower agricultural yields and production
      Higher food prices
      Source: Nelson et al. 2009.
    • 8. High and volatile food prices hurt the poor
      Self-reported food insecurity in Sub-Saharan Africa
      Source: Headey 2011
    • 9. Actions needed to reduce food price volatility and protect the poor
    • 10. Invest in productive social safety nets
      Bangladesh Vulnerable Group Development Program
      Increased per capita food consumption by 45-66 kcal per taka transfer (Ahmed et al. 2009)
      Ethiopia Productive Safety Nets Program (PSNP)
      With access to safety nets and agricultural support, beneficiaries are more food secure and productive. (Gilligan, Hoddinott, and Taffesse 2009)
      Nigeria Fadama II Development Project
      Increased the value of individual productive assets by about 50 percent (Nkonya et al. 2008)
    • 11. Establish global and regional strategic grain reserves
      Global emergency reserve
      Created with grain donations from large food exporters and producers (for example, United States, France, China, India)
      Located in these countries and also in poor food-importing countries (for example, Horn of Africa)
      Owned and managed by an institution such as WFP
      Strong global food management system including logistical capability
    • 12. Establish global and regional strategic grain reserves
      Some regional initiatives are emerging:
      Asean+3 Emergency Rice Reserve
      Sahel and West Africa Regional Food Stocks (RESOGEST)
      SADC Regional Food Reserve Facility
      Properly managed reserves can address food crises, but
      operating costs need to be low.
      moral hazard and other challenges must be overcome.
    • 13. Support transparent, fair, and open global trade
      Eliminate harmful trade restrictions and prevent new ones to:
      increase market efficiency, and
      reduce price fluctuations.
      Potential costs of a failed Doha Round could be high (Bouët and Laborde 2009):
      • 11.5 percent loss of developing country exports
      • 14. US$353 billion loss in world welfare
      Quick completion of the Doha Round is crucial.
    • 15. Promote agricultural growth, especially smallholder productivity
      Invest in agricultural R&D and infrastructure
      Agricultural research and new technologies
      Access to high-quality seeds and fertilizer
      Rural infrastructure
      Promote innovations for smallholders
      Financial services (community banking)
      Risk-management mechanisms (weather-based index insurance)
      Institutional arrangements (producer cooperatives)
    • 16. Investment in agricultural R&D has higher returns
      Source: Fan, Mogues, and Benin 2009 Note: “n.e.” indicates not estimated
    • 17. Investment in new technologies has high payoffs
      Smallholder cassava production, Nigeria
      Improved cassava varieties, advances in pest control, processing technology, mid-1980s to early 1990s
      Tripled production in less than a decade
      Farmer net profits were 18 times higher
      Returns to labor increased by more than 60 percent
      Increased income and gender equity
      Generated significant technology spillovers to Ghana
      Source: Nweke and Haggblade 2010
    • 18. Invest in climate change agricultural adaptation and mitigation
      Adaptation: change of planting dates, adoption of more resilient crop varieties, improved water storage
      Mitigation: improved land management, appropriate fertilizer/manure use, incorporation of crop residues
      For win-win-win: agricultural investments should target measures that provide mitigation, adaptation, and productivity benefits (Bryan et al. 2011)
      At least an additional US$7 billion in agricultural productivity investments are needed annually to offset adverse effects on human well-being. (Nelson et al. 2009)
    • 19. Establish international working group
      Regularly monitor the world food situation and provide analysis on:
      food supply, demand, stocks, prices, trade, and policies
      energy prices, input prices, and market speculation
      Provide guidance on:
      optimal level of global emergency grain reserves to be held
      when and how to release them
      at what prices
      Catalyze action and intervention
      The working group must be composed of key institutions in collaboration with major stakeholders.
    • 20. Proactive steps must be taken now toreduce food price volatility and prevent recurring food crises.
      Developed and developing country governments and international institutions must lead the way.

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