Presentation prepared by Xinshen Diao, Paul Dorosh, and James Thurlow, all with the International Food Policy Research Institute, Washington, DC. This is part of the Global Crisis Country Series.

1. Version: 18 June 2022
Bangladesh
Impacts of the Ukraine and Global
Crisis on Food Systems and Poverty
Xinshen Diao, Paul Dorosh, and James Thurlow
International Food Policy Research Institute, Washington DC
These country studies are conducted by IFPRI with financial support from
BMGF, FCDO, and USAID. All studies use data and models developed with
ongoing support from BMGF, USAID and the CGIAR’s “Foresight and Metrics”
initiative. The Bangladesh case study benefits from working with IFPRI’s South
Asia Region office in New Delhi, India, and local partners.
Xinshen Diao (x.diao@cgiar.org) | Paul Dorosh (p.dorosh@cgiar.org) | James Thurlow (j.thurlow@cgiar.org)

2. Version: 18 June 2022
Overview
• Series of country case studies
• Economywide modeling
• Capture world market shocks
• Estimate impacts on economy, agri-food
system, poverty, food security, etc.
• Simulate policy responses
• Three phases of analysis:
1. Initial data collection and impact assessment
2. Data revisions and analysis of broad policy options
• Cash transfers, food aid, and fertilizer subsidies
• Fiscal implications for national governments
3. In-country engagement and tailored policy analysis
Impact
assessment
Policy
analysis
Country coverage
Countries with IFPRI RIAPA models
May June
July

3. Version: 18 June 2022
Shocks | World Food, Fuel and Fertilizer Prices
World price
Trade share
Direct use
Indirect use
Incomes
How big is the increase in world price?
How important are imports in local market?
Can local producers substitute for imports?
Which sectors use the affected products as
inputs?
Which other sectors are affected via supply chains?
What kinds of workers and households earn
incomes within the affected sectors?
Final use Which households consume the affected products?
Impact Channel Considerations World Price Shocks
Source: World Bank Pink Sheets
Global data
11%
-13%
100%
56%
34%
88%
101%
Maize Rice Wheat Palm oil Crude oil Natural gas Fertilizer
Change in real world prices (June 2021 to April 2022)
30 Jun 2021 - 31 Jan 2022 31 Jan 2022 - 30 Apr 2022
30 Jun 2021 - 30 Apr 2022

4. Version: 18 June 2022
Shocks | World Food, Fuel and Fertilizer Prices
World price
Trade share
Direct use
Indirect use
Incomes
How big is the increase in world price?
How important are imports in local market?
Can local producers substitute for imports?
Which sectors use the affected products as
inputs?
Which other sectors are affected via supply chains?
What kinds of workers and households earn
incomes within the affected sectors?
Final use Which households consume the affected products?
Impact Channel Considerations Supply and Demand
Supply
(% by source)
Demand
(% by use)
Bangladesh
data
Source: IFPRI Bangladesh RIAPA Model
92%
62%
37%
38%
63%
92%
Maize Wheat Edible oils Oil products
Imports
Domestic
67%
51%
18%
84%
33%
82%
14%
Maize Wheat Edible oils Oil products
Exports
Final use
Input use
+ Others = 100%
+ + +
2.3% 0.9% 0.9% 2.8%
Products’ share of the
value of total demand
throughout the economy
Notes: Wheat includes wheat grain and flour. More than 70% of wheat grain is imported; wheat
flour is processed domestically.

5. Version: 18 June 2022
Shocks | World Food, Fuel and Fertilizer Prices
World price
Trade share
Direct use
Indirect use
Incomes
How big is the increase in world price?
How important are imports in local market?
Can local producers substitute for imports?
Which sectors use the affected products as
inputs?
Which other sectors are affected via supply chains?
What kinds of workers and households earn
incomes within the affected sectors?
Final use Which households consume the affected products?
Impact Channel Considerations Consumption Baskets
Bangladesh
data
Source: IFPRI Bangladesh RIAPA Model
14.5% 18.6%
13.7%
23.3%
15.5%
43.0%
52.4%
46.0%
55.3%
48.9%
42.5% 46.8%
53.8%
43.3%
50.7%
All households Rural Urban Poor Nonpoor
Composition of household consumption spending
Cereals & edible oils Other foods Non-food goods & services

6. Version: 18 June 2022
Shocks | Fertilizer Response (crop productivity effect)
Adoption
Application
Price
Demand
Response
What share of cultivated land uses fertilizers?
How much fertilizer is being used?
(i.e., fertilizer application rate)
How big is the domestic fertilizer price increase?
How do farmers react to rising fertilizer prices?
(i.e., price elasticity of fertilizer demand)
How do yields change with reduced fertilizer use?
(i.e., fertilizer response ratio)
Impact Channel Considerations Fertilizer Adoption Rate
Source: IFDC Bangladesh and IFPRI model estimates.
Timing When is the fertilizer needed?
Bangladesh
85%
95%
95%
45%
70%
70%
45%
45%
95%
45%
95%
35%
25%
25%
90%
100%
Maize
Rice
Wheat
Pulses
Oilseeds
Irish potatoes
Leafy vegetables
Other vegetables
Sugarcane
Tobacco
Cotton
Nuts
Bananas
Fruits
Leaf tea
Cut flowers
Share of cultivated land using fertilizer

7. Version: 18 June 2022
Shocks | Fertilizer Response (crop productivity effect)
Adoption
Application
Price
Demand
Response
What share of cultivated land uses fertilizers?
How much fertilizer is being used?
(i.e., fertilizer application rate)
How big is the domestic fertilizer price increase?
How do farmers react to rising fertilizer prices?
(i.e., price elasticity of fertilizer demand)
How do yields change with reduced fertilizer use?
(i.e., fertilizer response ratio)
Impact Channel Considerations
Crop Calendar
Source: FEWSNET Bangladesh
Timing When is the fertilizer needed?
Harvest of the irrigated boro season rice crop: April/May.
Planting of the 2022 monsoon season crops is underway.
Bangladesh

8. Version: 18 June 2022
Results | GDP and Employment
• Declines in national GDP and employment all from
agri-food system
• Rising import costs reduces spending on domestically
produced foods and services
• Falling agri-food production leads to job losses
• GDP and employment fall both on-farm and off-farm
within agri-food system
• GDP falls by about 2% in both primary agriculture and
off-farm agri-food sectors (e.g., processing, trading)
• Much faster job losses in off-farm sectors, because
rising agricultural prices reduce demand for food
processed food and food services
• GDP and employment increase outside agri-food
system
• Led by increase in garment exports that benefit from a
real exchange rate depreciation
Source: IFPRI Bangladesh RIAPA Model
-0.3%
-2.3%
-2.5%
-2.1%
0.6%
-1.6%
-3.8%
-3.5%
-4.4%
1.2%
-5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0%
Whole economy
Whole AFS
Agriculture
Off-farm
Outside AFS
Agri-food
system
Change in GDP and employment due to food, fuel
and fertilizer shocks (%)
GDP Employment

9. Version: 18 June 2022
Results | Drivers of GDP Losses
• Fertilizer and fuel shocks drive the decline in national
GDP because of their effect on agri-food system
• Agriculture GDP losses driven mostly by fertilizer
shocks
• Production of rice, wheat, and other major crops is
fertilizer intensive
• Most agriculture GDP losses are from crop production
• Off-farm agri-food GDP is adversely affected by higher
food prices
• Higher prices for agricultural products raise costs for food
processing and food services
• Many of these nonfarm activities rely are not fuel
intensive and more agricultural materials intensive
• GDP gains modestly outside the agri-food system
• But these gains are not large enough to offset the fall in
GDP in the agri-food system
Source: IFPRI Bangladesh RIAPA Model
Contribution
to change
0.0%
-1.0%
-0.7%
-1.3%
0.4%
-0.1%
-0.2%
-0.2%
-0.3%
-0.1%
-0.1%
-1.0%
-1.6%
-0.5%
0.3%
-0.3%
-2.3%
-2.5%
-2.1%
0.6%
Whole economy
Whole AFS
Agriculture
Off-farm
Outside AFS
Agri-food
system
Percentage change in real GDP due to food, fuel
and fertilizer shocks (%)
Food prices Fuel prices Fertilizer prices & response
15%
49%
36%
Notes: About 60 percent of the effect on agriculture GDP under “fertilizer prices and response” is directly from rising fertilizer
prices, while the remaining 40 percent is from the productivity shock caused by a decline in the use of fertilizer.

10. Version: 18 June 2022
Results | Household Consumption
Source: IFPRI Bangladesh RIAPA Model
• Household consumption falls significantly
• Much larger than GDP losses as households are hit twice by
rising prices and falling incomes
• Rising food prices are the most important driver of
consumption losses
• Importance of shocks differs across population groups:
• Food prices affect all households but more important for
rural and poor households
• Higher food consumption share for rural households means
larger impacts
• Staple foods have a larger share in total consumption for the
poor
• Fertilizer shocks also affect rural and poor households more
• These households are more dependent on fertilizer-intensive
locally produced food (e.g. rice and wheat)
• Fuel shocks affect urban and nonpoor households more
• Earn more income outside the agri-food system
• More import-intensive consumer basket
• Consume products with larger transaction cost margins
Contribution
to change
-2.8%
-3.0%
-2.5%
-2.9%
-2.9%
-1.0%
-1.0%
-0.9%
-1.0%
-1.0%
-0.9%
-1.1%
-0.4%
-1.6%
-0.7%
-4.7%
-5.2%
-3.9%
-5.4%
-4.6%
National
Rural
Urban
Poor
Nonpoor
Percentage change in real consumption
Food prices Fuel prices Fertilizer prices & response
61%
21%
18%

11. Version: 18 June 2022
Results | Changes in Inequality
• Differential effects on poor/nonpoor households are
driving changes in inequality :
• Fertilizer shocks negatively affect the lowest quintile much
more than top quintile, causing inequality to increase
• Food prices negatively affect all households with slightly
larger impact for households in the top quintile
• Fuel shocks have only small impacts on income
distribution
• The effects of Combined shocks are dominated by
fertilizer and food shocks for most households
• Overall, inequality rises
• Relatively large consumption losses in Quintiles 1 and 2,
which span Bangladesh’s poverty line
Source: IFPRI Bangladesh RIAPA Model
-6.0%
-5.5%
-5.0%
-4.5%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
Q1 Q2 Q3 Q4 Q5
Percentage change in quintile consumption
Food prices
Fuel prices
Fertilizer prices & response
Combined food, fuel and fertilizer shocks

12. Version: 18 June 2022
Share of population
falling into poverty
Results | Poverty
• Poverty rises significantly
• Headcount rate up by 3.2% points
• Five million more people pushed into poverty
• Poverty increases more in rural areas
• More than three-quarters of increased poor
population resides in rural areas
• Mainly driven by food and fertilizer shocks
Source: IFPRI Bangladesh RIAPA Model
Contribution to change
1.6%
1.1%
1.8%
0.7%
0.5%
0.7%
0.9%
0.4%
1.1%
3.2%
2.0%
3.7%
National
Urban
Rural
Change in poverty headcount rate (%-point)
Food prices Fuel prices Fertilizer prices & response
51%
21%
28%
24%
76%
Urban
Rural
Notes: About 14.3% of the country’s population have adult
equivalent consumption levels that fall below the US$1.90
poverty line. The poverty rate is higher in rural areas, about
15.6%, than in urban, about 10.9%.
2,534
677
1,851
1,057
290
763
1,376
249
1,138
4,968
1,217
3,751
National
Urban
Rural
Change in poor population (1000s)
Food prices Fuel prices Fertilizer prices & response

13. Version: 18 June 2022
• Global price shocks have differential effects on the
costs of six food groups for a healthy reference diet
• Reference diet is the EAT-Lancet’s “healthy” diet
thresholds for the six major food groups
• Rising prices for edible oils (in added fats) and cereals
(in staples) push up their costs, while falling incomes
reduce demand for proteins (meats & fish), dairy and
fruits and lower their costs
Results | Diet Quality
Source: IFPRI Bangladesh RIAPA Model
• Rising food prices and falling incomes cause diet quality to
worsen for many households
• Prior to the crisis, few households had consumption levels and
diversity needed for a healthy diet
• Rising food prices cause more than 32 million people to become
deprived in at least one additional food group required for a
healthy diet
• Rural population accounts for more of the deterioration in diet
quality
-0.2%
0.3%
-0.8%
-0.4%
-1.2%
2.4%
Net change in
cost of healthy
diet
Contributions of
food groups to
change
Change in the real cost of a healthy
reference diet caused by rising world
prices (%)
Added fats
Proteins
Dairy
Fruits
Vegetables
Staples
9.2%
11.2%
19.6%
20.1%
33.9%
6.0%
Shares of six food groups
in total cost of a healthy
diet prior to the crisis
Added fats
Proteins
Dairy
Fruits
Vegetables
Staples
27,690
7,475
20,215
2,551
2,023
32,180
8,592
23,588
National
Urban
Rural
Number of people to become deprived in at least one
additional food group for a healthy diet (1000s)
Food prices Fuel prices Fertilizer prices & response

14. Version: 18 June 2022
Headlines
• Food, fuel and fertilizer shocks lead to reductions in agri-
food system GDP and employment in Bangladesh
• Agriculture is particularly at risk to fertilizer shocks, especially
if they lead to lower fertilizer use.
• Off-farm agri-food is more affected by rising prices for
agricultural products that increase costs
• Rural households are especially vulnerable
• Larger income losses due to higher fertilizer prices
• Greater increase in poverty (esp. number of poor people)
• Larger contribution to the deterioration in diet quality
• Next steps
• Evaluate policy options available to governments and
development partners to mitigate impacts on food systems,
poverty, and food insecurity (e.g., cash transfers, food aid,
fertilizer subsidies, fiscal support, etc.)
Impact
assessment
Policy
analysis
Country coverage
May June
July