Global food prices continue to rise in early 2011, driven by sharp increases in wheat, maize, sugar, and edible oil prices. The World Bank's food price index in January 2011 was 15% higher than in October 2010 and only 3% below its 2008 peak. Higher global wheat and maize prices have significantly increased domestic food costs in many countries. An estimated 44 million more people fell into extreme poverty as a result of food price rises between June-December 2010 alone. Mitigating the poverty and vulnerability impacts of volatile food prices requires measures to stabilize markets in the short-run as well as investments to boost sustainable agricultural productivity and develop risk management tools over the medium-term.
Robert Johansson
SPECIAL EVENT
Discussion on the Key Findings of FAO’s 2019 State of Food Security and Nutrition in the World Report
Co-Organized by FAO North America and IFPRI
JUL 18, 2019 - 12:15 PM TO 01:45 PM EDT
Sharing gains of the potato in Kenya: A case of thin governanceSharing gains ...Premier Publishers
The potato offers a good alternative for diversification from maize, the staple food in Kenya. This article presents the results of a study on the potato marketing system, the factors affecting prices and the predominant governance system impacting on the market. Survey data were collected from 402 farmers in the three potato growing regions and addition information on monthly prices in major markets was provided the Ministry of Agriculture. There were also semi-structured interviews with the major actors in the potato sector.
Potato marketing exhibits the captive governance structure with traders collaboratively acting as the lead firm. An analysis of the split in selling price between the various players indicates that margins were concentrated at the coordination of marketing activities as opposed to the production activities. Coordination activities took about 40% of the consumer price. Besides the market channel used, the production region, the size of the land cultivated and the yields obtained determined the price obtained by the farmers. Given the distribution of the value added in the chain and the current dominance of traders, we argue in favour of upgrading the value chain and giving more power to the farmers and their organizations.
Transmission of South African maize prices into Botswana markets: an economet...Premier Publishers
The international prices of food commodities increased sharply between 2005 and 2008 and continued to rise. Over this period, international maize prices have also increased by 80 percent. Botswana imports majority of food items and has been witnessing unprecedentedly higher prices of food items. Maize is one of the staple foods in Botswana and, mostly imported from South Africa to meet the local demand. Little information is available on the transmission of maize prices from South African market into the Botswana market therefore, this study was conducted. The cointegration techniques and the error correction model (ECM) were employed to analyse the transmission of South African maize prices into the Botswana market. It was concluded that the two markets have a steady relationship and the markets are functioning effectively. Findings revealed that a long-run steady state of equilibrium existed between the South African and Botswana maize prices. It was recommended that local production of not only maize, but also other substitute staple foods such as sorghum should be promoted to reduce imports and, therefore, avoid food insecurity especially when maize price increases in South Africa.
Duke CGGC researchers gave this overview of food security in the wheat industry with implications for the MENA region and Russia. This is part of an ongoing stream of research with the Minerva Initiative.
Agcapita is Canada's only RRSP and TFSA eligible farmland fund and is part of a family of funds with almost $100 million in assets under management. Agcapita believes farmland is a safe investment, that supply is shrinking and that unprecedented demand for "food, feed and fuel" will continue to move crop prices higher over the long-term. Agcapita created the Farmland Investment Partnership to allow investors to add professionally managed farmland to their portfolios.
Estimating NTBs costs of Maize Production and Marketing for Smallholder Farme...Premier Publishers
This paper estimated Non-Tariff Barriers (NTBs) costs of maize production and marketing of smallholder famers in Mbozi and Momba districts of Mbeya region in Tanzania. A cross sectional design survey was used in collecting data from farmers in the two districts using structured questionnaires. Stratified and simple random sampling procedures were used in selecting a total of 120 smallholder farmers. Descriptive measures were used in summarizing the NTBs costs incurred by farmers. Results indicated that, estimated NTBs costs of farmers in Mbozi district were higher when compared to those in Momba district. It also observed that, farmers in Mbozi district paid a total of TZS. 73/Kg as NTBs costs to reach the Tunduma maize market while farmers in Momba district paid TZS.48/Kg to reach the same maize market. The difference was explained by spatiality being that Momba district is closer to Tunduma market. Based on these results, it can be concluded that, effects of NTBs costs were higher for farmers of Mbozi district than those of Momba district. It recommended that, protective food policy such as weighing bridges and road blocks should be reduced in order to maintain reasonable high prices in rural and low prices in urban deficit areas.
This study examined the effectiveness of agricultural protection policy and other macroeconomic variables on food supply, agricultural export, and farmers welfare in Nigeria, from 1980-2016 with a special interest in their relationship with the political economy. The specific objectives were to (i) estimate the degrees of agricultural protection, domestic agricultural food supply and economic welfare to farmers in Nigeria, (ii) determine the effectiveness of agricultural protection on food self-supply, agricultural export; and farmer-welfare. Data were obtained from secondary sources. Descriptive statistics and generalized method of moment (GMM) were used. Nigeria’s self-food supply was slightly above 50% while the rest of the consumption depended on importation. The welfare measure to farmers was relatively poor and not good enough to motivate them. There was a positive and significant relationship between export and agricultural protection. A significant and positive relationship also exists between farmer-welfare and protection in the sector.
The International Grains Council’s 24th annual conference, held in London on 9 June 2015, brought together some 300 traders, policymakers and other industry professionals. Meeting under the theme “Building on success, responding to challenges,” delegates from 48 countries gathered to assess the recent shifts in market fundamentals, which has seen global grains and oilseeds inventories build to near-record levels, with prices dropping to multi-year lows. As well as being a key forum for the exchange of views, the conference provided a valuable networking opportunity, bringing together a unique mix of participants from private and public sectors.
Agricultural export crop participation, contract farming and rural livelihood...iosrjce
The paper relates export crop participation and contract farming to rural livelihoods. It models the
determinants of export crop participation and contracting activities. Using cotton as an export crop, 107 cotton
and non-cotton farmers from Rushinga district were surveyed. Results confirmed few cases of livelihood
successes, with no evidence to support that cotton offers better income than non-exportable cash crop.
Household-specific factors were found to influence the decision to participate in export cropping and
contracting activities. The study concluded that single export crop dependency threatens rural livelihood
sustainability. Diversification into cereal cash crops by improving market access conditions is needed.
JEL Classification: Q1, O1
GCARD2: Briefing paper National Food Security - MAIZE and its importance for ...GCARD Conferences
The MAIZE Research Program (CRP) is a CGIAR global alliance bringing together CIMMYT, IITA and more than 300 institutions (NARES, advanced research institutions, NGOs, CBOs etc.). It aims at ensuring that public-funded international agricultural research helps to sustainably intensify maize-based farming systems, making them more resilient to climate change; while significantly enhancing farmers’ income and livelihood opportunities without using more land and as fertilizer, water, and labour costs rise.
Visit the conference site for more information: http://www.egfar.org/gcard-2012
Le Programme de Recherche sur le MAIS est une alliance mondiale du CGIAR élaborée ensemble avec le CIMMYT, l’IITA et plus de 300 institutions (NARES, grandes institutions de recherche, ONGs, CBOs, etc.). il vise a assurer que le financement international de recherche agricole sert à l’intensification durable des systèmes de productions à base du maïs, en les rendant plus résilients au changement climatique et favorisant une amélioration des revenus et des moyens d’existences des exploitations agricoles tout en utilisant moins de terres, d’intrants, de l’eau et des charges liées à la main-d’œuvre.
Visitez le site de la GCARD2 pour plus d'informations: http://www.egfar.org/gcard-2012
A presentation from the 13th Poverty Environment Partnership meeting held in Manila, Philippines, June 2008.
Download this presentation and more from the meeting here: http://www.povertyenvironment.net/pep13
Robert Johansson
SPECIAL EVENT
Discussion on the Key Findings of FAO’s 2019 State of Food Security and Nutrition in the World Report
Co-Organized by FAO North America and IFPRI
JUL 18, 2019 - 12:15 PM TO 01:45 PM EDT
Sharing gains of the potato in Kenya: A case of thin governanceSharing gains ...Premier Publishers
The potato offers a good alternative for diversification from maize, the staple food in Kenya. This article presents the results of a study on the potato marketing system, the factors affecting prices and the predominant governance system impacting on the market. Survey data were collected from 402 farmers in the three potato growing regions and addition information on monthly prices in major markets was provided the Ministry of Agriculture. There were also semi-structured interviews with the major actors in the potato sector.
Potato marketing exhibits the captive governance structure with traders collaboratively acting as the lead firm. An analysis of the split in selling price between the various players indicates that margins were concentrated at the coordination of marketing activities as opposed to the production activities. Coordination activities took about 40% of the consumer price. Besides the market channel used, the production region, the size of the land cultivated and the yields obtained determined the price obtained by the farmers. Given the distribution of the value added in the chain and the current dominance of traders, we argue in favour of upgrading the value chain and giving more power to the farmers and their organizations.
Transmission of South African maize prices into Botswana markets: an economet...Premier Publishers
The international prices of food commodities increased sharply between 2005 and 2008 and continued to rise. Over this period, international maize prices have also increased by 80 percent. Botswana imports majority of food items and has been witnessing unprecedentedly higher prices of food items. Maize is one of the staple foods in Botswana and, mostly imported from South Africa to meet the local demand. Little information is available on the transmission of maize prices from South African market into the Botswana market therefore, this study was conducted. The cointegration techniques and the error correction model (ECM) were employed to analyse the transmission of South African maize prices into the Botswana market. It was concluded that the two markets have a steady relationship and the markets are functioning effectively. Findings revealed that a long-run steady state of equilibrium existed between the South African and Botswana maize prices. It was recommended that local production of not only maize, but also other substitute staple foods such as sorghum should be promoted to reduce imports and, therefore, avoid food insecurity especially when maize price increases in South Africa.
Duke CGGC researchers gave this overview of food security in the wheat industry with implications for the MENA region and Russia. This is part of an ongoing stream of research with the Minerva Initiative.
Agcapita is Canada's only RRSP and TFSA eligible farmland fund and is part of a family of funds with almost $100 million in assets under management. Agcapita believes farmland is a safe investment, that supply is shrinking and that unprecedented demand for "food, feed and fuel" will continue to move crop prices higher over the long-term. Agcapita created the Farmland Investment Partnership to allow investors to add professionally managed farmland to their portfolios.
Estimating NTBs costs of Maize Production and Marketing for Smallholder Farme...Premier Publishers
This paper estimated Non-Tariff Barriers (NTBs) costs of maize production and marketing of smallholder famers in Mbozi and Momba districts of Mbeya region in Tanzania. A cross sectional design survey was used in collecting data from farmers in the two districts using structured questionnaires. Stratified and simple random sampling procedures were used in selecting a total of 120 smallholder farmers. Descriptive measures were used in summarizing the NTBs costs incurred by farmers. Results indicated that, estimated NTBs costs of farmers in Mbozi district were higher when compared to those in Momba district. It also observed that, farmers in Mbozi district paid a total of TZS. 73/Kg as NTBs costs to reach the Tunduma maize market while farmers in Momba district paid TZS.48/Kg to reach the same maize market. The difference was explained by spatiality being that Momba district is closer to Tunduma market. Based on these results, it can be concluded that, effects of NTBs costs were higher for farmers of Mbozi district than those of Momba district. It recommended that, protective food policy such as weighing bridges and road blocks should be reduced in order to maintain reasonable high prices in rural and low prices in urban deficit areas.
This study examined the effectiveness of agricultural protection policy and other macroeconomic variables on food supply, agricultural export, and farmers welfare in Nigeria, from 1980-2016 with a special interest in their relationship with the political economy. The specific objectives were to (i) estimate the degrees of agricultural protection, domestic agricultural food supply and economic welfare to farmers in Nigeria, (ii) determine the effectiveness of agricultural protection on food self-supply, agricultural export; and farmer-welfare. Data were obtained from secondary sources. Descriptive statistics and generalized method of moment (GMM) were used. Nigeria’s self-food supply was slightly above 50% while the rest of the consumption depended on importation. The welfare measure to farmers was relatively poor and not good enough to motivate them. There was a positive and significant relationship between export and agricultural protection. A significant and positive relationship also exists between farmer-welfare and protection in the sector.
The International Grains Council’s 24th annual conference, held in London on 9 June 2015, brought together some 300 traders, policymakers and other industry professionals. Meeting under the theme “Building on success, responding to challenges,” delegates from 48 countries gathered to assess the recent shifts in market fundamentals, which has seen global grains and oilseeds inventories build to near-record levels, with prices dropping to multi-year lows. As well as being a key forum for the exchange of views, the conference provided a valuable networking opportunity, bringing together a unique mix of participants from private and public sectors.
Agricultural export crop participation, contract farming and rural livelihood...iosrjce
The paper relates export crop participation and contract farming to rural livelihoods. It models the
determinants of export crop participation and contracting activities. Using cotton as an export crop, 107 cotton
and non-cotton farmers from Rushinga district were surveyed. Results confirmed few cases of livelihood
successes, with no evidence to support that cotton offers better income than non-exportable cash crop.
Household-specific factors were found to influence the decision to participate in export cropping and
contracting activities. The study concluded that single export crop dependency threatens rural livelihood
sustainability. Diversification into cereal cash crops by improving market access conditions is needed.
JEL Classification: Q1, O1
GCARD2: Briefing paper National Food Security - MAIZE and its importance for ...GCARD Conferences
The MAIZE Research Program (CRP) is a CGIAR global alliance bringing together CIMMYT, IITA and more than 300 institutions (NARES, advanced research institutions, NGOs, CBOs etc.). It aims at ensuring that public-funded international agricultural research helps to sustainably intensify maize-based farming systems, making them more resilient to climate change; while significantly enhancing farmers’ income and livelihood opportunities without using more land and as fertilizer, water, and labour costs rise.
Visit the conference site for more information: http://www.egfar.org/gcard-2012
Le Programme de Recherche sur le MAIS est une alliance mondiale du CGIAR élaborée ensemble avec le CIMMYT, l’IITA et plus de 300 institutions (NARES, grandes institutions de recherche, ONGs, CBOs, etc.). il vise a assurer que le financement international de recherche agricole sert à l’intensification durable des systèmes de productions à base du maïs, en les rendant plus résilients au changement climatique et favorisant une amélioration des revenus et des moyens d’existences des exploitations agricoles tout en utilisant moins de terres, d’intrants, de l’eau et des charges liées à la main-d’œuvre.
Visitez le site de la GCARD2 pour plus d'informations: http://www.egfar.org/gcard-2012
A presentation from the 13th Poverty Environment Partnership meeting held in Manila, Philippines, June 2008.
Download this presentation and more from the meeting here: http://www.povertyenvironment.net/pep13
Bangladesh’s Rice production is right on the equilibrium between demand and supply. However, this is a notable achievement for Bangladesh. Yet, in order to maintain this achievement and growing, Bangladesh has to immediately address the population issue, adopt policy to strict the conversion of arable land to non-arable activities, to have focused usage policy of natural gas adhered to agriculture, and moreover finding new technology for irrigation and replacing the usage of underground water. Unless, these issues are addressed in immediate effect, today’s Food Security in Bangladesh may not prevail for long.
Prof Kym Anderson's talk from the Australian Agricultural & Resource Economics Society's event "Reframing the Food Agenda: Setting the Scene for Australia" held August 19, 2011
anric blatt, lauralouise duffy, global fund exchange, earth wind & fire fund, investing in agriculture, investing in water, investing in the future of energy
This presentation is all about highlighting present scenario of food security in India and the Issues and challenges it is facing. Furthermore, some of the pragmatic measures have been given so as to make India a food secure nation.
1. INTRODUCTIONCheap food has been taken for granted for almost .docxjackiewalcutt
1. INTRODUCTION
Cheap food has been taken for granted for almost 30 years. From their peak in the 1970s crisis, real food prices steadily declined in the 1980s and 1990s and eventually reached an all-time low in the early 2000s (Heady and Fan, 2010). Since 2003, the international prices of a wide range of commodities have surged upwards in dramatic fashion, often more than doubling within a few years, in some cases even within a few months (Heady and Fan, 2008).Food prices based on the International Monetary Fund (IMF) food price index increased by 9.5 % between April 2006 and April 2007 and by 45.6 % over the next 12 months. The increase has been particularly very sharp for staple foods. Rice prices doubled in the five months between November 2007 and March 2008, wheat prices increased more than twofold in the 12 months after March 2007 and maize prices doubled in one and half year after August 2006. These increases in prices of staple foods have led to emergencies and rationing in a large number of countries and there are frequent reports of food riots from various parts of the globe (Chand, 2008).In 2007 the food price index calculated by the Food and Agriculture Organization of the United Nations (FAO) rose by nearly 40 %, compared with 9 % the year before, and in the first months of 2008 prices again increased drastically. Nearly every agricultural commodity is part of this rising price trend. Since 2000—a year of low prices—the wheat price in the international market has more than tripled and maize prices have more than doubled. The price of rice jumped to unprecedented levels in March 2008. Dairy products, meat, poultry, palm oil, and cassava have also experienced price hikes (von Braun, 2008). In 2007-08, world food prices reached record levels, rising 80% in 18 months. Following this peak, food prices fell, but since 2009 the cost of food has been climbing steadily in global markets, reaching record highs again in 2011. Over the last five years, the FAO food price index has risen by 92%, threatening the lives and livelihoods of millions of people (FAO, 2012).Although food prices are now lower than their 2008 peak, real prices have remained significantly higher in 2009 and 2010 than they were prior to the crisis, and various simulation models predict that real food prices will remain high until at least the end of the next decade. Needless to say, the stability and effectiveness of the world food system are no longer taken for granted (Heady and Fan, 2010).
Source: IMF, Data & Statistics
Figure 1.1. World Food Price Index (base 2005=100)
Although food commodities are not unique in undergoing such rapid price rises (energy and mineral prices have also surged), a sharp escalation in the price of basic foods has been a burden on the poor in developing countries, who spend roughly half of their household incomes on food. Sharply rising prices offer few means of substitution and adjustment, especially for the urban poor, so there are jus ...
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1. Food Price Watch
POVERTY REDUCTION AND EQUITY GROUP
POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK
THE WORLD BANK
FEBRUARY 2011
Global food prices continue to rise. The World Bank’s food price index increased by 15% between October 2010 and
January 2011 and is only 3% below its 2008 peak. The last six months have seen sharp increases in the global prices of
wheat, maize, sugar and edible oils, with a relatively smaller increase in rice prices. Higher global wheat prices have
fed into significant increases in local wheat prices in many countries. Higher maize, sugar, and oil prices have
contributed to increase the costs of various types of food, though local maize prices have largely been stable in Sub-
Saharan Africa. Local rice prices have increased in line with global prices in some large rice-consuming Asian countries.
These food price rises create macro vulnerabilities, particularly for countries with a high share of food imports and
limited fiscal space, as well as increases in poverty. Estimates of those who fall into, and move out of, poverty as a result
of price rises since June 2010 show there is a net increase in extreme poverty of about 44 million people in low- and
middle-income countries. In the immediate term, it is important to ensure that further increases in poverty are
curtailed by taking measures that calm jittery markets and by scaling up safety net and nutritional programs.
Investments in raising environmentally sustainable agricultural productivity, better risk-management tools, less food-
intensive biofuel technologies, and climate change adaptation measures are all necessary over the medium term to
mitigate the impact of expected food price volatility on the most vulnerable.
Global food prices continue to rise, though not side, there is uncertainty about the size and the quality
uniformly for all grains. The World Bank’s food price of wheat exports from Australia—where crops were
index rose by 15% between October 2010 and January damaged by excessive rains and floods—as well as
2011, is 29% above its level a year earlier, and only 3% concerns about China’s winter wheat crop. Demand
below its June 2008 peak (figure 1). A breakdown of the
index shows that the grain price index remains 16% Figure 1. World Bank Food Price Indices
below its peak mainly due to relatively stable rice prices,
which are significantly lower than in 2008. The increase
over the last quarter is driven largely by increases in the
price of sugar (20%), fats and oils (22%), wheat (20%),
and maize (12%).
Among grains, global wheat prices have increased
the most in recent months. A confluence of weather
shocks to various large producing countries, followed in
some cases by export restrictions, curtailed supply and
caused wheat prices to more than double between the
lows of June 2010 and January 2011 (figure 2). Currently
two factors are keeping wheat prices high. On the supply
Source: World Bank Development Prospects Group.
Food Price Watch, produced by the Poverty Reduction and Equity group at the World Bank, is a series that aims at drawing attention to trends
in domestic food prices in low- and middle-income countries and their policy implications. Contact: Hassan Zaman (hzaman@worldbank.org)
2. Figure 2. Global Prices of Key Food the impact of global price rises as prices of nonsubsidized
Commodities wheat products, as well as other basic staples, have
increased. Local practices have also shielded consumers
from higher global wheat prices—for instance in
Cambodia bread prices have remained stable as
consumers use flour made from locally produced cassava.
Maize prices have increased sharply and are affected
by complex linkages with other markets. In January
2011, maize prices were about 73% higher than June
2010. These increases are due to a series of downward
revisions of crop forecasts, low stocks (U.S. stocks-to-use
ratio for 2010/11 is projected to be 5%, the lowest since
1995), the positive relationship between maize and
wheat prices, and the use of corn for biofuels. Ethanol
production demand for corn increases as oil prices go
up, with sugar-based ethanol less competitive at current
Source: World Bank Development Prospects Group. sugar prices. Recent United States Department of
Agriculture (USDA) estimates show the share of ethanol
drivers center around the possibility of large wheat- for fuel rising from 31% of U.S. corn output in 2008/9
importing countries, particularly in the Middle East and to a projected 40% in 2010/11. Increased demand for
North Africa, coming to the market with large orders. high fructose corn syrup from countries such as Mexico,
These are related to assuring the public that adequate as they substitute away from higher priced sugar, also
domestic food stocks exist during uncertain political contributes to higher demand for corn. Prospects of
times in some countries. Another reason is that countries easing in this market depend partly on the size of the
like Saudi Arabia are progressively reducing domestic crops in Latin America, particularly Argentina, which
production of wheat to conserve valuable water has been affected by unusually dry weather due to the
resources and relying more on imports. La Nina effect, and the extent of import demand from
Higher global wheat prices have fed into sharp China in 2011 as well as oil and sugar price trajectories.
increases in domestic wheat prices in many countries. The transmission of higher global maize prices is
The transmission rate of global wheat price increases to varied and has depended significantly on domestic
the domestic price of wheat-related products has been harvest conditions. Countries in Sub-Saharan Africa
high in many countries. For instance, between June have benefitted from excellent maize harvests, which
2010 and December 2010, the price of wheat increased have led to a sharp fall in prices. The declines from
by large amounts in Kyrgyzstan (54%), Bangladesh June–December 2010 shown in table 1 come on the
(45%), Tajikistan (37%), Mongolia (33%), Sri Lanka heels of even sharper price falls in the early part of the
(31%), Azerbaijan (24%), Afghanistan (19%), Sudan year—on average, maize prices were lower in 2010 in
(16%), and Pakistan (16%). Several of these countries comparison to 2009 in Uganda (52%), Rwanda (37%),
have a large share of calories consumed from wheat- Kenya (33%), Malawi (30%), Ethiopia (22%), and
based products, particularly for the poor (table 1). Tanzania (19%).1 However, these prices also exhibit
In several other countries, the adjustment to higher considerable volatility, which has adverse impacts on
global wheat prices has been shared by the government both producers and consumers. For instance, after a
and consumers. In India, higher domestic procurement sharp decline in the early part of 2010, maize prices in
prices for wheat have contributed to record domestic Rwanda have rebounded by 19% since June 2010.
grain stocks, which have been released to curb prices. In Several Latin American countries saw the price of maize
parallel, the subsidized wheat program has been scaled rise dramatically in the last half of 2010 as dry weather
up. In Egypt, the bread subsidy is estimated to reach lowered yields—the largest increases were witnessed in
around 85% of the population. Nevertheless, even in Brazil (56%) and Argentina (40%). Higher global maize
these countries, consumers are not fully exempted from 1
The prices for Uganda, Rwanda, Kenya and Tanzania are in U.S. dollars.
POVERTY REDUCTION & EQUITY GROUP • WWW.WORLDBANK.ORG/POVERTY
POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK
THE WORLD BANK GROUP 2
3. Table 1. Largest Movers in Domestic Prices, June to December 2010
Change Calorie Change Calorie
in price share in price share
Product by country (%) (%) Product by country (%) (%)
Wheat Rice
World price (US$, HRW U.S. World price (US$, 5% Thai,
75 17
Gulf Ports) Bangkok)
Kyrgyzstan (retail, Bishkek) 54 40 Vietnam (retail, Dong Thap) 46 59
Bangladesh (retail, national
45 6 Burundi (retail, Bujumbura) 41 3
average)
Tajikistan (retail, national
37 54 Bangladesh (retail, Dhaka) 19 70
average)
Mongolia (retail,
33 42 Pakistan (retail, Lahore) 19 6
Ulaanbaatar)
Indonesia (retail, national
Sri Lanka (retail, Colombo) 31 14 19 50
average)
Azerbaijan (retail, national
24 57 Mozambique (retail, Maputo) 14 8
average)
Cambodia (wholesale,
Afghanistan (retail, Kabul) 19 .. -11 65
Phnom Penh)
Sudan (wholesale, Mexico (wholesale, Mexico
16 15 -9 2
Khartoum) City)
Pakistan (retail, Lahore) 16 37 Maize
Brazil (wholesale, São World price (US$, U.S. Gulf
14 13 73
Paulo) Ports)
Bolivia (wholesale, La Paz) 10 18 Brazil (wholesale São Paulo) 56 7
Argentina (wholesale,
Cameroon (retail, Yaounde) -15 6 40 3
Rosario)
Sorghum Rwanda (wholesale, Kigali)a 19 5
Peru (wholesale, national
World price 88 12 11
average)
Guatemala (retail, national
Somalia (retail, Mogadishu) 26 .. 8 40
average)
Sudan (wholesale,
-37 26 Kenya (wholesale, Nairobi)a -8 35
Khartoum)
Ethiopia (wholesale, Addis
Mali (wholesale, Bamako) -13 13 -8 21
Ababa)
Beans Moldova (retail, Chisinau) -8 22
Burundi (retail, Bujumbura) 48 16 Cassava
Cameroon (retail, Congo, Dem. Rep. of (retail,
43 4 -20 53
Yaounde) Kinshasa)
Uganda (wholesale, Mozambique (retail,
38 5 -39 32
Kampala)a Nampula)
Cape Verde (retail,
Kenya (wholesale, Nairobi)a 22 4 -26 ..
Santiago)
Source: FAO, GIEWS.
a. Prices in U.S. dollars because local currency prices unavailable.
POVERTY REDUCTION & EQUITY GROUP • WWW.WORLDBANK.ORG/POVERTY
POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK
THE WORLD BANK GROUP 3
4. prices are also passed through to consumers indirectly These higher prices feed through to domestic prices
by raising animal feed prices, meat prices, and the price quickly in many countries—for instance, sugar prices
of many processed food categories. doubled in Cambodia between June and December
Global rice prices have increased at a slower rate 2010 and edible oil prices increased by 15% between
than other grains and the outlook remains stable. The September and December in Afghanistan. Several
export price for Thai rice has increased by 8% (Thai 5%) countries have intervened to temper this pass through.
between October and January 2011, and 17% since June In Algeria, taxes and import duties on sugar and edible
2010. They remain about 70% below the peak reached oil were sharply reduced in January 2011 due to double-
during the 2008 food crisis. Following good harvests in digit prices rises. In Indonesia, the government has
large exporting countries, the decision by the Philippines reduced taxes on sugar and increased subsidies to local
to limit imports, and the release of large stocks onto the cooking oil producers.
market by Thailand, prices appear to be leveling off. One Prices of other food items essential for dietary
factor limiting the downward pressure on rice prices are diversity have risen in many countries. In India, food
recent announcements by large importers such as inflation stood at 18.3% in December partly due to the
Bangladesh and Indonesia to significantly increase higher prices of fruits and vegetables, milk, meat, and
domestic stocks. fish. In China, similarly, food inflation was driven largely
Domestic rice prices have risen sharply in some by vegetables (see figure 3). In the second half of 2010,
countries and remained steady in others. The domestic beans prices increased dramatically in Burundi (48%),
price of rice was significantly higher in Vietnam (46%) Cameroon (43%), Kenya (38%), and Uganda (22%). In
Mongolia, an outbreak of the foot and mouth disease,
and Burundi (41%) between June–December 2010.
coupled with a severe winter experienced in 2010, led to
Indonesia (19%), Bangladesh (19%), and Pakistan (19%)
a sharp increase in meat prices. Average mutton meat
have increased in line with global prices. These Asian
prices were 32% higher in 2010 compared to 2009.
countries are large rice consumers, especially among the
poor. Rice prices have increased in Vietnam despite good These food price rises create a range of macro
domestic harvests. This is primarily due to the vulnerabilities. One aspect is the impact on domestic
depreciation of the currency, which has fuelled overall food inflation and overall inflation. More than one-third
of the countries in Eastern Europe and Central Asia had
inflation and expectations of higher demand from large
more than 10% food inflation in 2010. Countries with a
importers and led to the minimum rice export price
high share of net food and energy imports face current
being raised by the Vietnamese government. Rice price
account vulnerabilities. These include Tajikistan, the
increases in Sri Lanka (12%) and China (9%) have been
Kyrgyz Republic, Georgia, and Albania in Eastern
relatively moderate in the second half of 2010, while in Europe and Central Asia, a region where limiting
Cambodia and the Philippines the retail price of rice current account deficits is particularly important
remained largely unchanged during this period. Rice following the 2009 financial crisis. The fiscal impact of
prices outside Asia remained stable in many countries, these price rises depends on the extent to which food tax
such as Cameroon, Guatemala, Mexico, Panama, and revenues increase and expenditures on mitigating
Somalia, during this period. measures—such as for social protection programs—are
Sugar and edible oil prices have increased sharply in increased.
recent months. Sugar prices have risen by 73% since Our estimates suggest that an additional 44 million
June due to supply shortfalls from Brazil, the largest people may have fallen into poverty in low- and middle-
exporter, and weather shocks in Australia. Similarly, income countries due to the rise in food prices since
edible oil prices were up on account of a number of June 2010. In order to assess the impact on poverty of
weather-related shocks. Prolonged dry weather related the change in food prices in the second half of 2010, we
to La Nina lowered expectations of yields in Brazil and extend a model used to estimate the impact of the 2008
Argentina, which together account for roughly 45% of food price crisis (see box 1 for the details). Net producers
soybean exports. On the other hand, floods in southern of food benefit from higher prices while net consumers
Malaysia and Indonesia have hindered palm oil harvests. suffer. Our results show that extreme poverty in low-
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5. Figure 3. Food Inflation in China (percent of through of global staple prices and allowed for
change, year-on-year) substitution away from imported wheat and rice in
40 some of the most vulnerable countries. Second, in sharp
Food Beans Vegetables Pork contrast to 2008 and buoyed by good harvests in
35
30
Vietnam and Thailand, the fundamentals in the supply
25
situation in the rice market remain strong. Rice is an
important commodity not only because it is the primary
20
staple for many developing countries, but also because it
15
was the main source of the contagion that precipitated
10
the 2008 crisis when many large exporters banned its
5
export.
0
-5
There are several short- and medium-term policy
implications of this recent round of food price rises.
-10
There are certain key commodity markets, such as rice,
-15
where informational uncertainty (for example, of stocks
Nov-09
Nov-10
Feb-10
Sep-10
May-10
Oct-10
Aug-10
Jun-10
Jul-10
Apr-10
Mar-10
Dec-09
Jan-10
held by large exporters) and ‘panic buying’ may keep
prices from falling to the levels expected by the good
Source: World Bank East Asia and Pacific Region. harvests. The publication of regular, accessible data on
stocks as well as commitments by larger exporters not to
impose export restrictions would help maintain
and middle-income countries may have increased by 44 stability, which is crucial to prevent further increases in
million people in net terms as a result of the food price poverty. At the same time, safety net and nutritional
increases between June and December 2010. This programs need to be scaled up in vulnerable countries—
reflects 68 million people who fell below the $1.25
and the international community may need to focus on
poverty line and the 24 million net food producers who
countries like Afghanistan, Burundi, the Democratic
were able to escape extreme poverty.
Republic of Congo, the Kyrgyz Republic, and Mongolia,
There are nutritional implications related to higher to name a few, that are facing large price spikes. Countries
food prices. Higher poverty is associated with increased that are large net commodity importers with low reserve
malnutrition as poorer people eat less and substitute cover and limited fiscal space will need to be monitored
away from more expensive, nutritious food and into to assess their external financing needs. The frequency
cheaper staples. These nutritional setbacks are of extreme weather-related events over the past year and
particularly severe for infants between the ages of zero their impact on food prices underscores the vulnerability
and two as well as pregnant women. The complex of the poor to climate change. Over the medium term,
linkages across food markets also affect obesity—for investments in raising environmentally sustainable
instance, the increased demand for high fructose corn agricultural productivity, climate change adaptation
syrup, as a substitute for more expensive sugar, has measures, and finding less food intensive biofuel
public policy implications in a country like Mexico, technologies are all necessary to mitigate the impact of
where obesity is a serious public health concern. food price volatility on the most vulnerable. Finally,
There are two factors limiting the poverty impact of these spikes underscore the importance of efforts to
the current global price spike. In many countries in raise incomes of the poor so that they spend a lower
Africa, good harvests of domestic crops—like maize, share of their budgets on food and are less vulnerable to
sorghum, millet and cassava—have limited the pass such shocks.
Box 1 next page
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6. Box 1. Estimating the Poverty Impact of Recent Food Price Rises
To quantify the poverty impacts of the recent rise in food prices, we use a global computable model
(Global Trade Analysis Project [GTAP]) with a sample of 28 household surveys with data on individual
households’ expenditures and income sources. These national surveys are drawn from low- and middle-
income regions from around the world and represent 41% of the population living in these countries (see
table 1).We use local food price changes for the commodities where we have data for the June–December
2010 period. For the commodities where the local price data do not exist, we work out the pass through
of global commodity price changes on local prices using the share of that commodity’s import in total
consumption. In the second stage of our calculations, we apply the expected domestic price changes to
determine the increase in the cost of living for net consumers and the increased profits of net producers.
Combining these two impacts, we calculate the net impact on each household and determine whether it
has been thrown into or lifted from poverty, defined at the expenditure level of $1.25 per person per day.
The results show that in half of our sample, we observe an increase in poverty greater than 0.5 percentage
points, and in eight countries an increase of more than 1 percentage point, including Tajikistan, where
poverty is expected to have risen by more than 3.6 percentage points, and Pakistan, where the 1.9
percentage point increase in poverty is mostly due to higher wheat prices, with the impact on consumers
far outweighing the beneficial impact on medium and large farmers. In contrast, in Vietnam, poverty is
expected to have declined because a large portion of poor households are net producers of rice and
benefit from their high price. Applying the population-weighted average increase in poverty to the total
population in low- and middle-income countries, we infer that the recent rise in food prices may have put
44 million people into poverty in these countries. This reflects 68 million people who fell below the $1.25
poverty line and the 24 million net food producers who were able to escape extreme poverty.
Share of the
population Poverty rate
Total population Sample population covered by change, Poverty rate
Country type (millions) (millions) sample (%) percentage points change (millions)
Low-income countries 828 286 34.5 1.1 9.5
Middle-income countries 4,758 1,987 41.8 0.7 34.1
Total 5,586 2,272 40.7 0.8 44.0
Source: World Bank staff estimates produced by the Agriculture and Rural Development Unit of the Development Research Group and the Poverty Reduction and Equity Group. Estimates for the
poverty impact of 2008 food price increases using this model can be found in M. Ivanic and W. Martin (2008), “Implications of Higher Global Food Prices for Poverty in Low-Income Countries,”
Agricultural Economics 39 (Supplement): 405–16.
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