The food price crisis and the global food security challenge
Smallholders are key
High food prices peaked in early 2008 and are falling ever since (see box at right). This is easing some of the immediate impacts of the food price crisis. However, more than 968 million people are estimated to be undernourished — the majority of them women and children in rural areas.
Long-term response strategies for tackling the effects of high and volatile food prices on hunger and poverty need to centre on smallholder-based agriculture and rural development. As demonstrated in
 World Development Report 2008 ‘Agriculture for Development’, for most developing countries, smallholder-based agricultural growth, and thus higher productivity, is the most effective approach to overcoming rural poverty.
It is necessary to increase smallholderal growth in the medium term. However, the immediate needs stemming from the food price crisis also have to be addressed, preferably through strengthened social safety nets or other social protection measures.
Any response strategy needs to be country-owned and highly context- and location-specific.
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What has happened so far?
a) Processes
Developing countries have responded to the food price situation in different ways. The FAO presents the situation on its web page in more detail, including through the  Crop prospects and food situation report.
The international development community has raised the situation in various fora or during international conferences, including:
- the 2009
 G8 Summit held in L’Aquila, Italy with the
 “L’Aquila” Joint Statement on Global Food Security, L’Aquila Food Security Initiative (AFSI), L'Aquila, Italy, July 2009
- the
OECD/Platform Policy Dialogue on High Food Prices Outlook and Donor Mid-term Response, Paris, February 2009
- the High Level Meeting on Food Security for All, Madrid, January 2009;
- the FAO Committee on World Food Security , Rome, October 2008;
- the UN General Assembly, 63 Session and the associated meetings on Africa’s development needs and the MDG High-Level Event, New York, September 2008;
- the G8 Summit 2008, Toyako, Japan, July 2008;
- the FAO High Level Conference on Food Security, Rome, June 2008;
- the Human Rights Council on the negative impact of soaring food prices on the right to food, Geneva, May 2008;
- the World Bank/ IMF Spring Meeting, Washington, D.C., April 2008;
A number of proposals have been put forward, the most advanced of which is the
Comprehensive Framework for Action (CFA) of the UN High Level Task Force on the Global Food Security Crisis. In addition, a Global Partnership on Agriculture and Food Security (GPAFS) has been broadly endorsed by, for example, the G8 and in the Accra Agenda for Action (AAA).
b) Resources and programmes
Developing countries have responded to the challenges they face with a multitude of policy and direct support measures (see the FAO web page on Crop prospects and food situation for details). The response of the international development community includes:
- Multilateral donors
- Bilateral donors
Most bilateral donors have pledged additional resources or re-programmed available resources to address immediate and mid-term needs stemming from the food price crisis.
At the June 2008 FAO High Level Conference on Food Security, pledges were made by various countries, including France, USD 1.5 billion (over five years); Germany, USD 750 million; Japan, USD 150 million; Kuwait, USD 100 million; the Netherlands, USD 75 million; New Zealand, USD 7.5 million; Spain, USD 773 million; United Kingdom, USD 590 million; and Venezuela, USD 100 million.
At the January 2009 Food Security for All Meeting, Spain pledged an addtional € 200 million per year for the five years to come.
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What else has to happen?
- Urgent reform of global governance for agriculture
The existing global governance available for agriculture and food systems is in disarray, and is unable to effectively respond to the fact that contexts have changed and new challenges have arisen.
- Better aid
Aid architecture and aid modalities are evolving fast, and many aid effectiveness lessons have been learned in relation to agriculture and rural development as a result of implementing the Paris Declaration on Aid Effectiveness (PD) and the Accra Agenda for Action (AAA). Examples of such include the importance of ownership, country systems, coherence, incentives, and mutual accountability. Reforms have to accelerate while taking into account the lessons learned and best practices.
- Better policies and strategies
There is a significant body of knowledge in agriculture and rural development (ARD) – as, for example, in World Development Report 2008, IFPRI, ODI, IDS-ELDIS. However, many unresolved issues still remain, such as which “model of agriculture” should be pursued, what roles should be played by the state and by the private sector, including smallholders, and how to address the continued challenge presented by the political economy of policies. Despite this, ARD offers ample opportunities to make progress in the fight against hunger and poverty while at the same time addressing challenges like gender equality and climate change.
In addition, progress must be made in identifying policy areas and strategies that will provide the greatest leverage and the most potential for addressing the food price crisis. Efforts must also be made to initiate subsequent policy dialogue and change (as, for example, in relation to biofuels, trade restrictions or the WTO Doha round).
- More resources for ARD
In addition to better aid and policy reforms, more resources are required from both national budgets and external aid. In June 2008, the FAO estimated that, at the global level, USD 30 billion is required each year to adequately address poverty and hunger. The MDG Task Force for Africa estimated that an additional USD 8.8 billion is required for African agriculture, while the CFA identified a global public finance shortfall of USD 25 to 40 billion.
These figures contrast sharply with the fact that the share of official development assistance (ODA) provided to agriculture has declined hugely, falling from 20% to 4% in 2005 (approx. USD 4.0 billion). This mirrors the lack of focus obvious in many developing countries.
The
Monterrey Consensus on Financing for Development and the commitments made at the 2005 Gleneagles G8 Summit and pledged in the
Gleneagles Communiqué need to be honoured to allow for an increase of external resources while countries in Africa need to implement the
Maputo Declaration, allocating at least 10% of the national budget for ARD in pursuit of agricultural growth of at least 6%.
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Background
- Narration/analysis
Over the past century, humankind has experienced three distinctive food price hikes: one following World War II, one following the first oil crisis in the late 1970s, and the one we are living through right now. There is a general expectation that food prices will drop from the peak levels they reached during the first half of 2008. However, they are not expected to fall to the historically low levels seen in 2000—2005. And, overall price volatility is expected to remain high.
Soaring food prices have a number of transitory, structural and policy-related causes. Supply-side factors include:
- weather-related production shortfalls;
- lack of investment in agriculture;
- low agricultural commodity stock levels and
- rising agricultural input costs.
Demand-side factors include:
- policy-induced demand for biofuels;
- population growth, and
- changing diets.
Other factors (such as increased activity on the part of the agricultural commodities market/futures system and short-term policy measures like export bans) have worsened the situation.
There has been a massive and direct impact on people, particularly the poor, and this has resulted in riots and unrest in a number of countries. The FAO estimates that the food price crisis has added 75 million people to the undernourished and hungry worldwide. By the end of 2008, FAO estimates that 963 million people are undernourished while the World Bank estimates that there are 1.4 billion people living in extreme poverty, wiping out many of the gains made in the last few decades in the fight against hunger and poverty.
Macro-economic impacts include balance of payment problems, inflation and the reduced availability of public financial resources for poverty eradication and the achievement of the other MDGs.
- Our top 10 recommendations for policy practitioners
- Chatham House. The Feeding of the Nine Billion: Global Food Security for the 21st Century, January 2009
- FAO. Soaring Food Prices: Facts, Perspectives, Impacts and Actions Required, April 2008
- HLTF.
Comprehensive Framework for Action, July 2008
- IFPRI. High Food Prices: The What, Who and How of Proposed Policy Actions, May 2008
- IFPRI. Global Food Crises - Monitoring and Assessing Impact to Inform Policy Responses, September 2008
- IFPRI. Food and Financial Crises: Implications for Agriculture and the Poor, December 2008
- IMF.
Food and Fuel Prices—Recent Developments, Macroeconomic Impact, and Policy Responses, June 2008
- ODI. Briefing Paper, Rising Food Prices: A Global Crisis, April 2008
- World Bank.
World Development Report 2008 – Agriculture for Development, October 2007
- World Bank. Rising Food Prices: Policy Options and World Bank Response, April 2008
- Further information and background papers
- ADB. Food Prices and Inflation in Developing Asia: Is Poverty Reduction Coming to an End?, April 2008
- ADB. Soaring Food Prices, May 2008
- BMZ. Increasing Food Prices and their Impact on Development Policy, April 2008
- Chatham House. Briefing Paper, Rising Food Prices, April 2008
- Chatham House. The Feeding of the Nine Billion: Global Food Security for the 21st Century, January 2009
- CONCORD. The Food Price Crisis: What needs to be done, European Food Security Group, October 2008
- FAO. The State of Food and Agriculture 2007 – Paying Farmers for Environmental Services
- FAO.
The State of Food and Agriculture 2008 - Biofuels: prospects, risks and opportunities
- FAO.
Bioenergy, Food Security and Sustainability – Towards an International Framework, April 2008
- FAO.
Crop Prospects and Food Situation, October 2008
- FAO.
Assessment of the World Food Security and Nutrition Situation, October 2008
- FAO.
Food Outlook, Global Market Analysis, June 2008
- FAO. Soaring Food Prices: Facts, Perspectives, Impacts and Actions Required, April 2008
- G8.
Leaders Statement on Food Security, July 2008
- GDPRD.
The Role of Agriculture and Rural Development in Achieving the MDGs: a Joint Donor Narrative
- HLTF.
Comprehensive Framework for Action, July 2008
- HLTF.
Progress Report: Apr 2008-Oct 2009, October 2009
- Hunger Task Force.
Hunger Task Force Report to the Government of Ireland, September 2008
- IAASTD.
Executive Summary of the Synthesis Report, May 2008
- IAASTD.
Global Summary for Decision Makers, June 2008
- IFPRI.
The Role of Agriculture in Development, Research Report 153, July 2007
- IFPRI.
The World Food Security Situation - New Driving Forces and Required Actions, December 2007
- IFPRI. Investing in African Agriculture to Halve Poverty by 2015, Discussion Paper 751, February 2008
- IFPRI. High Food Prices: The What, Who and How of Proposed Policy Actions, May 2008
- IFPRI. Rising Food Prices: What Should be Done, April 2008
- IFPRI. Global Food Crises - Monitoring and Assessing Impact to Inform Policy Responses, September 2008
- IFPRI. Helping Women Respond to the Global Food Price Crisis, October 2008
- IFPRI.
Food and Financial Crises: Implications for Agriculture and Poor, December 2008
- IFPRI.
Highlights from Millions Fed: Proven successes in agricultural development, November 2009
- IMF.
Food and Fuel Prices—Recent Developments, Macroeconomic Impact, and Policy Responses, June 2008
- Institute for Agriculture and Trade Policy. A Time of High Prices: An Opportunity for the Rural Poor, April 2008
- ODI. Rising food prices: A global crisis, Briefing Paper 37, April 2008
- ODI. Rising food prices: Cause for concern, Natural Resources Perspectives 115, June 2008
- OECD. Higher Food Prices – A Blessing in Disguise For Africa, Policy Insights No.66, May 2008
- OECD.
Policy Brief: Rising Agricultural Prices: Causes, Consequences and Responses, August 2008
- OECD.
Rising Food Prices: Causes and Consequences, May 2008
- OECD/FAO.
Agricultural Outlook 2008-2017, May 2008
- OECD/GDPRD.
Policy Dialogue on High Food Prices - Outlook and Donor Mid-term Response - discussion summary, March 2009
- Oxford Analytica. Food Crisis Represents Long-term Shift, April 2008
- Southern Africa Trust.
Who Will Feed the Poor? The Future of Food Security for Southern Africa - A Policy Discussion Paper, November 2008
- UK HM Treasury.
Global commodities: a long term vision for stable, secure and sustainable global markets, June 2008
- UN-ECOSOC. The Millennium Development Goals Report 2007
- UN-ECOSOC. Note for Special Meeting of the Economic and Social Council on Global Food Crisis, May 2008
- UN General Assembly.
Building resilience: a human rights framework for world food and nutrition security, Report of the Special Rapporteur on the right to food, Olivier De Schutter, September 2008
- UNDP. Human Development Report 07/08 – Fighting Climate Change: Human Solidarity in a Divided World, 2007.
- USDA. Global Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices, 2008.
- USDA. Production, Supply and Distribution, US Department of Agriculture, 2008 http://www.fas.usda.gov/psdonline
- World Bank/IFPRI. Agriculture and Achieving the Millennium Development Goals, 2006.
- World Bank.
World Development Report 2008 – Agriculture for Development, October 2007
- World Bank. Global Monitoring Report 2008 – MDGs and the Environment: Agenda for Inclusive and Sustainable Development, April 2008
- World Bank. Implications of Higher Global Food Prices for Poverty in Low-Income Countries, April 2008
- World Bank. Rising Food Prices: Policy Options and World Bank Response, April 2008
- World Bank. Aid Architecture: An Overview of the Main Trends in Official Development Assistance Flows, May 2008
- World Bank.
A Note on Rising Food Prices, The World Bank Development Prospects Group, Policy Research Working Paper 4682, July 2008
- World Bank.
Double Jeopardy: Responding to High Food and Fuel Prices, a report for the G8 Hokkaido-Toyako Summit, July 2008
- Useful links for policy practitioners
- Eldis food security web page
- FAO
- IFPRI Food Security Portal
- IFPRI web page on food prices
- ODI web page on food
- World Bank web page on food crisis
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