Food crisis: What the World Bank is doing, 02 Sep 2009

Report
from World Bank
Published on 02 Sep 2009 View Original
(updated September 2, 2009)

In response to the severity of the food crisis and the need for prompt action, the World Bank Group set up the Global Food Crisis Response Program (GFRP) in May 2008 to provide immediate relief to countries hard hit by food high prices. The Bank response has been articulated in coordination with the United Nations' High-Level Task Force on food security. Through its response, the Bank is supporting the implementation of the joint Comprehensive Framework for Action (CFA).

The World Bank Group increased GFRP to $2 billion in April 2009 to provide immediate relief to countries hard hit by food high prices. GFRP was created in May 2008 to reduce the threat high food prices and rising agricultural production and marketing costs pose to the livelihoods of the world's poor. The money is used to feed poor children and other vulnerable groups, provide for nutritional supplements to pregnant women, lactating mothers, infants and small children, to meet additional expenses of food imports or to buy seeds for the new season.

GFRP has disbursed $1164 million out of $1190.4 million in 35 countries as of August 27, 2009. An additional $26.4 million is being earmarked for programs in four countries.

GFRP is disbursing funds to Afghanistan ($8 million), Bangladesh ($130 million), Benin ($9 million), Burundi ($10 million), Cambodia ($5 million) Central African Republic ($7 million), Comoros ($1 million) Djibouti ($5 million), Ethiopia ($275 million), Guinea ($10 million), Guinea-Bissau ($5 million), Haiti ($10 million, $5 million), Honduras ($10 million), Kenya ($50 million, $5 million), Kyrgyz ($10 million), Laos ($3 million), Liberia ($10 million), Madagascar ($10 million, $12 million), Mali ($5 million), Moldova ($7 million), Mozambique ($20 million), Nicaragua ($7 million), Nepal ($36 million), Niger ($7 million), Philippines ($200 million), Rwanda ($10 million), Senegal ($10 million),Sierra Leone ($7 million), Somalia ($7 million), Southern Sudan ($5 million), Tanzania ($220 million), Tajikistan ($9 million), Togo ($7 million), Yemen ($10 million), and West Bank and Gaza ($5 million).

Grant funding has also been made available through several external-funded trust funds in support of the full range of interventions available under the GFRP. A Multi-Donor Trust Fund, which received a contribution of AU$50 million from the Australian government in the fall of 2008, has allocated funds for operations in Senegal, Cambodia, the Pacific Islands, Vietnam, Zimbabwe, and Sierra Leone. The Russian Federation has also allocated $15 million for the Kyrgyz Republic and Tajikistan, through the Russia Food Price Crisis Rapid Response Trust Fund, which became operational in April 2009. The European Commission has allocated EUR 48.5 million for projects in Ethiopia, Gambia, Guinea-Bissau, and Kenya, and pledged an additional EUR 62.3 for projects in Honduras, Mali, Benin, the Kyrgyz Republic, Laos and Yemen. As of August 2009, MDTF-funded operations were approved for Cambodia ($8 million), Senegal ($8 million) and Zimbabwe ($7 million), and $6.25 million for Tajikistan was approved under the Russia Trust Fund.

Boosting overall agricultural lending to $12 billion over the next two years, up from $4 billion in 2008, as announced in April 2009. This includes nearly doubling lending to Africa from $450 million to $800 million, and to Latin America from $250 million to $400 million, and supporting over $1 billion in new projects in agriculture and rural development in South Asia.

IFC invested more than $1.4 billion in FY08 in agribusiness supply chains. More than 40% of its projects were in IDA countries, with investments in Sub-Saharan Africa reaching $116 million. For FY09, IFC has invested $893 million as of February 2009, with investments in Africa reaching $109 million for distribution and storage, grain milling, plantation rehabilitation, and trade finance.

Tripling investments in safety nets and other social protection programs in health and education to $12 billion over next two years, as announced in April 2009.

Establishing Agriculture Finance Support Facility to expand rural finance through a $20 million Bill & Melinda Gates Foundation contribution, as announced in June 2009. The Facility will increase access to financial services, such as savings, credit, payments and insurance.

Working to help countries develop financial market insurance products and risk management strategies to ensure increased capacity to respond to future prices increases, such as weather derivatives and crop insurance.

In September 2008, Malawi became one of the first countries to use the Bank's new weather derivative financial product. Index-based weather derivatives help transfer risks to the financial markets. Payments are triggered by adverse weather events according to pre-specified conditions. The Bank is also supporting weather index insurance initiatives isThailand, Bangladesh, Senegal, Burkina Faso, Kenya, Jamaica and potentially Fiji. In Indonesia, the Bank and IFC are completing a feasibility study on a crop insurance pilot for maize small farmers.

Integrating national level agricultural risk management strategies into new country operations in Morocco, Malawi, Mozambique, Haiti, Belize, Grenada, and Jamaica.

Engaging in policy dialogue with more than 40 countries to help them address the crisis.

Through the HLTF Secretariat, the Bank is working through existing country-level coordination mechanisms and regional initiatives such as the Comprehensive African Agriculture Development Program (CAADP) to identify opportunities and constraints in CFA implementation on the ground. The focus is on 27 least-developed, most vulnerable countries, 22 of which are being supported by the Bank's GFRP.

FOOD CRISIS FACTS AND FIGURES

- 1.1 billion people were living on less than $1 a day and 923 million were undernourished, even before the food, fuel and financial crises.

- Food prices remain volatile. Local food prices in many countries haven't come down, although international food prices have fallen.

- Although they've declined from their peaks in 2008, major food grain prices are still above average. Maize is 50% more expensive than its average price between 2003 and 2006, while rice prices are 100% higher.

- When food prices are high, poor people either eat less, switch to cheaper, lower quality foods, or forgo spending on health and education.