Kyrgyzstan + 4 more

The Global Food Crisis Response: Bank Efforts to Offset Price Shocks Reach Nearly 40 Million People in 44 Countries

Source
Posted
Originally published
Origin
View original

Overview

The World Bank responded rapidly to the food price crisis that started in 2008 through the Global Food Crisis Response Program (GFRP), which mixes fast-track funding from International Development Association (IDA) and IBRD (International Bank for Reconstruction and Development) with trust fund grants to address the immediate food crisis, while encouraging agricultural systems to build resilience for the future. GFRP resources have currently financed operations amounting to US$1.5 billion reaching nearly 40 million vulnerable people in 44 countries.

Challenge

International grain prices increased significantly in early 2008, resulting in sharp increases in staple food costs in many developing countries. Soaring food prices were viewed as a contributing factor to civil unrest in nearly 40 countries. Prices of inputs for food production such as fuel and fertilizer also tripled after January 2008, undercutting the profitability of many smallholder producers even as their own ability to feed their families was decreasing. International food prices are spiking again for the second time in three years. A modest but steady increase in global grain consumption, more variable global grain supply due to weather, and a draw-down of stocks held by the major grain exporting countries have all combined to increase both uncertainty in global grain markets and broader food price volatility since 2005. Rising food prices entail risks for both countries and individuals. Food price inflation has accelerated in several low and middle income countries, where consumers often spend more than half of their income on food.

Approach

Immediate support from the international community is required to reduce the impact of high and volatile food prices on the poor and vulnerable and to increase country resilience to future supply and market shocks. When established in 2008, the Global Food Crisis Response Program (GFRP) focused on speed of response in providing policy advice and financial support. The approach set out by GFRP allowed client countries to choose a mix of budget support, social protection, and investments to support their short- and medium-run food supply response. These options addressed the immediate needs of the poor, while also embracing policies and approaches consistent with the need for agricultural systems to better prepare for similar threats in the future.

The program financed stand-alone technical assistance, development policy lending, and investment operations, drawing upon country and international experience under four components: (i) food price policy and market stabilization; (ii) social protection actions to ensure food access and minimize the nutritional impact of the crisis on the poor and vulnerable; (iii) enhancing domestic food production and marketing response; and (iv) implementation support, communications, and monitoring and evaluation.

Results

There is growing evidence of the impact of GFRP operations on the ground. Support for social protection programs is estimated to already have benefitted 5.6 million people and is expected eventually to reach 10 million people when funds from already-approved operations are fully disbursed. Support for short- and medium-term food supply response measures are estimated to have reached 5.9 million farm households to date, and are expected to directly benefit at least 8.8 million farm households when all activities are fully implemented. Development policy operations supported country-wide policies in 13 countries.

  • There is emerging evidence from several IDA countries of a strong short-term supply food response: For example, results of an impact evaluation survey carried out at the conclusion of the Emergency Food Security Support Project in Niger show that rice yields in irrigated plots treated with the recommended dose of fertilizers was 5.4 tons per hectare on average, thereby exceeding the baseline yield of 2.5 tons/ha by 116 percent. This in turn helped benefit 35 cooperatives encompassing 20,784 farmers.

  • In Nepal, the Social Safety Nets project has employed 168,263 workers through food or cash for work programs, providing food for approximately 940,000 beneficiaries across 28 food-insecure districts. Based on program monitoring from November 2008 to June 2009, 94 percent of beneficiaries reported an increase in food security and an average of 5.5 months of self-sufficiency; 52 percent of respondents reported eating more meals a day; 45 percent reported an increase in the variety of food consumed; and 30 percent reported eating larger meals.

  • In the Kyrgyz Republic, the National Federation of Community Seed Funds has mobilized 63 such funds with 2,271 farmers as members for a grain seed distribution program. Due to better quality seeds and fertilizer application, the yields for winter and spring cereals have increased dramatically compared to 2008, even after accounting for better weather conditions.

  • Among the IBRD countries, GFRP support in the Philippines helped facilitate the use of less distorting mechanisms for rice imports, and broaden reforms for social protection. Advice on alternative ways for the Philippines to source global rice imports helped ease upward pressure on prices. Policy advice to the Government to initiate bilateral deals with Vietnam and Thailand as well as to domestically procure rice stocks helped reduce further pressure on world prices.

Bank Contribution

As of early March 2011, the World Bank's Board has approved Bank-funded GFRP projects totaling US$1.24 billion, of which US$202 million is from the Food Price Crisis Response Trust Fund; US$836 million is from IDA for 13 countries; and US$200 million is from IBRD for a project in the Philippines. The Bank has engaged in policy dialogue with more than 40 countries to assist them address the food crisis. The instruments used include country level rapid diagnostics, high-level dialogue, public communications, and in-depth analytical work.

Partners

Effective partnerships have led to successful implementation of GFRP operations and enhanced institutional capacity in many developing countries. The World Bank is working in eight countries with UN agencies like World Food Programme, UNICEF, and the Food and Agriculture Organization to implement GFRP operations, and has formed strong links with civil society organizations in designing, implementing, and monitoring projects. Additionally, several nations have contributed to trust funds in support of GFRP activities, including Australia, Spain, Canada, Korea, and Russia, as well as the European Union.

Toward the Future

Over time, there has been a shift from the mitigation aspects of emergency response to adaptation to changed circumstances and improvement for future resilience. This shift has coincided with more attention to medium-run issues of supply response and making safety nets more sustainable over time. Clients are now paying more attention to addressing structural agricultural issues through the regular program. To support this, the World Bank Group prepared an Agriculture Action Plan that projects a significantly increased support to agriculture and related sectors, from a baseline average support in FY2006-08 of US$4.1 billion annually to between US$6.2 billion and US$8.3 billion annually in fiscal years 2010-2012. Complementary to the regular program, the public sector element of a new Global Agriculture and Food Security Program (GAFSP), emerging from discussions initiated by the Group of 20 nations, will help finance country-led strategies. The technical assistance window of GAFSP is likely to focus on building in-country capacity to formulate and implement long-term agricultural strategies, while the private sector window will provide equity and debt financing to private agribusiness in developing countries.