Transcript Mr. Henk-Jan Brinkman

Food and financial crises
CSD, 9 February 2009
Henk-Jan Brinkman,
Senior Adviser for Economic Policy
08
M
07
M
06
M
05
M
04
M
03
M
02
M
01
M
00
M
1
1
1
1
1
1
1
1
1
1000
20
20
20
20
20
20
20
20
20
$ per metric ton
Food prices have increased
1200
RICE
800
600
WHEAT
400
200
MAIZE
0
2
Cheaper
food
Spend
Drop out Child
less on
of school labor
nonessentials Migration Borrow
Selling
some
assets
Less
nutritious
food
Reduce
size /
number
of meals
Selling
of
productive
assets
Selling
of all
assets
Consume Begging Entire
wild
for food day
foods,
without
seeds
eating
Spend
less on
essential
items
Eat ab
normal
items
(e.g.
plants
and
insects)
Health
threatening
activities
Diversify
incomes
Child
malnutrition
Food/Nutrtion
Livelihood
Rapid deterioration of nutritional status
3
Prices  nutritional status
75
0.5
70
0.4
65
60
0.3
55
0.2
1992 1993 1994 1995 1996 1997 1998 1999 2000
Underweight (%), left
Weekly rice expenditure (per capita, $), right
4
Food prices remain high
Average of forecasts of EIU, FAPRI, IFPRI, OECD/FAO, USDA and
World Bank (2000=100)
Forecasts
330
305
280
255
230
205
180
155
130
105
80
2000
2001
2002
2003
Maize
2004
2005
Wheat
2006
2007
Rice
2008
2009
Soybean
2010
2011
2012
Sorghum
2013
2014
2015
2016
Soybean oil
5
2017
Thank you
NUMBER OF NATURAL DISASTERS
Climate change: increasing frequency
and intensity of weather disasters
2500
2000
1500
1000
500
0
1900-1950
OCEANIA
1951-1970
EUROPE
1971-1990
AFRICA
AMERICA
1991-2007
ASIA
7
Food prices have increased
350
300
250
200
150
100
50
MEAT
0
2000
2001
2002
DAIRY
2003
CEREALS
2004
2005
OILS
SUGAR
2006
2007
8
2008
Demand > Supply: Agreement on
list, but not on relative weight
o Demand
•
•
•
•
Emerging markets, changing demand patterns
Biofuels
Institutional investors
Depreciating dollar
o Supply
•
•
•
•
•
Low stocks
Weather-related shocks
Low productivity growth
Export restrictions
Oil price
 Inputs: Fertilizer and transport costs
 Outputs: Link between food and energy prices
9
Oil prices fell from a cliff
10
Some forecasts for 2009
o Global GDP growth: 1% (-0.5%?)
• Developed GDP growth: -0.5%
• Developing GDP growth: 4.5%
o Trade volume: -2.1 %
• -20% to -30% for some countries?
o FDI: -20% in 2008, -30% in 2009
o Net private debt + equity: -49% from ‘07
• $1.03 trillion in 2007; $530 billion in 2009
o Remittances: -1% (-5.7%?)
• Indonesia: -50% compared to 2007
o ODA: -$20b compared to 2007?
• another -$9b in 2010?
11
Two stylistic groups
o Strong trade but
weak financial
links with US+ EU;
dependent on ODA
o
o
o
o
o
o Strong trade and
financial links with
US + EU
SS Africa
o E + S Asia
Central America
o C + E Europe
West Asia
o some Latin American
Caribbean
countries
some Latin American
countries
12
Channels of effects
Group 1
Group 2
o Lower commodity
export volumes and
prices
o Lower volumes of
manufactured exports
o Lower tourism
revenues
o Financial distress in
developed countries
spilled over
o Lower remittances
o Less ODA
13
ODA down, WFP $ halved?
Official Development Assistance, 2000-2010
0.35
0.35
0.33
0.30
140
0.30
0.31
0.28
120
0.25
0.25
0.26
0.23
0.22
0.22
100
0.20
80
0.15
60
0.10
40
0.05
20
0.00
0
2000
2001
2002
2003
2004
2005
2006
2007
ODA
Scenario 3
Scenario 2
Scenario 5
Scenario 1
ODA/GDP ratio
2008
2009
ODA (in billions of US $)
ODA as percentage of GDP
0.33
2010
Scenario 4
14
WFP’s Strategic Plan 2008-11
o From food aid to food assistance
o Broader, flexible and nuanced toolkit
o Tools not new, but expanded scale:
• Cash and vouchers
• Purchase for Progress
• Policy dialogue and advocacy
• No one-size fits all school feeding
• New nutrition and food products
15
Historical context
Grain Prices, 1900-2007
(Real, $/ton, 1990 MUV-deflated)
600
Wheat
Maize
500
400
300
200
100
0
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
16
Transmission from int’l to domestic
prices is larger if:
o Food imports as % of domestic supplies
are larger
o Transportation costs are lower
o Trade barriers are lower
o Exchange rate is depreciating
o Food taxes & subsidies are reduced
o Markets are more competitive
17
Decline int’l prices ≠ national prices
o Delayed transmission because of
transportation time
o Sticky prices and the ratchet effect (more
easily adjust upwards than downwards)
o Effects of reductions of fuel subsidies on
food prices
o Second-round price effects (P  W  P)
18
Developing Countries
Developed
Countries
1. Financial
distress
Fewer
tourists
Import
demand
Household Level
Economic
growth
Urban households
Demand Factors
Biofuels
$ exchange rate
Employment
Exchange Rate
2. Economic
growth
Macro
D, E
Finance
B
Tourism
FDI
Export
prices
A,C
Export
volumes
H
Remittances
Employment
Food
prices
Income
& Wages
Social
transfers
Supply Factors
Low Stocks
Fuel prices
Low prod'ty growth
Weather shocks
Food
consumption
Rural households
Food
prices
F, G
ODA
Gvt
budget
Income
& wages
List of Indicators
Risk of increase in food insecurity (expected effect on food insecurity)
A. Trade with OECD as % of total (+)
E. External finance or CA deficit as % of GDP (+)
B. Tourism revenues as % of total forex earnings (+) F. Gvt budge deficit (+)
C. Primary commodities exports as % of total exports G.
(+) ODA as % of Gvt budget or per capita (+)
D. Reserves as % of imports (-)
H. Remittances as % of GDP or per capita (+)
19
WFP’s position within global response options
Short-term impact
(< 1 year)
national/international
Medium-term impact
(1-2 years)
WFP
Provide/scale up
emergency
transfers* and
safety nets
Food
√√
Cash
√√
Vouchers/stamps
√√
Limit increase/
reduce/stabilize
food prices
Reduce import
tariffs
x
Targeted
consumer
subsidies
Food
reserves/stocks
x
Export
restrictions
Price controls
Improve access to agricultural inputs
√
x
x
x
national/international
Stimulate food
supply/production
Long-term impact
(> 2 years)
WFP national/international WFP
√
Build/strengthen
√
safety net systems
Improve market
access by
smallholders
Build rural
infrastructures
√
Mainstream disaster
risk management
measures to prevent
and mitigate acute
hunger (e.g. weather
insurance scheme)
√
√
Build/strengthen
public and market
institutions
Invest in agricultural
research and
technology
Reform trade policies
x
x
x
WFP cross-cutting activities
- Food security and vulnerability analysis and mapping, needs/market assessments, emergency
preparedness √√
- Logistical support √√
- Food security surveillance √√ and nutrition surveillance √
- Technical support and advice on measures to address hunger √√
20
- Advocacy for repositioning food and nutrition security in national poverty alleviation agendas √√
Legend:
√√ core role for WFP; √ limited role for WFP; x no role for WFP
Benefit-cost ratios
Intervention
1. Reducing low-birth weight
1a Treatment for asymptomatic infections
1b Treatment for presumptive STD
1c Drugs for women with poor obstetric history
Benefit/cost
o 0.6-4.9
o 1.3-10.7
o 4.1-35.2
2. Improving child nutrition
2a Breastfeeding promotion
2b Integrated child care programmes
2c Pre-school programmes (focus on nutrition)
o 5.6-67.1
o 9.4-16.2
o 1.4-2.9
3. Reducing micronutrient deficiencies
3a Iodine (women child-bearing age)
3b Vitamin A (children under 6)
3c Iron (per capita)
3d Iron (pregnant women)
o
o
o
o
Source: Jere Behrman, Harold Alderman and John Hoddinott,
“Malnutrition and Hunger”, in: Bjørn Lomborg (ed.), Global Crises,
Global Solutions, Cambridge, 2004.
15-520
4-43
176-200
6-14
21
A1: Assess and analyze
Risk analysis
Impact assessment
o
o
o
o
o
o
o
o
o
o
Global, at HQ
Ex ante
Secondary data
Isolate price effect
No coping
In country
Ex post
Primary data (surveys)
All factors
Incorporate coping
o Monitor!
22
Risk = hazard x vulnerability
o Hazard = Price increase
o Vulnerability:
• Imports as % of consumption
• Government response capacity
• Foreign exchange reserves
• Existing socio-economic conditions
23
Assessments at country level
Vulnerability at household level:
o High % of income spend on food
o Buy more food than sell (net-buyer)
o Few coping mechanisms
24
25
People most at risk
o Rural landless
o Pastoralists, agro-pastoralists
o Small-scale farmers
o Urban poor
o Children under 2 and under 5
o Pregnant and lactating mothers
o Sickly
26
A2: Advocate for action and resources
o Large impact
o Need for urgent action
o Resources required to cover additional
costs of:
• Existing programmes: $755m (March 08)
• Add programmes to address impact: ??
• Budget 2008: $5.7b, 90m people
27
• Shortfall 2008: $1.7b
A3: Advise
o Price policy
o Trade policy
o Social protection
28
Policies: A snapshot
o Food price policies
• Reduce taxes
• General subsidies: high inclusion errors + cost
o Targeted subsidized food sales
o Food reserves
• Reduce intra-annual price changes and shortfalls
• Not for long-term high prices
o Import policy
• Cut tariffs, quotas and other trade barriers
• Facilitate imports (speedy clearances, licences)
o Export policies
• Export bans and taxes might do more harm than good
• Need for humanitarian access
29
A4: Assist
o Assessments and analysis (joint)
o Logistics, imports
o Scaling up existing safety nets
o Design upscaling social protection
systems
30
A5: Adjust programmes
o Adjust targeting
o Increase caseloads
• Food for work
• School feeding
o Adjust food baskets
• Cheaper food
• More nutritious food
o Adjust programmes
• Cash/vouchers
31
A6: Add programmes/activities
o Monitoring and surveillance
• Food frequency and diversity
• Prices
o Urban areas
o Nutrition programmes
o Contingency plans
32
Roll out
Number of General food School
people
distribution feeding
Cash or
Food for
Work
Djibouti
140,500
√
Ghana
135,000
√
Guinea
600,000
√
Haiti
2,500,000
√
√
√
Liberia
220,000
√
√
Mauritania
550,000
√
Mozambique
160,000
√
Nepal
1,250,000
√
Palestine
120,000
√
Pakistan
2,811,000
√
√
Senegal
540,000
√
√
√
Tajikistan
1,000,000
√
√
Uganda
160,000
√
√
Yemen
859,000
√
Total
11 million $390 million: $286 miilion shortfall
Nutrition for
mothers and
children
√
√
√
√
√
√
√
√
√
√
√
√
Vouchers
or cash
√
√
√
√
√
√
√
√
√
33
a coherent global response
policy
reform
agricultural inputs
(seeds, fertilizer)
cash & vouchers
increased
agriculture
production
12 months +
(Long term)
emergency
food
& safety nets
(child nutrition,
school feeding)
community works
programmes
6 – 12 months
(Medium term)
0 – 6 months
(Immediate)
34