The global food price crisis and household hunger: a review of recent food security assessments
by Issa Sanogo, WFP May 2009

The impact of the global food price shock at the macro level has been well researched. Studies have sought to simulate the potential impacts of the crisis on countries and households. However, this work has lacked ground-truthing to assess the real impacts on households. This article seeks to fill this gap by summarising the key findings of recent household-level food security assessmentsinitiated by WFP. The objective of the assessments was to determine country-specific causes of food price increases, whether these increases were leading to significant changes in the food security status of households, and what mitigating responses might be necessary.

Findings of household-level impact assessments

Prior to launching field assessments, WFP conducted a global analysis to identify countries likely to be vulnerable to increased food and fuel prices, and therefore likely to see the biggest changes in their food security profiles. The hypothesis underlying the global analysis was that these countries would exhibit high levels of food insecurity even before the food and fuel price hikes, relied heavily on imported food and fuel commodities, had relatively large urban populations, were experiencing high inflationary pressures and had populations who spent a significant proportion of their incomes on food. Countries exhibiting a combination of these factors were ranked and then targeted for country-level assessments (Table 1).

The country assessments were conducted between April and August 2008, using a proxy indicator, the food consumption score (FCS), to measure the diversity and frequency of food consumed within a seven-day recall period. The higher the score, the better the diet and the more food-secure the household. The findings are presented for three categories of countries:

  • Category 1: countries where the major share of staple foods is imported from international markets (examples: Ethiopia, Liberia, Tajikistan).
  • Category 2: countries where cereals in the core food basket are substitutes for internationally traded cereals (examples: Burkina Faso, Niger).
  • Category 3: countries where the major share of staple foods is domestically produced rather than imported from international markets (examples: Burundi, Cambodia, Uganda).

Impact on countries dependent on cereal imports

Countries dependent mostly on imported cereals (wheat, maize and rice) experienced substantial domestic price increases. Most of the countries where assessments were conducted fell into this category (Table 2). Average monthly price increases ranged from 30% in Nepal to almost 150% in Ethiopia. In Pakistan, increased informal cross-border trade with Afghanistan and reductions in import subsidies led to substantial increases in the price of wheat flour, the main staple food.

The impact on households’ food security was consequently high. In Pakistan, the poorest quintile of households spent 13% more on food than two years earlier, to the detriment of health expenditure, as the number of households unable to afford healthcare increased from 6% to 30%. In Addis Ababa in Ethiopia, the proportion of households consuming an adequate diet (defined as FCS above 35) decreased from 64% to 40%. In Greater Monrovia in Liberia, the proportion of households with an adequate diet fell from 64% to 40%.

The demographic groups most affected include large families with high dependency ratios, women-headed or widowed households and other vulnerable groups such as orphans and HIV/AIDS-affected households. In livelihood terms, they are subsistence farming households, pastoralists, households relying on pensions and allowances, remittances or daily or casual labour and petty traders. Households with poor diets tend to report irregular school attendance and health centre visits due to insufficient purchasing power. They have fewer income sources, and own fewer assets such as animals and farm equipment. Recourse to negative coping strategies like increased school drop-outs, increased migration, child labour and the sale of economic assets was reported in Lesotho, Liberia, Nepal, Pakistan, Tajikistan and Yemen.

In cases where assessments covered both rural and urban areas, the impact of price increases was higher for urban dwellers in absolute terms. The proportion of urban households with poor diet was 37%, compared to 34% in rural areas. In Pakistan, the price shock was most strongly felt in urban areas in terms of real income and reductions in caloric intake because urban dwellers spend more on food compared to rural households. However, expenditure increases were more pronounced in rural areas, with a 10% increase in food expenditure and a 4% increase in total expenditure.

Impact on countries dependent on substitutes for internationally traded cereals

The transmission of global cereal price increases to domestic prices was higher for millet and sorghum than for commodities that are not traded internationally. In Sahelian countries, where households’ caloric intake depends essentially on millet and sorghum, which are widely traded regionally, prices increased by a monthly average of between 10% and 20% in Burkina Faso and Niger, compared to 2007. The regional cereal supply and demand conditions are the main drivers of such price increases. However, the deterioration in purchasing power did not translate into a significant reallocation of expenditures to the detriment of non-food spending, such as education and health in Niger. About 90% of the surveyed households experienced an increase in their expenditures, and 46% reported an income decrease between December 2007 and July 2008. Households tended to reallocate their expenses within the food basket, cutting back on milk products and condiments. For example, the proportion of households shifting to less-preferred food increased from 26% to 49%, whereas the proportion of households that reduced consumption went up from 23% to 33%.

Food insecurity has deepened in Niger, with about an 18-point increase in the proportion of households with poor diet, mostly in rural areas. The proportion of households with acceptable diet decreased from 66% in December 2007 to 52% in July 2008. In livelihoods terms, the most affected households are petty traders, wage labourers, subsistence farmers and peri-urban agriculturalists.

Impact on countries which rely more on domestic production

The transmission of global prices to domestic prices was low for staple foods and high for cash crops. Staple food (plantains, cassava and sweet potatoes) prices have followed local supply and demand conditions and the global price transmission has been muted or delayed by low price increases in Uganda or even price decreases in Burundi (see Table 4). However, moderate increases in maize prices were observed in Uganda, largely due to regional demand. Rice prices almost doubled in Cambodia, a net rice-exporting country, but this was offset by concomitant increases in incomes.

Households that rely more on domestic production than imported commodities have suffered less from international price hikes. The impact of global food price increases is delayed as consumers seek cheaper substitutes and shift consumption to locally produced staples in Uganda and Burundi. In Uganda, almost 75% of food needs for the majority of households are met by own production. Estimates suggest that a 10% increase in the cost of the food basket results in a 6% decline in households’ purchasing power in Uganda. In Burundi, the proportion of surveyed urban households with good diet is relatively high, ranging from 60% to 85%.

The most affected households were urban poor, including casual and unskilled labourers and petty traders, landless rural households and subsistence farmers. In Uganda, the most affected households (conflict-affected households, institutional populations in boarding schools, universities, prisons, military facilities and hospitals and the urban poor) are net buyers of maize. They tended to turn to non-traded cheaper foods (plantain, cassava, sweet potatoes). There has been no major change in food sources in Burundi, though households appear to have reduced the amounts they purchase.

What have we learned?

Comparing assessment findings is problematic because of methodological differences between the various studies. Findings should also be interpreted with caution, as most of the survey tools emphasised food-related issues at the expense of the non-food aspects of household wellbeing. Nevertheless, the following recommendations can be drawn from the few assessments reviewed in this article.

First, patterns of global food price transmission to domestic economies call for a diversification of local production to reduce vulnerability to international price fluctuations. The transmission rates for import-dependent countries are substantially higher than in other countries. Consequently, the impact on household food security is much higher for those depending on internationally traded food commodities than for those who rely more on domestic production.

Second, social safety net programmes must be expanded, both in rural and urban areas, to address increased food insecurity. The global food price crisis has in many cases compounded the impacts of existing shocks, such as drought, floods and conflict. Furthermore, increased food insecurity has proved to be of as much concern in urban as in rural areas.

Third, pursuing mitigating measures through emergency food aid to protect livelihoods will reduce food insecurity and malnutrition. Such measures are indispensable to prevent the use of negative coping mechanisms. So far, there has been widespread use of coping strategies that may increase the risk of malnutrition in the short term. Assessments indicate that households shift primarily to less costly, less preferred and less nutritious foods, increase debt to acquire food or reduce the number and size of meals. Use of negative coping strategies is witnessed particularly in food import-dependent countries. As the global financial crisis gathers pace, many countries may be forced to adopt more severe coping strategies.

Finally, continued monitoring is essential: the crisis is not over. Recent domestic food price decreases remain limited and price levels are still high compared to just a couple of years ago. In many countries in East and West Africa, prices are still going up.

How is WFP responding to high food prices?

WFP provided support to 23 countries in direct response to high food prices, starting in mid-2008. WFP assistance covered the increased costs of purchasing commodities and transport services, as well as including a variety of new projects. Key features of WFP’s response include:

  • Ramping up food assistance to urban areas where food is unaffordable and there is risk of further discontent (e.g. Afghanistan, Djibouti, Ghana, Haiti, Liberia, Mozambique and the occupied Palestinian Territories).
  • Extending school feeding to the school holidays (Guinea, Haiti and Senegal), and using schools as a platform to provide take-home rations to vulnerable families (e.g. Ghana, Liberia, Mauritania, the occupied Palestinian Territories, Pakistan and Tajikistan).
  • Providing supplementary rations of nutritious food to malnourished children and women (e.g. Djibouti, Ghana, Liberia, Mozambique, Nepal, Pakistan, Senegal, Tajikistan and Yemen).
  • Accelerating voucher programmes to enable people to access food through the market (e.g. Djibouti and Senegal), and providing cash transfers to support work activities, including urban youth employment projects (e.g. Ghana, Liberia, Mauritania, Mozambique and Nepal).
  • Expanding food for work programmes in support of efforts by governments and the Food and Agriculture Organisation (FAO) to increase agricultural production (e.g. Guinea and Senegal), or to build farm-to-market roads and other community infrastructure (e.g. Haiti, Liberia and Pakistan).
  • Supplying small-scale food reserves that communities can draw upon to help them cope with price or other shocks, and combining efforts with FAO and governments to provide food with seeds, tools and support to build roads and market infrastructure to help subsistence farmers (e.g. Mauritania, Senegal and Uganda).

Assistance provided to affected populations is yielding tangible results, suggesting there is a need to maintain support. For example, in Mauritania WFP facilitated the development of a comprehensive and specific government plan to reduce the nationwide impact of food price rises. The country was the first in the region to tackle the issue. Beneficiaries reported that general food distributions had prevented asset sales and skipped meals. Elsewhere, WFP country offices in Benin, Ghana, Kenya, Pakistan, Sierra Leone and Tajikistan were able to scale up Food for Education programmes, allowing children to stay in school. In Pakistan, beneficiaries reported that the wheat being provided enabled them to build up savings, which could than be used for basic healthcare and education expenditures. In Nepal, a road construction project has reduced the walking time and transportation costs involved in reaching the nearest market.

 

Issa Sanogo is Programme Advisor (Markets) in WFP’s Food Security Analysis Service. His email address is Issa.Sanogo@wfp.org. The author would like to thank the WFP and Partner assessment teams without whose field assessment reports this article would not have been possible. Many thanks also to WFP colleagues Joyce Luma, Henk-Jan Brinkman, Jan Delbaere, Agnes Dhur, Arif Husain, Caroline Chaumont and Guillaume Foliot for their useful comments, suggestions and inputs. The views expressed in this article do not necessarily represent the official position of WFP. The author is solely responsible of any errors or omissions.

 

References and further reading Asian Development Bank, Food Prices and Inflation in Developing Asia: Is Poverty Reduction Coming to an End?, Economics and Research Department, 2008.

T. Benson et al., Global Food Crisis: Monitoring and Assessing Impact to Inform Policy Responses, Food Policy Report, September 2008.

D. Dawe, Have Recent Increases in International Cereal Prices Been Transmitted to Domestic Economies? The Experience in Seven Large Asian Countries, ESA Working Paper No.08-03, FAO, 2008.

FAO, Growing Demand on Agriculture and Rising Prices of Commodities: An Opportunity for Smallholders in Low-income, Agricultural-based Countries?, paper prepared for the 31st session of IFAD’s Governing Council, Rome, 2008.

M. Ivanic and W. Martin, Implications of Higher Global Food Prices for Poverty in Low-income Countries, Policy Research Working Paper No. 4594, World Bank, 2008.

R. J. Myers, ‘On the Costs of Food Price Fluctuations in Low-income Countries’, Food Policy, 31, 2006, pp. 288–301.

ODI, Rising Food Prices: A Global Crisis, Briefing Paper 37, April 2008.

D. Tschirley and T. S. Jayne, Food Crises and Food Markets: Implications for Emergency Response in Southern Africa, Policy synthesis, USAID and OSD, July 2008.

J. von Braun et al., High Food Prices: The What, Who, and How of Proposed Policy Action, IFPRI, 2008.

World Bank, Double Jeopardy: Responding to High Food and Fuel Prices, G8 Hokkaido-Toyako Summit, 2 July 2008.