Executive Summary
In response to the dramatic rise of global food prices since 2007, WFP has been providing funding and technical support to WFP staff and partners to assess the impact of higher prices and structural vulnerabilities and a growing and 'new face of hunger'. According to preliminary research the estimated new caseload is expected to be more visible and to have greater political influence as they are often concentrated in urban areas.
With numerous initiatives underway and a number of different players, the WFP Regional Bureau needs to take stock of and analyse the high food price situation in the region. Also the UN Regional Directors Team and OCHA are eager to ensure that the coordination of assessments and activities continues while it is also imperative that information generated and the proposed responses are consistent with the Comprehensive Framework for Action which was prepared by the High Level Task Force on the Global Food Crisis, established by the UN Secretary General.
Unlike prices increases in the past, the recent phenomenon is lasting longer, the price increases are much larger and involves more food staples (major cereals, oilseeds and livestock). The main demand factors include: increases in the price of oil, bio-fuel production, rising incomes and changes in consumption patterns. The supply factors include: increasing prices of agricultural inputs, underinvestment in agriculture, climate change risks, reduced world stocks and restrictive marketing and trade.
Based on detailed literature review and discussions with selected key informants, this paper presents a summary of current evidence and understanding of the impact of HFP in the OMJ region1. It provides an analysis of how various stakeholders have responded within the context of the Comprehensive Framework for Action and finally recommendations on how to better understand and address the issue are outlined. In addition, several country level case studies have been prepared that summarize the array of issues and responses to high food prices in the OMJ region.
Causes
Although increases in world commodity prices have a part to play, the causes of HFP in the region are strongly driven by the following factors:
- South Africa is the main producer and supplier of food in the region and therefore, the depressed production levels of maize for South Africa during 2006 provided fertile ground for the intensified impact of world food prices on domestic markets.
- The reduction in domestic agricultural production and ultimate dependence on imported food particularly maize from South Africa has caused prices of most countries to rise.
- The total dependence on food imports from international markets for countries such as Djibouti
- High fuel prices experienced in 2007 to late 2008 led to high food prices. Despite the recent fall in world oil and in-country fuel prices, this has not been translated to reduction in food prices.
- Political instability, insecurity and war for countries such as Somalia, Ethiopia, Kenya causes market distortions and influences the prices of commodities
- Macro-economic instability, high inflation levels and weakening domestic currencies for most countries in the region.
- Poor policy decisions based on incorrect information and analysis of maize production levels affected decisions on imports and thus caused prices to rise (e.g. as observed in Malawi and Zambia).
- Government policies promoting subsidies on maize and banning exports have provided temporary relief but also caused supply constraints and hence pushing domestic prices.
Impact
Traditionally food insecure households (e.g. very poor, elderly headed households, HIV and AIDS affected households, households hosting orphans or disabled members) are now suffering more. Evidence that acute and chronic malnutrition levels are increasing is strong, although there is no clear evidence on the linkages between measured nutrition outcomes and High Food Prices. In urban areas, households also tend to respond to higher prices by diversifying their income activities in order to increase their purchasing power. In some countries pastoralist and agro-pastoralists have experienced declining terms of trade thus limiting household purchasing power. Furthermore, in the context of insecurity and war, the IDPs and refugees are more vulnerable to high food prices and food insecurity as they rely on external assistance in an environment where their own livelihood opportunities are limited.
Overall, some countries have been affected more than others because of in-country macro-economic conditions, trade policies and type of staples. In most cases, the way in which countries have responded to the increases in food prices has exacerbated the crisis. External trade bans in some countries in southern Africa have served as a disincentive to large scale farmers to increase their production.
Recommendations
- Some responses such as immediate relief food assistance are required particularly for the HIV and AIDS affected individuals and households. The need for boosting small scale food production is key and requires the role of government in managing security and the macro-economic environment. Building longer term resilience requires the expansion of social protection systems and this will vary between countries.
- Lack of clarity on how future price changes will unfold requires continuous market monitoring and analysis as well as contingency planning, particularly in urban areas. Strengthening linkages and methodology harmonization with existing organisations who currently collect and analyse market information will be crucial. Also there is need to build/strengthen relationships with existing institutions such as those for health, education and nutrition in urban areas rather than trying to create new systems.
- While the impact differs per country, for some the impact may be long lasting and this may mean more years to deal with the crisis and with much greater intensity. Yet for some the HFP issue is cyclical and seasonal. This emphasizes the need for using scenario building activities to identify and explain the best case and worst case scenarios.
- There is still need for better understanding the impacts as the evidence is still weak. There are still difficult questions to answer such as what has changed? Is it numbers or nature? How long will this last? Current WFP work by VAM on assessing the impacts of HFP in urban areas needs to be extended in the region based on demands from countries.
This document is considered to be a work in progress and will be updated at least twice during 2009, with the matrix (Annex) being updated and circulated on a more regular basis. For questions, comments or to provide information for updates, please contact Eric Kenefick (Eric.Kenefick@wfp.org) in the WFP Regional Bureau in Johannesburg.