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GLOBAL PRICE INCREASE Potential Impacts on Livelihoods

GLOBAL PRICE INCREASE Potential Impacts on Livelihoods. Examples taken from 1 urban slum in Nairobi & 1 pastoral community in NE Kenya – Analysis of poor households. BASELINE AND SHOCK ANALYSIS. We start by understanding how households normally live…. BASELINE AND SHOCK ANALYSIS.

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GLOBAL PRICE INCREASE Potential Impacts on Livelihoods

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  1. GLOBAL PRICE INCREASEPotential Impacts on Livelihoods Examples taken from 1 urban slum in Nairobi & 1 pastoral community in NE Kenya – Analysis of poor households

  2. BASELINE AND SHOCK ANALYSIS We start by understanding how households normally live….

  3. BASELINE AND SHOCK ANALYSIS …then we incorporate the impact of a change….

  4. Gap BASELINE AND SHOCK ANALYSIS …and finally look at how people might cope The analysis suggests that post-shock, households will not be able to maintain their normal livelihood assets without assistance. Livelihoods Protection Threshold Survival Threshold

  5. Price increase on global markets (United States) Maize: + 46% in April 2008 compared to April 2007 Price increase in Kenya No evidence so far In this exercise we ran 2 scenarios: Price increase of 25% Price increase of 50% Analysis Assumptions – Price increase

  6. Urban Analysis – poor household • 55% of the pop., rent houses, dirt floor, no electricity. HH size 6-7, single headed • Food access – purchase 90-95% of food needs (74% of this are cereals) • Economic activities – unskilled casual labour in industrial areas, kiosks, hawkers, porters – income range Ksh 40,000 – 100,000 per annum

  7. Gap = 500-1000 Impact on urban poor – Mukuru Kwa RubenScenario - 25% price increase Impact on food sources Impact on expenditure • They cope with increased expenditure on staples by: • buying cheaper calories • reducing expenditure on non- staple, social services & other The impact of the shock will cause households to have a 40% food deficit before coping

  8. Gap = 6,000-7000/- Impact on urban poor – Mukuru Kwa RubenScenario - 50% price increase Impact on food sources Impact on expenditure • They cope with increased expenditure on staples by: • buying cheaper calories • reducing expenditure on non- staple, social services & fuel • relying on gifts The impact of the shock will cause households to have a 40% food deficit before coping

  9. Implications of coping – Price increase • Expand income by engaging in negative coping strategies - prostitution, brewing, theft • Reduce quality of diet & # of meals – reduce expenditure on sugar, milk & oil (50%) and vegetables • Reduce expenditure on soap, fuel & clothes etc (50%) • Reduce expenditure on accessing social services – health, education, water • Rely on gifts from rural home

  10. Assumptions for pastoral analysis 1) Food Aid 2008 Distribution has already decreased compared to 2007 – likely to decrease further? In this exercise, we assume that poor households (30% of population) reduce their access to food aid from 60% (baseline 06/07) to 34% in April 2008 - based on the fact that 23% of the population received a 75% ration in April 2008. 2) North Eastern province has been impacted by drought almost on a continuous basis since 2003 so livestock holdings have been depleted during times of drought with little time for recovery Here we consider that herd growth was constant

  11. Gap = 1 shoat Impact in pastoral livelihood zoneScenario - 25% price increase & 60% food aid Impact on food sources Impact on expenditure • They do this by: • increasing self employment • rely on gifts • reduce expenditure on non-staple & other • Sell 2 additional shoats The impact of the shock will cause households to have a 44% food deficit before coping

  12. Gap = 4 shoats Impact in pastoral livelihood zoneScenario - 50% price increase & 60% food aid Impact on food sources Impact on expenditure • They do this by: • increasing self employment • rely on gifts • reduce expenditure on non-staple & other • Sell 2 additional shoats (4-6) The impact of the shock will cause households to have a 44% food deficit before coping

  13. Implications of coping – Price increase • Expand on collection & sale of bush products – indirect costs • Reduce expenditure on sugar, milk & oil (50%) • Reduce expenditure on fuel & clothes etc (50%) • Unsustainable off-take from herd sizes – 2 shoats is acceptable – 4 is detrimental • No restocking People will not die from hunger but the annual lack of investment in human and productive assets is huge and will have the following consequences: • Remaining low education and literacy level • Frequent human health issues (Diarrhoea = malnutrition…) • Depletion of assets - increased vulnerability • Increase of destitute households around “urban” centres

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