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High Food Prices: Threats and opportunities Kostas G. Stamoulis Chief, ESAE/F

High Food Prices: Threats and opportunities Kostas G. Stamoulis Chief, ESAE/F. Key Messages. High prices: Result of structural and cyclical factors 75 million more hungry people as a result of High Food Prices. The poorest, landless and female-headed households the hardest hit

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High Food Prices: Threats and opportunities Kostas G. Stamoulis Chief, ESAE/F

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  1. High Food Prices:Threats and opportunities Kostas G. StamoulisChief, ESAE/F

  2. Key Messages • High prices: Result of structural and cyclical factors • 75 million more hungry people as a result of High Food Prices. • The poorest, landless and female-headed households the hardest hit • Importance of smallholder response • Turning threat into opportunity FAO Agricultural Development Economics Division ( ESA)

  3. High Food Prices FAO Agricultural Development Economics Division ( ESA)

  4. World Cereal Stocks and Stock-to-use Ratio Cereals Wheat Coarse Grains Rice FAO Agricultural Development Economics Division ( ESA)

  5. Clearer linkages between commodity energy prices Index for light crude oil With additional pressure put on feedstock prices because of biofuel policies in selected countries

  6. Ethanol production, 2005-2017 FAO Agricultural Development Economics Division ( ESA) Source: OECD-FAO, 2008

  7. High Food Prices Increase Hunger… FAO Agricultural Development Economics Division ( ESA)

  8. ..andcancel progress in hunger reduction FAO Agricultural Development Economics Division ( ESA)

  9. …disproportionate impact on Africa FAO Agricultural Development Economics Division ( ESA)

  10. Poor countries are vulnerable to high food prices…

  11. ..and so are poor households FAO Agricultural Development Economics Division ( ESA)

  12. The poorest are hit the hardest.. FAO Agricultural Development Economics Division ( ESA)

  13. ..while women headed households are more vulnerable FAO Agricultural Development Economics Division ( ESA)

  14. High food prices : An opportunity ? • Opportunity for what ? • Developing country response • Poverty reduction • From Prices to Incentives • Pass through • Net incentives FAO Agricultural Development Economics Division ( ESA)

  15. Supply Response ? ..yes..but • Developing countries: • export taxes & restrictions, import subsidies • subsistence: high input prices, no benefit from higher output prices • rationale for ISFP type interventions Source: Global Perspective Studies Unit, FAO FAO Agricultural Development Economics Division ( ESA)

  16. Marginal recovery in cereal production of the 82 LIFDCs FAO Agricultural Development Economics Division ( ESA)

  17. Transmission of world to international prices FAO Agricultural Development Economics Division ( ESA)

  18. High food prices and production incentives FAO Agricultural Development Economics Division ( ESA)

  19. Agricultural response and poverty reduction • Production in developing country agriculture has been increasing • Poverty and hunger reduction slow and concentrated • Poverty concentrated in the rural areas of developing countries • A paradigm whereby agriculture contributes to poverty reduction: More attention to smallholder farmers • Smallholders: Short term and structural impediments FAO Agricultural Development Economics Division ( ESA)

  20. Smallholder farm organization prevalent FAO Agricultural Development Economics Division ( ESA)

  21. Patterns of rural development FAO Agricultural Development Economics Division ( ESA)

  22. Fertilizer use per hectare FAO Agricultural Development Economics Division ( ESA)

  23. Smallholders and structural constraints Time distance to markets by geographical region FAO Agricultural Development Economics Division ( ESA)

  24. Access to infrastructure by rural households FAO Agricultural Development Economics Division ( ESA)

  25. Short and long term response inhibited by.. • Low price incentives ( low output..high input) • Access to essential inputs and markets • Structural factors FAO Agricultural Development Economics Division ( ESA)

  26. Need short and long term responses: FAO proposes…. • Safety nets and transfers • Urgent support to farmers in developing countries • Increase investment in developing country agriculture • Improve international policy coordination FAO Agricultural Development Economics Division ( ESA)

  27. FAO Response • Forum for exchange : • The HLC, June 2008 • The CFS 2008 • Information and analysis • Market information/intelligence • SOFI 2008 • SOCO 2008 • SOFA 2008 • FAO/OECD Outlook • Policy support and technical assistance • The Initiative for Soaring Food Prices ( ISFP) FAO Agricultural Development Economics Division ( ESA)

  28. THE CHALLENGE cereal import bill in Low-Income Food-Deficit Countries has gone up by 72% in 2007-08 high input prices which have almost tripled compared with August 2007 FAO Initiative on Soaring Food Prices FAO Agricultural Development Economics Division ( ESA)

  29. FAO Inititiave on Soaring Food Prices ACHIEVEMENTS TO DATE • 27 interagency assessment missions • monitoring of global and domestic food prices • input supply, technical and policy assistance in 79 countries (upon request) FAO Agricultural Development Economics Division ( ESA)

  30. FAO Initiative on Soaring Food Prices ACHIEVEMENTS TO DATE • input supply ongoing and planned in71 countries (TCP and other funds) • Africa and Near East: 34 • Asia and Southwest Pacific: 19 • Latin America and the Caribbean: 16 • Eastern Europe: 2 • 53 countries targeting the 2008 planting season FAO Agricultural Development Economics Division ( ESA)

  31. FAO Initiative on Soaring Food Prices FINANCING • FAO financing to date: close to USD 69 million sources: TCP, donor countries (the Netherlands, Spain, the United Kingdom, the United States, the UN's Central Emergency Response Funds ) • additional commitments: USD 70 million (EC, Japan, Switzerland, UNOCHA, World Bank) FAO Agricultural Development Economics Division ( ESA)

  32. FAO Initiative on Soaring Food Prices ISFP IN ACTION - Mozambique • project funded by TCP and Spain • distribution of cassava cuttings and seeds of high-yielding, resistant varieties • training of farmers in processing and marketing techniques (transforming raw cassava crop into flour that can be used to make bread, pastries and chip snacks) FAO Agricultural Development Economics Division ( ESA)

  33. Thank you! FAO Agricultural Development Economics Division ( ESA)

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