Global food prices remain near historic peaks, and food price volatility should be seen as the “new normal.”
Managing food price volatility will require sustained commitment, co-ordination, and vigilance from the international community to help governments put policies in place to help people better cope.
Some countries with high poverty and weak safety nets are now responding to this chronic volatility by scaling up consumer food subsidies, which are often counter-productive.
When faced with high food prices, poor families cope by pulling their kids out of school and eating cheaper, less nutritious food, which can have catastrophic life-long effects on the social, physical, and mental well-being of millions of young people.
Malnutrition contributes to infant, child and maternal illness; decreased learning capacity; lower productivity and higher mortality. One third of all child deaths globally are attributed to under-nutrition, and up to 80% of our brain architecture develops during the first 1,000 days of life.
Investment in agriculture and rural development remains a priority for the World Bank Group. In FY13, new Bank Group commitments to agriculture and related sectors were $8 billion.
STRATEGY AND RESULTS
Policy advice. The Bank has engaged in policy dialogue with more than 40 countries, at their request, to assist them to address the food crises of 2008 and 2010, and the “new normal” of high and volatile food prices. Instruments used include rapid country diagnostics, high-level dialogue, public communications, and in-depth analytical work. In the Middle East and North Africa region, the World Bank, in collaboration with the Food and Agriculture Organization (FAO) and the International Fund for Agriculture Development (IFAD), released a paper on “Improving Food Security in Arab Countries.” Further analytical work was undertaken on responding to food price volatility and subsequently summarized in the economic and sector work on “Responding to Higher and More Volatile World Food Prices”.
Scaling up nutrition. The World Bank is also improving global collaboration in the generation and sharing of knowledge between agriculture, food security, and nutrition, through the SecureNutrition knowledge platform. As a part of the Scaling Up Nutrition (SUN) movement, 100 partners – including the World Bank – have endorsed the Scaling Up Nutrition Framework for Action to address under-nutrition.
Expedited financial support. In 2008, the Bank’s Board of Executive Directors endorsed the Global Food Price Crisis Response Program (GFRP), initially a $1.2 billion rapid financing facility providing financial assistance as well as policy and technical advice to the poorest and most vulnerable countries. In 2009 the Bank increased the size of the facility to $2 billion, and extended the program until June 2012 to allow for a swift response to calls for assistance from countries hard hit by price spikes. From July 2012 onwards the Bank’s emergency response is channeled through the International Development Association’s (IDA) Crisis Response Window and the recently approved Immediate Response Mechanism that will provide the basis for emergency assistance in the future.
To date GFRP has financed operations amounting to $1.6 billion, reaching nearly 66 million vulnerable people in 49 countries. (Some 89% of approved funds have been disbursed.) In addition to $1.24 billion in Bank resources (of which 96% has been disbursed), grant funding has been made available through three externally-funded trust funds.
The resources made available through the GFRP are having a significant impact on the ground. In Niger rice yields in irrigated plots treated with the recommended dose of fertilizers exceeded the baseline average per hectare (ha) by 116% (5.4 tons/ha versus 2.5 tons/ha), which helped to benefit 33 rice producer cooperatives encompassing 20,784 farmers. In Nicaragua, the project provided school lunches to 609,000 pre-school and primary school children leading to higher retention rates in targeted areas.
In September 2009, the G20 asked the World Bank to prepare a multilateral mechanism to help implement pledges to long-term food security made at the L’Aquila summit in July 2009. Launched in April 2010, The Global Agriculture and Food Security Program (GAFSP) is intended to fill financing gaps in national and regional agriculture and food security strategies. Eight countries and the Bill & Melinda Gates Foundation have pledged about $1.3 billion over three years, with $1.1 billion received. Since May 2010, 25 countries have been allocated $912 million from the Public Sector Window of GAFSP.
In Rwanda, over the past year, GAFSP support helped to increase the proportion of land protected against soil erosion from 15 % to 41% of the initial area being treated, and net sales from agricultural activities on targeted non-irrigated hillsides is USD 1,925/ha, up more than 90% from the baseline of USD 1,000/ha. In Sierra Leone, 193 agricultural business centers have received organizational development assistance, 321 ha of inland valley swamp land has rehabilitated irrigation, and the capacity of the public agricultural extension services at district level has been improved.
In addition, GAFSP supports 6 investment projects and 11 advisory services projects through the International Finance Corporation (IFC) designed to increase private sector activities in GAFSP countries. For example, it has allocated US$5 million to Root Capital, a social development financier dedicated to the “missing middle”, US$20 million to the Global Warehouse Finance Program supported by the IFC, and €10.6 million for Velocity Dairy in Ethiopia. The Second Call for Proposals for the Private Sector Window of GAFSP, which closed in January 2013, generated 89 proposals, one of which has already resulted in a $6 million investment in africaJUICE, a fruit processor in Ethiopia, which will maximize synergies between the two windows and ensure complementary GAFSP financing.
Increased investment in agriculture. In 2013, new Bank Group commitments to agriculture and related sectors were $8 billion. For IBRD/IDA, assistance to agriculture and related sectors has risen from an average of nine percent of total lending in FY10-12, to 12 percent in FY13. At $4.4 billion, the International Finance Corporation’s (IFC) investments were at the highest level ever. Altogether, the commitments meet the projection in the World Bank Group's Agriculture Action Plan 2013-2015, of between $8 billion to $10 billion. World Bank IBRD/IDA agricultural assistance to Sub-Saharan Africa was particularly strong, reaching $1.4 billion, a 35 percent increase over FY10-12.
Financial market insurance products and risk management strategies. In developing countries, farmers, agro-enterprises, and governments can employ a range of technical, managerial, and financial approaches to mitigate, transfer, and cope with risks. The World Bank supports the development and implementation of agricultural sector and supply chain risk management strategies in a growing number of developing countries through the provision of technical assistance, capacity transfer, and training.
Research to address critical knowledge gaps. In collaboration with other agencies and institutions, the Bank is undertaking a comprehensive analytical program. In addition, the Bank continues its support to the Consultative Group on International Agricultural Research (CGIAR). In 2012, a CGIAR Multi-Donor Trust Fund established to harmonize donor investments is being hosted and managed by the World Bank.
Coordinating with with development partners on food price volatility. The World Bank is actively engaged with the United Nations High-Level Task Force (HLTF) on the Global Food Security Crisis, providing both .financial support to the HLTF through the World Bank's Development Grant Facility, and participating in the updating of the UN’s Comprehensive Framework for Action (CFA). The World Bank contributes to agriculture and food security recommendations for the G20, and, in collaboration with partners, is implementing G20 initiatives to address food price volatility, including the Agricultural Market Information System (AMIS) launched to improve global agricultural market transparency. The World Bank also regularly participates in the Multilateral Development Banks’ Working Group on Food and Water Security.
For more information, please see: www.worldbank.org/foodcrisis/
Media Contacts: Amy Stilwell (202) 458-4906, email@example.com
Updated September 2013