AT A GLANCE · International food prices are spiking for the second time in three years, igniting concerns about a repeat of the 2008 food price crises and its consequences for the poor. · Responding to the severity of the 2008 crisis and the need for prompt action, the World Bank set up the Global Food Crisis Response Program (GFRP) in May 2008 to provide Bank financing and technical advice to affected countries. The GFRP has now reached 40 million people in 44 countries. · Investment in agriculture and rural development remains a high priority: the World Bank Group is boosting agriculture and agriculture-related investment to some $6 to $8 billion a year from $4.1 billion in 2008. · In April 2010, at the request of the G20, the World Bank launched the Global Agriculture and Food Security Program (GAFSP) - a new multilateral mechanism in support of agriculture,. GAFSP takes up where emergency and recovery assistance leaves off, targeting transformative and lasting change in the agriculture and food security of poor countries through financial support to existing aid effectiveness processes. To date, six countries and Gates Foundation have pledged about $975 million over the next 3 years, with $520 million received. Volatile and high food prices continue to impact the poorest. In February 2011, the World Bank Food Price Index reached its 2008 peak and stayed at about the same level through June 2011, increasing by 40 percent since June 2010. Modest but steady growth in global grain consumption, more variable global grain supplies due to weather, and a draw-down of stocks held by major grain exporting countries have combined to increase both uncertainty in global grain markets and broader food price volatility. Food price inflation has accelerated in several developing countries where consumers often spend more than half of their income on food. The current food price spike has resulted in an estimated 44 million more people living in poverty. The World Bank’s response to the food crisis. The Bank has responded to country requests for assistance around five main areas. 1. Policy advice. The Bank has engaged in policy dialogue with more than 40 countries, at their request, to assist them address the food crisis. Instruments used include rapid country diagnostics, high-level dialogue, public communications, and in-depth analytical work. A study on sources of food price inflation and appropriate policy responses in Ethiopia is ongoing. 2. Expedited financial support. In May 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. The Bank increased the size of the facility to $2 billion in April 2009, and the program was recently extended until June 2012 to allow for a swift response to calls for assistance from countries hard hit by price spikes. As of June 2011, GFRP had financed operations amounting to $1.5 billion; some 77 percent of funds have been disbursed, reaching nearly 40 million vulnerable people in 44 countries. In addition to Bank resources, grant funding has been made available through three externally-funded trust funds that amounted to about $356 million equivalent. A Multi-Donor Trust Fund (MDTF) has received contributions from Australia (AUD 50 million), Spain (€80 million) the Republic of Korea (7.6 billion Won), Canada (CAD 30 million), and International Finance Corporation (IFC) ($150,000). The Russia Food Price Crisis Rapid Response Trust Fund has allocated $15 million for the Kyrgyz Republic and Tajikistan. Lastly, the European Union has allocated €111.8 million to operations in 10 countries. The resources made available through the GFRP are having a significant impact on the ground. In Nepal, a GFRP project has provided food to approximately 940,000 people through food/cash for work programs. Some 94 percent of beneficiaries reported an increase in food security and an average of 5.5 months of self-sufficiency; 52 percent of respondents reported eating more meals each day; 45 percent reported an increase in the variety of food consumed; and 30 percent reported eating larger meals. In Senegal, grant support from the MDTF is scaling up the Government’s Nutrition Enhancement Program and providing cash transfers to vulnerable mothers with children under the age of five. The G20 Summit in September 2009 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. This new mechanism, the Global Agriculture and Food Security Program (GAFSP), is intended to fill the financing gaps in national and regional agriculture and food security strategies. The GAFSP was launched in April 2010. Donors have pledged $896.5 million to its public sector window. Donors include Australia, Canada, the Bill & Melinda Gates Foundation, Ireland, the Republic of Korea, Spain, and the United States. In addition, Canada and the U.S. have pledged $75 million to the private sector window. Since May 2010, $481 million has been awarded to Bangladesh, Cambodia, Ethiopia, Haiti, Liberia, Mongolia, Nepal, Niger, Rwanda, Sierra Leone, Tajikistan, and Togo from the public sector window of GAFSP. In addition, the International Finance Corporation (IFC) launched the first Call for Proposals for the Private Sector Window on July 18, 2011. This is targeted at agribusinesses operating in IDA countries where the Public Sector Window is already active in order to maximize synergies between the two windows and ensure complementary GAFSP financing. 3. Increased IFC investment in agribusiness. The Action Plan projects an increase in support from the World Bank Group (IDA, IBRD, Special Financing and IFC) to agriculture and related sectors to between $6.2 and $8.3 billion annually over FY10-12. For FY11, IFC invested $2.2 billion in the agribusiness and forestry value chain. This leads to a total of $5.8 billion for overall World Bank Group lending (IDA, IBRD, Special Financing and IFC) in FY11. 4. 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. 5. 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). A new CGIAR Multi-Donor Trust Fund was established to harmonize donor investments and is being hosted and managed by the World Bank. Six new results-oriented research programs submitted by the Consortium of International Agricultural Research Centers have been recently approved for funding by the CGIAR Fund Council. The World Bank is responding to the food crisis in coordination with development partners. The World Bank is actively engaged with the United Nations High-Level Task Force on the Global Food Security Crisis. Established in April 2008, it brings together the Heads of U.N. specialized agencies, funds, and programs with the Bretton Woods institutions. The World Bank is also contributing to several agricultural and food security working groups drafting recommendations for the G20, at the request of the French Presidency. 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/ Contacts: Amy Stilwell: (202) 458-4906 Email: astilwell@worldbank.org Fionna Douglas: (202) 473-8913 Email: fdouglas@worldbank.org Robert Bisset: (202) 458-5191 Email: rbisset@worldbank.org Updated August 2011 |
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