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

2. FAO Agricultural Development Economics Division ( ESA)
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. FAO Agricultural Development Economics Division ( ESA)
High Food Prices
World prices of basic food commodities increased drastically starting in The FAO food price index, increased by 51 percent between May 2007 and 2008, while the corresponding increase between 2006 and 2007, was 13 percent.
FAO Agricultural Development Economics Division ( ESA)

4. World Cereal Stocks and Stock-to-use Ratio
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. FAO Agricultural Development Economics Division ( ESA)
Ethanol production,
FAO Agricultural Development Economics Division ( ESA)
Source: OECD-FAO, 2008

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

8. ..and cancel 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
Mean farm Size decreases in Africa and Asia increases everywhere else.
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 Agricultural Development Economics Division ( ESA)
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. FAO Initiative on Soaring Food Prices
THE CHALLENGE
cereal import bill in Low-Income Food-Deficit Countries has gone up by 72% in
high input prices which have almost tripled compared with August 2007
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 Agricultural Development Economics Division ( ESA)
FAO Initiative on Soaring Food Prices
ACHIEVEMENTS TO DATE
input supply ongoing and planned in 71 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 Agricultural Development Economics Division ( ESA)
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 Agricultural Development Economics Division ( ESA)
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)
Bread has increased in price by 50 percent in Mozambique
Substituting cassava flour for 15 percent of the flour used in making bread,can save Mozambique an estimated US$ 15 million per year in wheat imports
FAO Agricultural Development Economics Division ( ESA)

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