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Country responses to the food crisis
Message from Ganesh Thapa, IFAD Regional Economist
Rising food prices played an important role in the acceleration of inflation across the Asia and the Pacific region during 2007 and the early months of 2008. Not only is the food price inflation the most regressive of all taxes, it also leads to lower growth and accentuation of income inequality. The looming food crisis has the potential of slowing down the momentum of growth and poverty reduction in the region in the short and medium terms. The surge in prices of foodgrains cannot be satisfactorily explained in terms of supply and demand alone. A large part of the surge is attributable to speculation. Many countries also resorted to protective measures without realizing that such measures would force more drastic adjustments and higher prices in global markets. While the global foodgrain supply shrank through export restrictions and prices rose faster, food importers escalated demand by bidding aggressively for larger imports to dampen domestic inflation. A vicious circle of spiralling food prices was thus sustained by policies designed to protect domestic consumers, but likely to deepen the food crisis. While the prospects of maintaining the momentum of growth, poverty reduction and sustained reduction in hunger in Asia are daunting, what governments, international and bilateral agencies do could make a difference. This newsletter shares some examples of how country governments and IFAD are addressing this challenge. Ganesh Thapa, Regional Economist, Asia and the Pacific Division Response to food inflation and the food crisis in villages of India
Between 2005 and 2008, global prices of wheat and maize tripled while rice prices increased five-fold. In India, this inflationary trend was felt most strongly from the end of 2007, when increasing food prices took a steeper upward climb, followed by reduced credit from financial institutions and a global recession. The country is also faced with dwindling food productivity, mainly in cereals. This trend has made poor people more vulnerable and food-insecure, since they spend about one-third to one-half of their income on basic food needs. IFAD is trying to address this issue through the projects it supports. Nature and dimensions of food insecurity in villages supported by IFAD projects The IFAD-supported Livelihoods Improvement Project for the Himalayas (LIPH) studied the food security situation in project villages as part of its baseline survey in December 2006. It found that poor people were facing an acute food crisis. The Results and Impact Monitoring System (RIMS) survey conducted by the project in the last quarter of 2006 in Meghalaya State indicated that 47 per cent of surveyed households face a hungry season. The critical lean period stretches from February to July and places families under maximum stress for food availability and security during March and April. The surveyed households only had enough food, produced on their farms, for about two to four months. The rest of the food requirement was met mainly through purchasing food from cash earned through seasonal labour in other villages and nearby towns and by selling bamboo and firewood. The situation is worse in upland areas where the government’s initiative to distribute food at a subsidized price through a system called the public distribution system is weak or non-existent. Very poor families in project areas suffer most: they are denied purchases of food on credit since they do not have credit-worthiness, and lenders are not confident that they will be able to repay the loan. They resort to selling vegetables, non-timber forest products and fuel wood and undertake wage labour to buy food. Poor families in the projects spend 30 to 50 per cent of their income on food. Hence, their low purchasing power leads to food and nutrition insecurity when their own farm production is insufficient to meet the entire requirement of food for the year. Many poor people do not meet their complete dietary requirements due to low productivity of cereals, pulses and oil seeds. Low productivity is often a result of the use of traditional agricultural practices or because families have abandoned the cultivation of traditionally grown nutritious food in favour of new commercial food crops demanded by the market in response to changes in consumer food habits and tastes. Some of the factors contributing to the food crisis in the project areas as perceived by project beneficiaries across projects are:
In the tribal areas of IFAD-supported projects, which are mainly in remote and interior areas, families have even fewer opportunities to earn income. Only a few families rear cattle for dairy products due to scarcity of grazing land, limited knowledge of forage and feed, and poor animal husbandry services. Weak extension services has resulted in lack of knowledge about better animal husbandry practices, which has led to high mortality of pigs and poultry. Similarly, weak extension services to educate farmers on better horticultural practices prevented farmers from producing enough fruits and vegetables to meet their food and income needs.
Revamping production systems to increase nutrition and productivity
Retraining in traditional agricultural techniques has been a major strategy in Meghalaya and Uttrakhand. The LIPH is helping maintain the existing level of production and productivity by reducing production risks, offering demonstrations of better cultivation practices and providing better linkages with line agencies. The project strengthened the Jhum, or sifting agriculture, system in Meghalaya by introducing new crop varieties. It also introduced horticulture that was traditionally grown in the jhum to the homestead gardens, and the Baarah Anaaj (twelve crop) system. In Meghalaya, production of traditional crops – tapioca, millets, yam and maize – has decreased as a result of a change in the food habits of the farming communities over the years, and with the availability of other foods in the market. Many very poor families rely on coarse varieties of food such as jackfruit, cassava, millet, maize and edible roots and rhizomes mostly collected from the wild. These products take longer to digest and keep the stomach only partially full. The project is supporting the farmers to reintroduce traditional crops and incorporate them in their diet, thereby decreasing their dependency on non-traditional foods for which supply is dependent on other production systems. New high-demand food crops were also introduced to sell at the market, and the project is also introducing vermin compost and farmyard manure production to increase production in home gardens. Many projects in the country programme are also testing various new varieties of paddy, pulse and vegetables and organizing demonstrations to address food security and nutrition. For example, demonstrations on systematic rice intensification in Meghalaya and Orissa, conducted in collaboration with the International Rice Research Institute (IRRI), have shown positive results. Annual rice yields have increased, and production costs have decreased owing to labour-saving methods that were also introduced. A variety of initiatives to support food security, and increase food production and income
Given below are examples of initiatives undertaken by IFAD-funded projects to support food security through increased food production and income:
Marketing agricultural produce to increase on-farm income IFAD-supported projects have initiated market linkages and improved market infrastructure and information in remote villages, which had previously been overlooked by the government and NGOs.
Providing access to land
Households with access to land often have little tenure security – normally one year – and the farms cannot cultivate horticultural trees and shrubs which are of a permanent nature (such as fruit trees) to be used not only as a source of food, but also for cash to purchase food. And those who are landless cannot cultivate food crops and are highly food-insecure, with only three or four months’ worth of food purchased through wage earnings from seasonal labour.
Creating and improving irrigation, and soil and water management Managing water availability is directly linked to food production and food security. For example, water sources are being depleted as a result of tree felling for firewood and, in the Maghalaya project area, by forest areas in the watersheds being converted to orchards.
In recent years, food and energy security have become the greatest concerns in rural India, where one of the world’s largest populations of poor people lives. Moreover, current inflation has had a significant impact on an already existing scenario of low food productivity and food insecurity. Inflation has also negatively affected the effectiveness of the government public distribution system to support the coping mechanisms of poor people. Long-term solutions need to be found, at the policy and operational levels, to address the food crisis. Shaheel Rafique, Implementation Support Specialist, India Country Office, Delhi Read more:
Back to topCountry team conducts a ‘food price survey’ in IFAD-supported projects in Pakistan
The global rise in food prices in 2008 had a severe effect on Pakistan’s economy, especially on the poorer segment of its population. This was in part because it was compounded by an earlier domestic rise in food prices. In recent years, rising domestic prices of food have been the principal component of a steadily rising overall inflation rate. Pakistan was in economic difficulty well before either the global food price rise or the international recession. Since the third quarter of 2007, overall inflation had increased to over 15 per cent; it is currently around 20 per cent. Food prices rose by over 30 per cent in 2008 as a result both of increased international food prices and massive rises in oil prices. In May 2008, IFAD’s Pakistan country team conducted a survey in rural areas where IFAD-supported projects operate to understand the impact of the food crisis on project participants and their coping strategies. Only six weeks were available to conduct the survey in order to quickly develop an action plan. Since time was of the essence, the sample was small and lacked statistical significance but was well distributed geographically. Training surveyors and pre-testing the questionnaire was not possible. The only way to reach poor rural households where food prices were expected to have a severe impact was to rely on the staff of IFAD projects and partner organizations. The survey covered 14 districts in all four provinces of Pakistan as well as Azad Kashmir and the Northern Areas. The rationale for the survey was to obtain qualitative information on household responses to the crisis, especially changes in spending and consumption. Unlike in large-scale surveys, not everything was coded ,and marginal notes by enumerators were encouraged. These comments often illuminate the states of mind of householders and record their plight in a way that statistics cannot. It should be noted that members of community organizations interviewed have access to support from umbrella organizations and linkages with service providers (including, quite often, microcredit) that the majority of rural households in Pakistan still do not. This makes the implications of their responses all the more worrying, since the majority of rural households have even less support than the sample. Economists estimate that rising food prices impact not only poor people but approximately more than 40 per cent of rural population. This is confirmed by the survey. The most affected are those who need to purchase large amounts of wheat and essential food for household consumption. Families in these circumstances are diverting resources originally allocated for health and education to purchase food. Quality and quantity of consumption is declining, and indebtedness is rising. Of the total sample size of 420 households surveyed, 72 per cent of respondents were male and 28 per cent were female. For the majority of respondents, agriculture and livestock were the main sources of livelihood. Production and purchase of food
Pakistan is still referred to as a ‘wheat economy’. The most important single food item in rural Pakistan is wheat, either in grain form or as flour (“atta”). Rice is considered a luxury rather than an essential part of the diet. As with the current crisis, when inflation in rice prices has overshot wheat, rice is likely to be omitted and substituted by wheat. The number of respondents who purchased wheat in 2008 increased from 65.7 to 79.0 per cent compared to 2007. Purchasing wheat when there is not enough for household consumption is not merely a function of income; wheat availability varies from region to region. According to 73.8 per cent of respondents, wheat was available locally. About 13.8 per cent of respondents have no access to local wheat while for 3.8 per cent of respondents wheat is available locally occasionally. Unsurprisingly, the latter two categories were clustered in remote and mountainous regions. In wheat-deficit households, 63 per cent of respondents were able to purchase wheat while 37 per cent did not have the financial means. Almost two-thirds of wheat growers said that they were growing wheat to secure food for their families. However, about 42 per cent produced less wheat in 2008 due to scarce and untimely rains. Some respondents acknowledged that the change in global patterns of weather has deep repercussions for Pakistan’s agriculture production. About 15 per cent of respondents growing wheat on irrigated land faced scarcity of water. High and rising costs of fertilizers, seeds and electricity, reduced soil fertility, and unavailability of modern agriculture techniques were among the reasons for low yields. Very high prices of agricultural equipment and materials, lack of planning to cultivate land, costly labour and fuel charges also reduced the production. This situation will be exacerbated as prices and interest rates have risen sharply and credit is less easily available in the current economic climate. The declining status of household health and nutrition is captured by responses to the following questions:
Incomes, prices and indebtedness Fifty per cent of the respondents reported lower incomes in 2008 than in previous years. The reasons included low rainfall and water shortages, inflation and rapid price hikes reducing purchasing power, deteriorating health conditions and unavailability of employment opportunities. About 40 per cent of respondents whose incomes increased attributed this increase to the use of modern agricultural technology, and some others to the increase in their livestock holdings, which shows that IFAD partner support organizations’ community level programmes have had some success. Others replied that job promotions/increments, a rise in pensions and better economic planning had increased their incomes. Overall, 82 per cent of respondents noted that prices of necessities other than food had also risen and this further reduced their purchasing power. About 41.4 per cent of respondents borrowed money in 2007, about two-thirds of them from IFAD partner support organizations and the rest borrowed from shopkeepers/middlemen, extended families and biradari (sub-ethnic lineage group). Fewer than 6 per cent had access to banks. Loans from shopkeepers and middlemen are usually disadvantageous to the borrower, and loan conditions worsen in bad times A total of 18.2 per cent of respondents were unable to return the borrowed amount. For support organizations offering microcredit with timely return rates of well over 90 per cent, the almost doubled rate of default is very significant. In response to the question “Did you buy food items on credit?” 36.4 per cent of respondents said yes and 13.6 per cent said no. Fifty per cent of respondents chose not to respond to this question. This is very significant since cultural factors prescribe non-response on the basis of pride. Coping with increased food prices The question “What would help you to cope with the increase in food prices?” was included for qualitative responses. A common reply was “We’ll cut our stomachs”, meaning “we’ll eat less”. However, there were discussions on causes of higher food prices and remedies. Two main remedies emerged:
To cope with increasing food prices, people felt they would have to cut down their expenditures to save more money to meet their food needs. The participants stressed the need to save more and seek other sources of income to replenish their quickly eroding purchasing power. They identified the main new sources of income as raising cattle and poultry farming as well as acquiring different vocational skills through training and working longer hours and making greater effort. Conclusions Survey results support the view that the food crisis severely exacerbates the economic crisis, and affects far more people than the poorest and poor ones. It is also having a negative impact on household health and nutrition, and a particularly adverse impact on households that do not produce sufficient staples to meet their needs and must either purchase them or do without. As the UNDP National Human Development Report for Pakistan 2003 shows, households that do not have a member earning substantially from some other source (for example, through migration remittances) are also worse off. Moreover, the crisis has deepened as increases in oil prices drove inflation higher: because of its own financial constraints, the government has raised oil product prices when prices rose, but has not passed on the benefits of the later fall in petroleum prices to the consumer. Agha Imran Hamid, Knowledge Management Facilitator, IFAD, Pakistan Read more:
The challenge of soaring food prices in the Philippines “Today, some 854 million people worldwide live in hunger: one in eight people globally, and one in six people in developing countries. Because of rising food prices, which rose by 83 per cent over three years from 2006-2008, an additional 100 million people have grown hungry,” said Dr Kanayo F. Nwanze, IFAD’s Vice President, during the Second IFAD-Philippines Partners Knowledge and Learning Market: Food Security, People’s Wealth – an event held in Metro Manila, the Philippines on 28-29 October 2008.
Several factors have caused the prices of food to soar around the world. Climate change is resulting in frequent extremes of weather such as droughts, floods and hurricanes that consequently cause shortfalls in crop production. Among other factors affecting food prices are increased prices of crude oil, increased production of biofuels, and urbanization and competing demand on land for commercial use instead of agricultural purposes. In the Philippines, most Filipinos felt the rising food prices in 2008 when rice prices reached PHP 36.72/kg (USD 0.8) in July 2008. This is 22 per cent higher than the average retail price for the first six months of the year and 63 per cent more expensive than the average retail price for 2007. Increasing price tags on almost all food items in the Philippines are making life more difficult for every citizen of the country, with poor people being the most affected. The rising food prices in the Philippines have increased the incidence and severity of poverty. Government supports Filipino farmers
In response to the food crisis in 2008, the Government of the Philippines launched the new rice production initiative entitled ‘Focusing on Increasing Provincial Productivity – Rice Self-Sufficiency Plan 2009-2013’. The plan envisions a 100 per cent self-sufficient rice economy by 2013 through improved rice productivity. Recently, the Department of Agrarian Reform created a policy environment that supports the government’s food security initiatives. “To protect our current agricultural lands, especially for the production of rice, the President has approved, through our recommendations, the suspension of the conversion of all rice lands into non-agricultural uses in the next two years,” saidHon. Datu Nasser Pangandaman, Al Hadj, Secretary, Department of Agrarian Reform at the Knowledge and Learning Market last year. IFAD and its partners respond to feed the hungry
United Nations food and development agencies, particularly the Food and Agriculture Organization (FAO), World Food Programme (WFP) and IFAD, have laid out approaches to protect the welfare of the poorest and hungriest by providing direct support to the government on an emergency basis and beyond, while providing resources and designing policies to re-launch agriculture and revitalize rural economies. Together with the Government of the Philippines, IFAD and FAO developed the Rapid Food Production Enhancement Programme. The programme will contribute to government’s emergency responses to soaring food prices. In particular, it will;
IFAD will finance the programme with a loan of USD 15.9 million and a grant of USD 500,000. Recently the European Commission also approved a EUR 10 million grant to co-finance the programme by scaling up its coverage and scope. Two projects will be implemented under the programme: the Rapid Seed Supply Financing Project, which seeks to acquire and distribute just under 1,000,000 bags of certified inbred paddy seeds during the 2009 dry season crop in selected rice-producing provinces; and the Irrigated Rice Production Enhancement Project, which will support the rehabilitation of at least 5,000 hectares of communal irrigation schemes in the focus provinces of the 2009-2013 Rice Self-Sufficiency Plan. “Access by farmers, especially indigenous people and women, to resources such as land, water and rural financial services, is key to ensuring food security,” said Sana F.K. Jatta, IFAD Country Programme Manager at the October 2008 Knowledge and Learning Market in Manila. Given the right support and opportunity to access resources, and with their high level of adaptability and resourcefulness, Filipinos can cope with the challenge posed by the soaring food prices.
Read more:
Back to topIssue 7: Drought, coping mechanisms and poverty – Insights from rainfed rice farming in Asia Drought is a major constraint to food production in the Asia and the Pacific region. Some 23 million hectares of agricultural land are drought-prone, representing one-fifth of the total rice area of the region. A recent report of the Intergovernmental Panel on Climate Change highlights the increasing frequency and intensity of droughts in many parts of Asia. These increases are attributed mainly to a rise in temperature, in particular during the summer and normally drier months and during El Niño Southern Oscillation (ENSO) events. In China, for example, the increase in the area affected has exceeded 6.7 million hectares since 2000. In South Asia nearly half the droughts are associated with El Niño, and consecutive droughts in 1999 and 2000 in Pakistan and north-western India led to sharp declines in water tables and crop failures. In South-East Asia, as well, droughts are normally associated with ENSO years. Past studies of drought have focused mainly on arid and semi-arid regions. Although sub-humid regions of Asia also suffer from frequent droughts, researchers have not studied the problem and its impact on farmers’ livelihoods. The economic costs of drought here can be enormous. For example, the total economic cost of drought in eastern India is estimated to be as high as 11 per cent of the total agricultural gross domestic product. The present paper summarizes the findings of a research study undertaken by IRRI that sought to fill the knowledge gap regarding the effects of drought in sub-humid rice-producing areas. In addition to estimating the economic costs of drought in major rice-producing countries of Asia, the study documented farmers’ risk-coping mechanisms. Farmers in China, India and Thailand use a variety of coping strategies to deal with the consequences of drought, including careful choice of cropping patterns, rice varieties, planting methods and crop management practices. The study also identified possible technological and policy interventions for effective drought management. IRRI is collaborating with IFAD on a programme for technology development for rice in upland areas of Asia. We believe that the findings and recommendations of the paper will be of interest to policy makers, development practitioners, donors, academics and civil society.
For more information, please contact Valentina Camaleonte, Asia and the Pacific Division, IFAD, tel: +39 06/54592670 | ||||||||||||||||||||||||||||||||||||||||
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[email protected] Martina Spisiakova
Making a Difference in Asia and the Pacific Issue 23: November-December 2008 Special issue: October 2008 Issue 22: August 2008 Issue 21: June-July 2008 Issue 20: January-February 2008 Issue 19: January-February 2008 Issue 18: December 2007 Issue 17: September-October 2007 Issue 16: June-July 2007 Issue 15: Issue 14: January/February 2007 - Sustainable natural resource management Issue 13: November/December 2006 - PBAS: looking beyond the resource allocation system Issue 12: September/October 2006 - Communication for poverty reduction and rural development Issue 11: July/August 2006 - Working with UN agencies at the country level Issue 10: May/June 2006 - Indigenous peoples and ethnic minorities Issue 9: March/April 2006 - Access to land Issue 8: January/February 2006 - Agricultural Technology Management Issue 7: November/December 2005 - Pro-poor policies Issue 6: September/October 2005 - Gender & MDGs Issue 5: July/August 2005 - Partnership Issue 4: May/June 2005 - Rural Finance Issue 3: March/ April 2005 - Donor Harmonization Issue 2: January/ February 2005 Issue 1: November/ December 2004
China Implementation mission – Dabieshan Area Poverty Reduction Programme Henan, 1-20 February 2009 Evaluation mission by IFAD Office of Evaluation – West Guangxi Poverty-Alleviation Project, 25 February – 6 March 2009 Training on logframe – Dabieshan Area Poverty Reduction Programme, 1-8 March 2009, Henan RIMS training – Dabieshan Area Poverty Reduction Programme, 16-27 March, Henan Follow-up mission – South Gansu Poverty-Reduction Programme, 1-11 April 2009 Supervision mission – Rural Finance Sector Programme, 1-15 April 2009, Shaanxi and Chongqing Loan negotiations – Sichuan Post-earthquake Agricultural Rehabilitation Project, 23-24 April, Rome Fact-finding mission – new project, 16-30 April 2009 Indonesia Start-up workshop – Rural Empowerment and Agricultural Development Programme in Central Sulawesi, 6-14 March 2009 Maldives Mid-term review – Post-Tsunami Agriculture and Fisheries Rehabilitation Programme, 21 March – 7 April 2009 Mongolia Project design – Natural Resource Management Initiative, 15 March – 5 April 2009 Myanmar Fact finding mission – Nargis Cyclone Recovery, 23-27 February 2009 Pakistan Design completion and quality assurance mission – Crop Maximization Support Project appraisal, 20 March – 10 April 2009 Philippines Start-up workshop – Second Cordillera Highland Agricultural Resource Management Project, 8-11 March 2009 Training in procurement and financial management – Second Cordillera Highland Agricultural Resource Management Project, 15-18 March 2009 Training of project staff from IFAD-supported projects in the Philippines in M&E and RIMS – Sri Lanka, 22-28 March 2009 Annual country programme review, 27-30 April 2009 Sri Lanka Start-up workshop – Smallholder Plantations Entrepreneurship Development Programme, 22-28 March 2009 Follow-up mission – Post-Tsunami Coastal Rehabilitation and Resource Management Programme, 9-13 March 2009 Post supervision mission – Smallholder Plantations Entrepreneurship Development Programme, 21-24 April 2009 Viet Nam Supervision mission – Rural Income Diversification Project in Tuyen Quang Province, 9–20 March 2009 Supervision mission – Decentralized Programme for Rural Poverty Reduction in Ha Giang, 30 March – 9 April 2009 Supervision mission – Decentralized Programme for Rural Poverty Reduction in Quang Binh Provinces, 12-20 April 2009
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The International Fund for Agricultural Development (IFAD) is a specialized agency of the United Nations, dedicated to eradicating poverty and hunger in developing countries. Its work in remote rural areas of the world helps countries achieve the Millennium Development Goals. Through low-interest loans and grants, IFAD develops and finances projects that enable rural poor people to overcome poverty themselves.
IFAD tackles poverty not just as a lender, but as an advocate for the small farmers, herders, fisherfolk, landless workers, artisans and indigenous peoples who live in rural areas and represent 75 per cent of the world's 1.2 billion extremely poor people. IFAD works with governments, donors, non-governmental organizations, local communities and many other partners to fight the underlying causes of rural poverty. It acts as a catalyst, bringing together partners, resources, knowledge and policies that create the conditions in which rural poor people can increase agricultural productivity, as well as seek out other options for earning income.
IFAD-supported rural development programmes and projects increase rural poor people's access to financial services, markets, technology, land and other natural resources.