updated: 8 July, 2008
IFAD
Operations
International Fund for Agricultural Development
Impact on poor rural people

The prices of basic food commodities have increased rapidly over the past three years. In only the first quarter of 2008, wheat and maize prices increased by 130 percent and 30 percent respectively over 2007 figures.  Rice prices, while rising moderately in 2006 and more so in 2007, rose 10 percent in February 2008 and a further 10 percent in March 2008.  The threat to food security in developing countries increases in stride.  Coordinated action by the international community, and by the United Nations in particular, is essential.  "Responding effectively to the impact of higher food prices must be a top priority for the global community, particularly when the impact is combined with the projected effects of climate change", says Lennart Båge, IFAD's President. 

IFAD’s immediate response has been to make available up to US$200 million from existing loans and grants to provide an urgent boost to agricultural production in the developing world, in the face of high food prices and low food stocks.  But IFAD will also continue to press for rapid and urgent longer-term investment in agriculture, including access to land, water, technology, financial services and markets, to enable the 450 million smallholder farms in developing countries to grow more food, more productively, and thereby increase their incomes and resilience, and respond to the increasing global demand for food.   

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Key facts

  • The food crisis is real, and it is affecting poor rural people across the developing world.
  • In virtually all countries, food prices have increased in 2007 and early 2008. The extent to which they have increased varies considerably country by country, and indeed within countries, from 10-20 per cent to 200 per cent. Consumer prices have typically increased to a greater degree than producer prices.
  • The factors behind the increased prices include higher input costs, higher transportation costs (both a consequence of increasing fuel prices), in a few countries civil unrest, and above all, agro-climatic conditions. Floods, droughts and frosts led to substantial increases in prices in many countries.
  • Poor rural people, many of whom are absolute or net food buyers, are losing out and are becoming poorer.
  • As consumers, they are responding by reducing the quantity they eat, and are shifting to lower costs – and in some cases lower quality – foods. There are suggestions from a number of countries that malnutrition is on the rise.
  • As producers, they are responding either by withdrawing from the market and reverting to low-input low-output production, for home consumption; or, where they are able, by shifting into higher value market-oriented production, as a means to earn the income to assure their food security.
  • Others in the rural economy are reacting to increased market opportunities, and in a number of regions – above all Latin America – land ownership is becoming increasingly concentrated. The rural poor are already losing out in some cases.
  • To date, government responses to rising food prices have been principally short-term and aimed at urban consumers. A number of countries have also introduced measures aimed at stimulating increased market supply.  Yet poor rural people risk being excluded from both.

 

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