INTRODUCTION

• OBJECTIVE: promote Comprehensive Framework for Action (CFA) as instrument for enhanced intra-cluster and inter-cluster cooperation

• STRUCTURE: four sections:– Price trends, impacts, and government responses;– Highlights of Major International Initiatives– Implementation of Responses and Impacts

– CFA for Robust functioning of RCM

Evolution of global food prices

• started in 2001 accelerated in 2007 and 2008 • Reached pick in nearly 30 years in the first three

months of 2008• January to March 2008, U.S. wheat export

prices jumped from US$375 ton US$440/ton and Thai rice from US$365/ ton to US$562/ton

• Preceded by 181% increases in wheat and 83% in overall global food prices during the previous 36 months up to February 2008.

Cereal export prices* (US$/ton)

Food Commodity Jul-07 Mar-08 Apr-08 May-08 Jun-08 Jul-08

US - Wheat 250 481 382 349 358 349

US - Maize 146 234 247 242 281 292

US - Sorghum 157 233 243 240 268 262

Argentina - Wheat 249 395

Argentina - Maize 141 216 224 207 258 271

Thai - White rice 337 567 853 963 870 849

Thai - Broken rice 261 522 726 772 645 601

Global Food Prices evolving differently from the domestic prices in most African markets.

Maize

Medium Term Prices Expected to remain above 2004 level

Figure 1 Food Price ForecastsAverage of forecasts of EIU, FAPRI, IFPRI, OECD/FAO, USDA and World Bank (2000=100)

80

100

120

140

160

180

200

220

240

260

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Maize Wheat Rice Soybean oil Soybean Sorghum

Forecasts

Determining factors

• Transitory: – Diseases/Floods in China– Sluggish Economic growth in USA– Low Global food stock

• Structural - likely to stay in medium term– decrease in global stocks replenishment– high oil prices triggering high food prices– growing world population and strong income– demand for the production of biofuel – agricultural land increasingly taken for commercial

and industrial purpose

Impact of high food prices:A. Macroeconomic• Balance of Payment and Terms of Trade:

– In 2007 total LIFDCs’ food imports was USD107 billion: 24% higher than in 2006, and more than twice the level in 2000.

– compounded by the dramatic increase in petroleum and petroleum products

– Almost all African countries are net food importers hence their BOPs deteriorated

– The impact on terms of trade severe particularly in Lesotho, Eritrea and Gambia

Impact: Macroeconomic Cont.

• Triggered higher Inflation: – Global impact of food prices on inflation was

26.6%– in Africa 46.5 %

• Social Tension and Instability:– Destabilizing the macroeconomic environment

for private sector-led growth and development.

B. Impact on household

• Food and Nutrition Security: – Surplus producers should benefit: but in

appropriate pricing policies and fragmented commodity markets makes it impossible.

– Most severe on urban poor, net food buyers, women and children

– Coping mechanism: eating less, buying less nutritious food, cutting expenses in health care and education, selling assets and incurring additional debt

B. Impact on household: Cont.

• Poverty:– Declining value of assets: sales of vital livestock fetch

very little grain on the market,– urban poor and net food buying farmers thrown into

deeper poverty trap– Previously self-sufficient farmers poorer due to

inability to buy inputs– Exemplified by ADB study: an increase in rice price of

10, 20 and 30%. lead to additional:• 2.72, 5.65 and 8.85 million poor people respectively in the

Philippines, • 7.05, 14.67 and 21.96 million respectively in Pakistan.

Responses by GovernmentsCountry responses in Annex• Policy responses adopted can be divided

into three broad classes: – ensure household food security through

safety nets;– lower domestic food prices through short-

run trade policy measures or administrative action; and

– enhance longer-term food supply.

A. Safety Nets

• Feeding the most needy:– free distribution of food aid to the most

vulnerable groups; – implementation of food for work

programmes; and– making effective use of implementation of

existing school feeding programmes, e.g. Burkina Faso, Kenya and Mozambique.

Safety nets (A) Cont

• Improving income earnings or reducing food prices:– Ethiopia raised by 33 percent the cash wage rate of

workers in the country’s cash-for-work programme– reducing taxes, such as custom duties, VAT, excise

taxes, etc. on food grains (12 countries)– increase food supply by reducing stocks and

increased imports– quantitative restrictions on food exports– price controls and subsidies

B. Improving Supply Response

• enabling smallholder to respond: – Initiating new initiatives– strengthening existing programmes (Malawi

implemented successfully support programme in 2005/6 and 2006/7 cropping seasons).

• HIGHLIGHTS OF MAJOR INTERNATIONAL

INITIATIVES

Was the food crisis in Africa triggered by rising food prices unexpected? • Noooo!!

– agriculture remained under-funded and hence under-developed

– policies pursued over the last forty- plus years favoured the urban consumers farm gate prices below their border parities

– agriculture was heavily taxed directly and indirectly through overvalued currencies

– undermined capital accumulation and long term investment

Good News for African Agriculture, But• Good News:

– Adoption by African Leaders adopted CAADP– agreement to spend 10 percent of national budgetary resources

to agriculture– development partners endorsed CAADP– pledged to increase ODA to agriculture

• But:– By 2006, less than 10 countries achieved the 10 percent Maputo

target and 14 countries allocated between 5 and 10 percent.– Bilateral net ODA to sub-Saharan Africa, excluding Nigeria

from DAC fell by 1.2%. – total aid was USD 24.9 billion representing a decline of 2.1%.

International InitiativesA. Initiatives of the Rome-based UN bodies• FAO – December 2007 launched ISFP based on the

Twin Track - Social Safety and Productive Safety Nets• Productive Safety Nets:

– improving access to inputs by poor farmers through the issuing of vouchers to buy seeds and fertilisers for major staple crops with the objective of increasing production by about 20 percent.

– policy adjustments to facilitate increased private investment and delivery of public goods to enhance productivity

• Social Safety Nets: strengthening safety nets for the poor and food insecure

A. Initiatives of the Rome-based UN bodiesCont.

• WFP led the a global initiative on social safety nets; – ramping up food assistance to urban areas where food

is unaffordable and there is risk of further discontent– extending school feeding to children through the

school holidays and using schools as a platform to provide take home rations to vulnerable families,

– providing supplementary food to malnourished children and pregnant/nursing women,

– voucher programmes to enable people buy food from the market,

– providing monthly food rations– expanding food for work programmes

Initiative of the “Chief Executives Board for Coordination • Met in Berne, Switzerland, deliberated on

UN support in: – emergency safety nets; – support to rapid supply-side response in food

deficit countries;– longer term investment support to

Governments, food producers and other national actors; and

– policy analysis and advice.

Initiative of the “Chief Executives Board for Coordination.. (Cont)• Resolved that assistance should be:

– contextualized within support to achieve MDG1;– strategically focus on increasing productivity of small

and medium-scale producers and supply the urban markets;

– mindful of the need to adapt climate change and for “climate friendly” agricultural development models;

– supportive of, governments’ policy framework for poverty reduction and for agricultural development,

– active collaboration and consultation with IFIs, bilateral donors and farmers’ organisations;

– distinguish between immediate crisis responses and medium- and long-term interventions, but ensure

Advocacy and communication in support of

responses to high food prices

• TICAD-IV: Side Event on High Food Prices which resulted in:– a pledge by the Japanese Government to

increase its food aid – to work with AGRA in doubling rice production

within the coming ten years

Advocacy and communication (Cont):High Level Conference (3-5 June)

• Organized by FAO in collaboration with WFP, IFAD and Biodiversity

• Attracted wide media coverage• Attended by Heads of States, Ministers and

Representatives of 181 countries + EC • Credited more for succeeding in:

– generating financial resources (US$11 billion + 14.1 b&a), and

– agreement in purpose and action by both LIFDCs and the development partners.

Advocacy and communication (Cont):

The G8 Hokkaido Toyako Summit - 7-9 July 2008 • G8 leaders pledged to reinvigorate their efforts towards

assisting countries most affected by high food prices,• urged members to work towards meeting the Gleneagles

resolution, reaffirmed at Heiligendamm, to increase ODA flow to Africa to USD25 billion a year by 2010

• advance agriculture and sustainable land-use and natural resource management in Africa”, through effective implementation of CAADP

• called on African governments to increase investment in agriculture in line with the Maputo Declaration

IMPLEMENTATION OF RESPONSE

MEASURES AND INITIAL EFFECTS • Framework is NEPAD CAADP Pillar 3:• International Task Force established to

coordinate response by a much wider stakeholder institutions under leadership of AU/NEPAD.

• Task Force Members, members of CAADP Partnership Platform (CAADP/PP) established by the NEPAD Secretariat for

• The Task Force holds weekly telephone conference to exchange views and coordinate activities related to soaring food prices.

What has been done?

• NEPAD/AU Workshop widely attended (160 part) and assisted 16 countries to prepare plan of action;

• Assessment Missions to 16 countries undertaken, preparation in 6 countries;– Mission involve key members of the AFSRD

cluster (WFP, FAO, IFAD, WB)– Bilateral and multilateral donors are also

strongly encouraged to participate in the assessment missions

What has been done? Cont.

• FAO’s Productive safety net response– Globally FAO programme of approved projects is

USD74.4 million– USD32.7 million are from its own resources– USD70 million pipeline projects for 78 affected

counties, of which 34 are in Africa – FAO own contribution in Africa is USD17.4 million:

USD15.3 million (88%) for input distribution and USD2.1 million for technical support

– four sub-regional projects for Africa – Central, East, Southern and West – for a total budget of USD1.4 million

– Some farmers have received inputs

What has been done? Cont.

• WFP Social Safety Net– Implementation ongoing in 17 priority

countries in Africa – Target to assist 14.3 million beneficiaries until

the end of the year– Total resources needed are $426 million:

funded $180 WFP’s Emergency Market Mitigation Account (EMMA).

– Confident to mobilize the shortfall

Initial effects/Impacts of the responses to high food prices • Too early to assess the impact of

productive safety nets

• humanitarian assistance, in cash or in kind, provided by WFP and other agencies might have averted hunger

• No monitoring system in place on high food prices

Outcome of various initiatives

• highlighted that root causes neglect for decades of agriculture and development sectors;

• put agriculture back on top of the development agenda;

• strengthened collaboration between NEPAD, AU and RECs, and their partners

• underscored the need to accelerate CAADP implementation at national and regional level; and

• underlined the need to strengthen capacity of the AU, NEPAD and RECs;

CFA FOR ROBUST RCM

• key principles of CFA already adopted as the guiding principles;

• CAADP remains the framework for food security and agr. development in

• Question is how the different clusters relate to CAADP

Clusters with direct input CAADP

• Agriculture, Food Security and Rural Development Cluster,

• Infrastructure Development, Water and Sanitation, Transport and ICTS,

• Industry, Trade and Market Access, and

• Science and Technology

Clusters with indirectly contribution to CAADP

• Governance

• Human Resources Development, Employment and HIV/AIDS

• Advocacy Communications

• Peace and Security

• Environment