High food prices

Introduction
A wave of food-price inflation is moving across the globe, leaving in its wake drastically increased levels of hunger and poverty. The phenomenon is affecting everyone on the planet but the poor and hungry are on the front line, as are agencies like WFP that work to help them.

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Key facts

• Top international experts say millions of people are being pushed deeper into poverty and hunger by high food prices. According to the World Bank, the number is at least 100 million. WFP’s research indicates that it could be as high as 130 million.

• On international commodity markets, food prices have gone up 54 percent over the last year, with cereal prices soaring 92 percent. (source: FAO – World Food Situation)

• Over the first four months of 2008 WFP paid an average of US$430 for a metric ton of wheat, compared to US$207 for the same period of 2007, an increase of 108 percent.

• WFP is also paying more for other key elements in its food basket: 33 percent more for maize, 50 percent more for rice, 73 percent more for vegetable oil and 61 percent more for pulses.

• World cereal reserves are expected to fall 5 percent this year, to their lowest point for 25 years. (source: FAO - Crop Prospects)

• Approximately 1 billion people still live on less than US$ 1 dollar a day, the threshold defined by the international community as absolute poverty, below which survival is in question.

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The challenge
High food prices represent the biggest challenge that WFP has faced in its 45-year history. Analysis carried out by the organisation supports World Bank estimates that at least 100 million people have been pushed deeper into poverty by soaring food costs. WFP Executive Director Josette Sheeran has called this a silent tsunami for the world’s hungry.

Recognising the seriousness of the challenge, on April 29 United Nations Secretary-General Ban Ki-moon announced the creation of a UN Task Force to work with donor and beneficiary governments to promote a comprehensive and unified response. On May 20-22 the UN Economic and Social Council (ECOSOC) held a special session on the Global Food Crisis.

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Roots of the phenomenon
Higher food prices are rooted in increased energy costs, rising demand from economic growth in emerging economies, the growth of biofuels and increasing climatic shocks such as droughts and floods.

Meanwhile, food reserves are at their lowest for 25 years and commodity markets extremely volatile, subject to sudden spikes and speculation. The situation has been exacerbated by the falling value of the dollar, which is the currency in which all major commodities are traded.

In a bid to protect their own populations, many countries have imposed export bans or restrictions on certain food types. This tends to drive prices up further as food becomes less available.

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‘New face of hunger’
The people hit hardest by this combination of factors are those living on the razor’s edge of poverty. In rich countries people spend 10-20 percent of their income on food so they can afford to pay more. In many poor countries they already spend 60 percent, sometimes even 80 percent, of their budget on food.

Affected groups include the rural landless, pastoralists and many small-scale farmers in Africa and elsewhere. But the impact is also on the urban poor. In many of the world’s poorest cities people can suddenly no longer afford the food they see on store shelves because prices have soared beyond their reach.

This is the ‘new face of hunger’. It’s not a matter of availability, as we would see in a drought-like situation. It’s about accessibility and it’s especially impacting populations who are reliant on the markets.

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Impact
Higher food prices are already causing social unrest around the world. Lives were lost in April in Haiti during several days of unrest. In recent months there have also been protests in at least 25 other countries, including Burkina Faso, Cote d’Ivoire, Cameroon, Gabon, Egypt, Senegal, Indonesia, Bangladesh, India and the Philippines.

In developing countries across the world, the price crunch means that families which may have had money to pay school fees for their children, to go to clinics when they are sick, or take much-needed nourishing food together with anti-retroviral drugs, will suffer as they cut back in these areas. They are cutting meals and substituting less nutritious foods.

As they struggle to cope, we risk seeing a major setback – perhaps as much as seven years – in the Millennium Development Goals. The first objective which the world committed itself to reaching by 2015 was to halve the proportion of hungry people. Food is also the foundation for six of the other MDG goals – more hunger and more suffering today points to a potential erosion of the hard-won progress we have made.

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WFP’s Call to Action
WFP, which is a voluntarily funded operation, aims to feed more than 70 million hungry people around the world in 2008. Six months into the year, its total budget for 2008 stands at US$4.5 billion, of which US$2 billion has been received.

That US$2 billion includes money generously provided by donors in response to the appeal WFP launched in March for special funds to cover the impact of high food and fuel prices on its operations. The target for that appeal was US$755 million, a figure which was reached after only two months, partly thanks to a US$500 million donation from Saudi Arabia on May 22.

WFP’s programmed budget for 2008 does not cover those who are joining the ranks of the hungry as a result of high food and fuel prices, the ‘new face of hunger’. Nor does it cover those that may be hit by natural catastrophes – such as the cyclone in Myanmar – which no one can predict and which can devastate hundreds of thousands of lives.

All these people will look to WFP for help for their survival and so the organisation’s total budget for 2008 could grow yet higher.

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The way forward
WFP supports a comprehensive approach to high food prices where all parties, from governments to UN agencies to NGOs, work together. It supports FAO’s appeal for US$ 1.7 billion to implement its Initiative on Soaring Food Prices and welcomes IFAD’s announcement of funding worth US$ 200 million to enable poor farmers to access seeds, fertilizers and tools.

As part of a coherent global response by UN agencies, WFP’s role will be threefold:

• in the short term, WFP will seek full funding for the life-saving projects programmed for 2008 and for targeted food safety nets and mother-child health programmes in extreme situations. It will seek to scale up school feeding and use it as a platform for urgent, nutritional interventions;

• in the medium term, WFP will offer its huge logistics capacity to support life-saving distribution networks. It will also expand cash and voucher programmes and support local purchases from small farmers, helping them to afford inputs and sustain livelihoods;

• and in the longer term, it will support policy reform and provide advice and technical support to governments engaging in agricultural development programmes; at the same time WFP will pursue local purchase contracts that can help farmers increase investment and yields.

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Quick navigation
Introduction
Key facts
The challenge
Roots of the phenomenon
‘New face of hunger’
Impact
WFP’s Call to Action
The way forward

Contacts
Martin Penner
Public Information Officer
+39 06 6513 3254 (office)
Martin.penner@wfp.org

For more contacts:

Addis AbabaAmmanBangkokBeijingBerlinBogotaCairoColomboCopenhagenDakarIslamabadJakartaJerusalemKabulKhartoumLondonNairobiNay Pyi TawNew YorkPanama CityParisPyongyangRome HQTokyoTorontoWashington

Why are prices high?
Factors contributing to global food price rises include:

Rising oil and energy costs
Growing competition between biofuels and food
Growing demand from burgeoning economies in the developing world
Increase in climate and weather-related events destroy crops, reducing food supplies

Key documents

WFP Executive Director Josette Sheeran -biography

‘New Face of Hunger’ - keynote speech by WFP Executive Director (Center for Strategic and International Studies, April 2008)

Factsheet: High food prices

Press release-WFP says high food prices a silent tsunami

Chief Executives Board Communique-Berne-29 April

Press release - WFP completes $755 million appeal with Saudi pledge

Video gallery
*New video: WFP Executive Director Josette Sheeran in Myanmar

Video: What’s in your cup today? From Sri Lanka to Egypt, people are feeling the crunch of high food prices. Watch this video to hear what people have to say about the direct impact food price spikes have on their livelihoods.

Video: High food prices: Around the world, people are feeling the crunch of high food prices, especially at the markets, where crowds and bartering are commonplace.

Related news
How to Feed the World - Newsweek

The Silent Tsunami - The Economist

UN Secretary-General warns of food crisis emergency

Oped: High food costs hurt the poor - WFP Executive Director Josette Sheeran

Food for thought - The Economist

High food prices may force aid rationing - Financial Times

The world’s growing food-price crisis - TIME

Feed the World - The UK Guardian

Useful links
UN Food and Agriculture Organization (FAO) - World Food Situation Portal

UN International Fund for Agricultural Development (IFAD )

International Food Policy Research Institute (IFPRI )

UN Office for the Coordination of Humanitarian Affairs -IRI

World Food Programme © 2008