COPING WITH FOOD PRICE SURGES

15 Pages·2013·0.9 MB·English

COPING WITH FOOD PRICE SURGES
Safeguarding Food Security in Volatile Global Markets
ArianaAlva Ferrari ●Pauline Fidelius ●Sonia Heinebal INTERNATIONAL
Harminder Singh Sangha ●Andrea Sicuro AGRIFOOD
ECONOMICS

Objective
The focus of the presentation will be to demonstrate the impact of food price volatility on
low-income countries and suggest a possible solution to the best long-term food security
strategy.
Key Issues
(cid:1)
Food Price and Volatility Experience: Volatile food prices impact acutely poor
households and are brought below the poverty level.
(cid:1)
Compensatory Finance Schemes: Attempts to help vulnerable countries
experiencing sudden losses because of fluctuating world prices.
(cid:1)
Food Security: Overview of policies available and their impact on food
Importing/Exporting countries.
(cid:1)
Market-Based Approach to Food Security: Optimal approach to stabilize
volatility in a long term basis.
Food Price and Volatility Experience
• Volatility is the variability of a price and tend to be positively associated.
• In poorest economies where daily income is $1.25 per capita, spending 50 percent of its income
erodes living standards.
• Uncertainty of food prices affect farmers as well, as it becomes more difficult to make sound decisions
about how and what to produce.

Compensatory Financial Schemes
“Adopted to assist countries in adapting to
volatility in the prices of their export goods”
EU facilities: STABEX
IMF’s CFF
from 1975 to 2000
Transfer of money become pro-cyclical,
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tourism services and work remittances.
of the instability of export earnings.
EU facilities: SYSMIN
EU facilities: FLEX
focused on alleviation of fluctuations in
it aims at faster disbursement of funds to
revenue arising from production and sale
eligible countries
of minerals
Global safety net schemes
They emerged onto the multilateral stage as a specific response to the 2008 financial
crisis and to the coincident rise in the prices of food commodities.
The World Bank’s Vulnerability Financing Facility (VFF)
The Vulnerability Financing Facility is a dedicated facility to streamline crisis support to
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Food Crisis Program (GFRP) and the new Rapid Social Response (RSR) program
focused on social interventions.
The Global Food Crisis Response Program
It was established in 2008 addressing agriculture by:
•reducing the negative impact of high volatile food prices on the lives of the poor in a
timely way
•supporting governments in designing sustainable policies that mitigate the adverse
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long-term market distortions, and
•supporting broad-based growth in productivity and market participation in
agriculture to ensure an adequate and sustainable food supply response. (WB, 2008)
The Rapid Social Response (RSR) Program
It is “designed to assist countries address urgent social needs stemming from the crisis, and to
build up capacity and institutions to respond better to future crises” (World Bank, 2009).
Today, the US$61 million RSR fund financed by Russia, Norway and the UK stands out as a
prominent example of a successful multilateral partnership, which will evolve to become the
umbrella to support the implementation of this strategy.
Operational Procedure
In spite occasional delays and cancellations, RSR stands as a successful instrument (IEG, 2011).
Part of its success comes from its high degree of integration into the World Bank’s core sector
strategy and knowledge management network.
An even more important factor in RSR’s success has been the donors—the Russian Federation,
Norway, and the UK—who mandated RSR to be flexible and agile.