July 15, 2022 – Record high food prices have triggered a global crisis that will drive millions more into extreme poverty, magnifying hunger and malnutrition, while threatening to erase hard-won gains in development. The war in Ukraine, supply chain disruptions, and the continued economic fallout of the COVID-19 pandemic are reversing years of development gains and pushing food prices to all-time highs. Rising food prices have a greater impact on people in low- and middle-income countries, since they spend a larger share of their income on food than people in high-income countries. This brief looks at rising food insecurity and World Bank responses to date.
(See “pink sheet” data for agricultural commodity and food commodity prices indices, updated monthly.)
Domestic food price inflation remains high around the world. , with many experiencing double-digit inflation. The share of high-income countries with high inflation has also increased sharply, with about 67.9% experiencing high food price inflation.
According to the World Bank’s April 2022 Commodity Markets Outlook, exacerbating food insecurity and inflation.
Food prices were already high before, and the war is driving food prices even higher. Commodities that have been most affected are wheat, maize, edible oils, and fertilizers. Global commodity markets face upside risks through the following channels: reduction in grain supplies, higher energy prices, higher fertilizer prices, and trade disruption due to shutting down of major ports.
Over the coming months, a major challenge will be access to fertilizers which may impact food production across many crops in different regions. Russia and Belarus are major fertilizer exporters, accounting for 38% of potassic fertilizers, 17% of compound fertilizers, and 15% of nitrogenous fertilizers.
On April 13, 2022, The heads of the World Bank Group, International Monetary Fund, United Nations World Food Programme, and World Trade Organization released a joint statement calling on the international community for urgent action to address food insecurity, to keep trade open and support vulnerable countries, including by providing financing to meet the most urgent needs.
Following the start of the war in Ukraine, trade-related policies imposed by countries have surged. The global food crisis has been partially made worse by the growing number of food trade restrictions put in place by countries with a goal of increasing domestic supply and reducing prices. As of July 15, 18 countries have implemented 27 food export bans, and seven have implemented 11 export-limiting measures.
Globally, hunger levels remain alarmingly high. According to the 2022 State of Food Insecurity in the World (SOFI) report, the number of people affected by hunger rose in 2021 to 828 million, an increase of about 46 million since 2020 and 150 million since 2019, before the outbreak of the COVID-19 pandemic. In addition, WFP and FAO warned that acute food insecurity could worsen in 20 countries or areas during June to September 2022.
Rapid phone surveys done by the World Bank in 83 countries show a significant number of people running out of food or reducing their consumption in the first two years of the COVID-19 pandemic. Reduced calorie intake and compromised nutrition threaten gains in poverty reduction and health and could have lasting impacts on the cognitive development of young children.
World Bank Support
In the face of multiple crises, the World Bank is deploying short- and long-term responses to boost food and nutrition security, reduce risks, and strengthen food systems.
On May 18, the World Bank announced actions it plans to take as part of a comprehensive, global response to the ongoing food security crisis, with up to $30 billion in existing and new projects in areas such as agriculture, nutrition, social protection, water and irrigation. This financing will include efforts to encourage food and fertilizer production, enhance food systems, facilitate greater trade, and support vulnerable households and producers.
The World Bank Group and the G7 Presidency co-convened the Global Alliance for Food Security on May 19, which aims to catalyze an immediate and concerted response to the unfolding global hunger crisis.
Examples of the World Bank’s support to countries to alleviate food insecurity include:
- A $130 million loan for Tunisia, seeking to lessen the impact of the Ukraine war by financing vital soft wheat imports and providing emergency support to cover barley imports for dairy production and seeds for smallholder farmers for the upcoming planting season.
- The $2.3 billion Food Systems Resilience Program for Eastern and Southern Africa, approved on June 21, 2022, helps countries in Eastern and Southern Africa increase the resilience of the region’s food systems and ability to tackle growing food insecurity. The program will enhance inter-agency food crisis response also boost medium- and long-term efforts for resilient agricultural production, sustainable development of natural resources, expanded market access, and a greater focus on food systems resilience in policymaking.
- In Bangladesh, an Emergency Action Plan, mobilized as part of a Livestock Dairy Development project, provided US$87.8 million in cash transfers to 407,000 vulnerable dairy and poultry farmers to support their businesses. Financing also went towards providing personal protection equipment, farm equipment and enhanced veterinary services through the procurement of 64 mobile veterinary clinics.
- In Bhutan, the World Bank re-aligned its portfolio to support food distribution in the short term and enhance food production in the medium term through inputs supply and irrigation.
- In Chad, $30 million in emergency financing was mobilized to provide food assistance through the free distribution of food kits to 437,000 vulnerable people experiencing severe food and nutritional insecurity located in both urban and rural areas and provided seeds and small agricultural equipment to 25,000 poor and vulnerable smallholder farmers to preserve their productive capacity for the imminent growing season.
- In Haiti, the Resilient Productive Landscape project mobilized emergency funding to help over 16,000 farmers access seeds and fertilizer and safeguard production for the next two cropping seasons.
- In the Kyrgyz Republic, the World Bank-supported, GAFSP-funded Agricultural Productivity and Nutrition Improvement Project, which focuses primarily on improving water infrastructure and developing the capacity of water users’ associations (WUAs), distributed US$1.1 million in agricultural inputs such as seeds and fertilizer through 30 project WUAs to address vulnerable populations.
- In Senegal, a $150 million IDA credit is helping increase exports of high-value crops such as shelled groundnuts and horticultural products, increase dairy farming productivity, and reduce the mortality rate of small ruminants, mitigating the negative impacts of the pandemic while investing in more productive and resilient practices.
- In Sierra Leone, emergency financing under the ongoing Smallholder Commercialization and Agribusiness Development Project is supporting government COVID-19 response initiatives with inputs, land mechanization services, and extension services to support rice farmers. The World Bank-financed Social Safety Net Project also scaled up its cash transfer system to provide support to the most vulnerable households.
Last Updated: Jul 15, 2022