FAO/WFP/IFAD PRESENTATIONTO UNCT

April 22, 2008

CURRENT FOOD CRISIS AND SOARING PRICES IN PAKISTAN

Structure of Presentation

Countries in Current Food Crisis

Consequences of food crisis

GLOBAL CONTEXT – Drivers of the Soaring

Prices

PAKISTAN CONTEXT - Food Crisis & Soaring

prices

Mitigation Programmes

UN Delivering as One – Proposed Action

Food Security Defined

Food security exists when all people, at

all times, have physical and economic

access to sufficient, safe and nutritious

food to meet their dietary needs and

food preferences for an active and

healthy life.

COUNTRIES IN CURRENT FOOD CRISIS

Eritrea Madagascar Gambia Zimbabwe

Angola Myanmar Guinea Mozambique

Sao tome and principe

Malawi Nepal Cogo, DR

Chad Benin Sierra Leone Yemen

Mauritania Zambia Niger Senegal

Burundi Haiti OPT Ethiopia

Timor-Leste Afghanistan Tajikistan Guinea-Bissau

Somalia Central African Republic

Tanzania Cameroon

Rwanda Bangladesh Indonesia Comoros

Togo Uganda Pakistan

CONSEQUENCES OF PERSISTENT FOOD SHORTAGES & PRICES HIKE

Slow down/reversal of poverty alleviation efforts Hinder economic growth and inflation control Retard employment generation Derail efforts to promote reform Create social and political instability

RISK THAT MDG 1 TARGET FOR HUNGER WILL BE DRAMATICALLY MISSED

GLOBAL CONTEXT: DRIVERS OF SOARING PRICES

Insufficient growth in cereal production Declining cereal stocks (lowest in three decades)

Rise in petroleum prices (correlation to food > 0.6)

Increased demand from biofuels sector Economic boom in large developing countries

(5kg cereals produce 1kg meat) Inadequate agriculture and trade policies (e.g.

export bans can contribute to higher global prices)

LOW RATE OF GLOBALLOW RATE OF GLOBALCEREAL PRODUCTIONCEREAL PRODUCTION

Source: Data from FAO 2003, 2005-07 * Forecast.

Mill

ion

tons

To

tal M

illio

n to

ns

0

300

600

900

1,200

1999 2000 2001 2002 2003 2004 2005 2006 2007*

800

1,200

1,600

2,000

Wheat Coarse grains Rice Total (right)

CLIMATE CHANGE EFFECT ON AGRICULTURE PRODUCTION GROWTH BY 2080

Source: Cline, 2007

CEREAL STOCK DECLINEEnding Stocks 1999 to 2007

0

100

200

300

400

500

600

700

800

1999 2000 2001 2002 2003 2004 2005 2006 2007*

Wheat Coarse grains Rice (milled) Total

Source: FAO 2003

MIL

LIO

N T

ON

S

SOARING OIL PRICESSOARING OIL PRICES

Source: Data from FAO 2007 and IMF 2007

Co

mm

odi

ty p

rice

s (U

S$

/ton

)

New trend?

0

100

200

300

400

0

20

40

60

80

100Corn

Wheat

Rice

Oil (right scale)

Oil

pri

ces

(US

$/b

arre

l)

Source: Global Subsidies Initiative 2007

THE BIO-FUEL BOOMTHE BIO-FUEL BOOM

Ethanol Ethanol productionproduction

1975 - 20071975 - 2007

BiodieselBiodiesel production production 1991 - 20071991 - 2007

billi

on li

ters

billi

on li

ters

billi

on li

ters

billi

on li

ters

UNFAOURABLE AGRICULTURE UNFAOURABLE AGRICULTURE AND TRADE POLICIESAND TRADE POLICIES

Drastic decline in donor funding for agriculture Creation of unfavourable environment:

Huge subsidy to DC farmers High tariffs on value added products High cost of compliance with International standards Soaring input costs VS historically depressed output

prices Shrinking agriculture lands due to non-agricultural

uses.

PAKISTAN CONTEXT:

FOOD CRISIS/SOARING PRICES

FOOD CRSIS IN PAKISTAN CURRENT SITUATION

Pakistan is listed among the 40 countries that are facing food crisis

Already food insecure population: 60 million

Additional 17 million are feared to have joined the food insecure categories

Commodities Price Hike in Pakistan (June 06 – March 08)

88%

80%

58%

49%

35% 33% 32% 30%

18%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Rice Edible Oil GramPulse

Maize Fish LiquidMilk

MashPulse

WheatFlour

Mutton Beef withBones

Perc

ent .

Source: MINFAL

Effects of Food Price HikeEffects of Food Price Hike

Reversal of gains made in poverty alleviationReversal of gains made in poverty alleviationReduced access to foodReduced access to foodPoor diet quality Poor diet quality Increased micronutrient malnutritionIncreased micronutrient malnutrition

Reasons for Food Prices Surge

International high prices (petreol and food) increase import costs and fuel price hikes

Price policy encourages siphoning and hoarding

Price differential with neighbour countries Unfavourable weather conditions Shortfall in domestic production

MITIGATION PROGRAMMES

Short Term: Targeted Relief/Subsidies and Safety Nets

Medium Term: Scale-up national food security programme

Long Term: Create enabling environment for sustainable

agriculture growth

“DELIVERING AS ONE-UN” PROPOSED ACTION

UN ADVISORY ROLEUN ADVISORY ROLE Conduct immediate situation assessment studyConduct immediate situation assessment study

UN ADVOCACY ROLEUN ADVOCACY ROLE Assist Gov’t in formulating Policies and Action Assist Gov’t in formulating Policies and Action

PlanPlan

UN CONVENER ROLEUN CONVENER ROLE Call for Donor partnership in short and medium Call for Donor partnership in short and medium

term mitigation effortsterm mitigation efforts

UN SERVICE PROVIDER ROLEUN SERVICE PROVIDER ROLE Agencies to provide partnership support to Gov’t Agencies to provide partnership support to Gov’t

in their areas of comparative advantage in short in their areas of comparative advantage in short and medium term mitigation measuresand medium term mitigation measures

THANK YOU

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