CURRENT FOOD CRISIS AND SOARING

PRICES IN PAKISTAN

FAO/WFP/IFAD PRESENTATION
TO UNCT

April 22, 2008

 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 Malawi Nepal Cogo, DR

principe
Chad Benin Sierra Leone Yemen
Mauritania Zambia Niger Senegal

Burundi Haiti OPT Ethiopia

Timor-Leste Afghanistan Tajikistan Guinea-Bissau

Somalia Central African Tanzania Cameroon
Republic
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 GLOBAL
CEREAL PRODUCTION

1,200 2,000

Total Million tons

Million tons

900
1,600

600
1,200
300

0 800
1999 2000 2001 2002 2003 2004 2005 2006 2007*

Wheat Coarse grains Rice Total (right)

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

CLIMATE CHANGE EFFECT ON AGRICULTURE
PRODUCTION GROWTH BY 2080

Source: Cline, 2007

 CEREAL STOCK DECLINE
Ending Stocks 1999 to 2007

800

700
MILLION TONS

600

500

400

300

200

100

0
1999 2000 2001 2002 2003 2004 2005 2006 2007*

Wheat Coarse grains Rice (milled) Total

Source: FAO 2003

 Commodity prices (US$/ton)
Ja
n-
0

0
100
200
300
400
Ju 0
l-0
Ja 0
n-
0
Ju 1
l-0
Ja 1
n-
02
Ju
l-0 Rice
Corn

Ja 2
Wheat

n-
0
Ju 3
l-0
Ja 3
n-
0
Oil (right scale)

Ju 4
l-0
Ja 4
n-
0
Ju 5
l-0
Ja 5
n-
0
Ju 6
l-0
Ja 6
n-
0
SOARING OIL PRICES

Ju 7
e

l-0
7
w
t r en d?

0
20
40
60
80
100

Source: Data from FAO 2007 and IMF 2007

Oil prices (US$/barrel)

 THE BIO-FUEL BOOM

Ethanol
billion liters

production
1975 - 2007

Biodiesel
billion liters

production
1991 - 2007
Source: Global Subsidies Initiative 2007
UNFAOURABLE AGRICULTURE
AND 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)
100%
88%
90%
80%
80%

70%
.

58%
60%
Percent

49%
50%

40% 35% 33% 32% 30%

30%
18%
20%
11%
10%

0%
Rice Edible Oil Gram Maize Fish Liquid Mash Wheat Mutton Beef with
Pulse Milk Pulse Flour Bones

Source: MINFAL
 Effects of Food Price Hike
 Reversal of gains made in poverty
alleviation
 Reduced access to food
 Poor diet quality
 Increased 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 ROLE
 Conduct immediate situation assessment study
 UN ADVOCACY ROLE
 Assist Gov’t in formulating Policies and Action Plan
 UN CONVENER ROLE
 Call for Donor partnership in short and medium term
mitigation efforts
 UN SERVICE PROVIDER ROLE
 Agencies to provide partnership support to Gov’t in their
areas of comparative advantage in short and medium
term mitigation measures
THANK YOU