Results: Aug 22, 2022

Russia-Ukraine War and the Global Crisis

Policy Responses to Address Poverty and Food Security Impacts

Prafull S. Lokhande
INSTITUTE OF SCIENCE, POONA'S
INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH
 Results: Aug 22, 2022

Impact Analysis | Modeling World Price Shocks

World price shocks Analytical approach
• Peak changes in world prices for food, fuels and fertilizers Country studies use RIAPA economywide model
(i.e., June 2021 to April 2022 | note that food and fertilizer prices fell to pre-war levels
by July 2022, but remain higher than in mid-2021) • Captures entire agri-food system and broader economy
• Tracks impacts from products/sectors to households
• Effect of higher fertilizer prices on fertilizer use in the
current cropping season

Change in nominal world prices Jun 2021 - Jan 2022

(June 2021 to April/July 2022) Jan 2022 - Apr 2022

Jun 2021 - Apr 2022
19 country studies completed
Jun 2021 - Jul 2022
125%
113%
106%
102%

68%
44% 50%

19% 27%

5%

-7%
Maize Rice Wheat Palm oil Crude oil Natural gas Fertilizers
 Results: Aug 22, 2022

Impact Analysis | Poverty & Food Security Impacts

Poverty headcount rate (%-point) Prevalence of undernourishment (%-point) Population with worse diet deprivation (%-point)
Increase in Population with
Food prices Fertilizer prices Fuel prices Increase in poor Food prices Fertilizer prices Fuel prices undernourished Food prices Fertilizer prices Fuel prices deteriorating diets
population (1000s) population (1000s) (1000s)

Bangladesh 3.3% 5,078 Bangladesh 3.2% 4,922 Bangladesh 7.5% 11,700

Cambodia 2.4% 390 Cambodia 1.3% 212 Cambodia 3.3% 533

DRC 1.3% 1,118 DRC 1.2% 1,082 DRC 1.3% 1,159

Egypt 1.8% 1,832 Egypt 1.8% 1,901 Egypt 13.0% 13,510

Ethiopia 3.2% 4,260 Ethiopia 2.1% 2,336 Ethiopia 1.7% 1,915

Ghana 0.6% 153 Ghana 0.3% 74 Ghana 0.9% 273

Kenya 2.6% 1,411 Kenya 2.0% 1,093 Kenya 3.0% 1,641

Mali 3.3% 702 Mali 1.2% 261 Mali 0.2% 49

Malawi 2.4% 442 Malawi 2.5% 462 Malawi 0.4% 72

Myanmar 7.6% 4,100 Myanmar 2.0% 1,053 Myanmar 11.8% 6,348

Niger 0.9% 209 Niger 0.4% 97 Niger 0.7% 178

Nigeria 0.9% 1,783 Nigeria 1.9% 3,910 Nigeria 4.5% 8,350

Nepal 4.5% 1,272 Nepal 1.5% 420 Nepal 6.1% 1,730

Philippines 2.3% 2,441 Philippines 1.4% 1,475 Philippines 0.6% 589

Rwanda 3.8% 485 Rwanda 4.4% 555 Rwanda 3.8% 476

Senegal 2.6% 419 Senegal 0.7% 105 Senegal 5.5% 881

Tanzania 2.1% 1,241 Tanzania 1.9% 1,137 Tanzania 1.6% 912

Uganda 0.9% 388 Uganda 1.1% 491 Uganda 0.2% 72

Zambia 0.9% 159 Zambia 0.9% 162 Zambia 0.3% 45

 Results: Aug 22, 2022

Impact Analysis | Headline Findings

• Agri-food systems are adversely affected, but there is wide Combined impacts across the 19 countries
variation across countries
Food prices

• Large impacts on household consumption or welfare, Fertilizer prices

Fuel prices
especially amongst rural households

• Poverty and food insecurity deteriorates, mainly due to rising 7,358

Poor population increases

10,034

fertilizer prices (poverty and hunger) and rising food prices

(diet quality) by 27 million people 9,798

Undernourished
3,218

population increases
10,666
Detailed country-level results 7,866

by 22 million people
IFPRI website

AgriLinks 3,042
website
9,127
Diet quality deteriorates
for 50 million lower- and 38,265

middle-income people
 Results: Aug 22, 2022

Policy Analysis | Modeled Interventions

Five broad interventions Scenario design
Food tax relief Modeling approach
• Reduce import tariffs and other taxes on wheat, wheat flour, oilseeds, and • Interventions are overlaid on top of the
edible oils. Subsidize consumption of some of the affected food products. world price shocks for each country
Fertilizer subsidies Focus on cost-effectiveness of
• Reduce tariffs on imported fertilizers and increase subsidies to offset rising
interventions
fertilizer costs and limit any decline in fertilizer use and crop productivity. • Allocate 1% of government revenues to
each of the five interventions
Fertilizer use efficiency (e.g., via farmer advisory services)
• Measure the reduction in poverty, hunger
• Reduce fertilizer wastage so that farmers can minimize any decline in and diet quality impacts
production caused by rising fertilizer costs and lower fertilizer use.
Sequencing and implementation
Fertilizer supply chains (e.g., via loans & credit provision)
• Impact analysis focused on near-term
• Support to producers to increase production & to midstream traders to outcomes (i.e., 2022)
lower transaction costs, thereby increasing supply and lowering prices.
• Policy analysis considers a slightly longer
Cash transfers timeframe (e.g., 2022-2024)
• Provide direct cash transfers to poor rural and urban households.
 Results: Aug 22, 2022

Policy Analysis | Avoided Poverty & Food Security Impacts

Share of total impact avoided by allocating 1% of revenues to each intervention

Poverty
Cash transfers are most cost-effective
(by design, they target the poor)

Hunger
Fertilizer options are often most effective
(offset declining food availability)

Diet deprivation
Food & fertilizer options are most effective
(increase overall food supply, and reduce
prices for the most-affected products)

Impact Analysis | Headline Findings & Caveats
• All policy options are effective (to some degree) in offsetting
poverty and food security impacts
• But no policy is the most cost-effective in addressing all outcomes
• Even for specific outcomes, the most effective policy varies by country
• Cash transfers, fertilizer use efficiency, and fertilizer supply chains
are usually more effective than food or fertilizer subsidies
• Cash transfers, like subsidies, generate large but temporary benefits
• Efforts to improve fertilizer efficiency take longer to implement, but may
have more lasting benefits
• Having a balanced portfolio of policy responses is critical
• i.e., combination of immediate and lasting investments designed to
address countries’ unique poverty and food security impacts
Results: Aug 22, 2022
Caveats & Areas for Improvement
Country-specific interventions
• We considered broad interventions, but are now engaging
national governments and partners to tailor policy options
Costing interventions
• Governments in the model finance the interventions, but
we do not yet account for administrative/overhead costs
• Investments in fertilizer use efficiency and supply chains
are not fully costed (assumed to be mainly donor-financed)
Falling prices since June 2022
• Recent declines in some world prices are not modeled
• Food prices have returned to pre-crisis levels, and so we
may overstate the benefits of food tax relief
Compounding crises
• We do not (yet) model concurrent macroeconomic and
climate shocks facing many countries
 Results: Aug 22, 2022

Acknowledgements
Funding: This research and seminar were made possible through support provided by the Office of Policy, Analysis and Engagement, Bureau for Resilience and Food Security, U.S. Agency
for International Development (USAID), under the terms of the Strengthen Evidence-based Policy Making in Africa, Asia, Latin America and the Caribbean (IFPRI/ReSAKSS) Award # AID-BFS-
I0-17-00001 and the Policy, Evidence, Analytics, Research and Learning (PEARL) Award# 720RFS22IO00003. Joint funding was also received from the Bill and Melinda Gates Foundation
(BMGF), the United Kingdom’s Foreign, Commonwealth and Development Office (FCDO), and the donor group funding the CGIAR’s Foresight and Metrics, and National Policies and Strategies
initiatives. The opinions expressed in this seminar are those of the author(s) and do not necessarily reflect the views of BMGF, CGIAR, FCDO or USAID.

Country researchers:
• Kibrom Abay (Egypt) • Edwin Ombui Oseko (Kenya)
• Fadi Abdelradi (Egypt) • Lensa Omune (Kenya)
• Kwaw Andam (Nigeria) • Karl Pauw (Cambodia, D.R. Congo, Egypt, Ghana, Malawi, Myanmar, Philippines, Tanzania, Uganda, Zambia)
• Seth Asante (Ghana) • Josee Randriamamonjy (D.R. Congo, Egypt, Mali, Myanmar, Niger, Senegal)
• Gilberthe Benimana (Rwanda) • Pranav Patil (Ghana)
• Clemens Breisinger (Egypt, Kenya) • Angga Pradesha (Kenya, Nigeria, Philippines)
• Antony Chapoto (Zambia) • Mariam Raouf (Egypt)
• Jan Duchoslav (Malawi) • Gracie Rosenbach (Rwanda)
• Mia Ellis (Cambodia, Nepal, Tanzania, Uganda, Zambia) • Jenny Smart (Nepal, Senegal)
• Mekamu Kedir Jemal (Ethiopia) • David Spielman (Rwanda)
• Kristi Mahrt (Myanmar) • Mitelo Subakanya (Zambia)
• Juneweenex Mbuthia (Kenya) • Hiroyuki Takeshima (Nepal)
• Bart Minten (Myanmar) • John Ulimwengu (D.R. Congo)
• Serge Mugabo (Rwanda)