Global Food Security

Understanding itMeasuring it

Assessing price impacts

24 February 201424 February 2014Rabat

Leo AbruzzeseGlobal Forecasting Directorg

Background

• About 842m people in 2013, or one in eight globally, suffered from chronic hunger, according to the FAO.

• The world’s population will grow from 7bn now to 9.3bn in 2050, an increase of one-third.

ik i f d i h hi hli h d f d i• Recent spikes in food prices have highlighted food-security vulnerabilities, as have natural disasters and weather shocks.

• Many factors are behind the food security crisis:Ri i i Rising energy prices

Declining agricultural sector investment Stagnating/declining agricultural productivity Rising demand for food due to economic growth,

higher incomes and population pressureshigher incomes and population pressures Trade-distorting subsidies Ecological degradation Substituting subsidised bio-fuels for food production

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Measurement tools

FAO: Suite of food security indicators

• Four food security dimensions can be identified: food availability, economic and physical access to food, food utilization and stability (vulnerability and shocks) over timetime.

4

IFPRI: Excessive Food Price Variability Early Warning System

• Identifies periods of extreme food commodity price variation (volatility) that exceed the 95th percentile.

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IFPRI: Global Hunger Index

• A tool designed to comprehensively measure andcomprehensively measure and track hunger globally and by region and country

• Highlights successes and failures• Highlights successes and failures in hunger reduction

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Food Secure: EU Research project

• Objective: to develop advanced tools that may help to improve the ability of decision makers to foresee and respond to future food and nutrition security

icriseso an indicator-based trigger for policy response to upcoming price-related food criseso toolbox of long term global economic and biophysical models to explore possible

f t d l t i f d d t iti itfuture developments in food and nutrition security

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Global Food Security Index

Overview: The Global Food Security Index

The Economist Intelligence Unit was commissioned by DuPont to research and produce a comprehensive Global Food Security Index.

Defining food security• Food security exists when people at all times have physical, social and economic

access to sufficient and nutritious food that meets their dietary needs for a

The Global Food Security Index:

access to sufficient and nutritious food that meets their dietary needs for a healthy and active life.*

ranks 107 countries

according to their relative levels of food security

using 27 indicators divided into three categories: Affordability; Availability; Quality and Safety.

* Adapted from the 2009 Declaration of the World Summit on Food Security

Index framework

• Food consumption as a share of household expenditure

• Percent of population under global poverty line

• Sufficiency of supply: food supply in kcal/person/day and chronic food aid dependency

• Public expenditure on agricultural R&D

AvailabilityAffordability

• GDP per capita, $US, PPP

• Agricultural import tariffs

• Presence of food safety nets

• Agricultural infrastructure

• Volatility of ag production

• Political stability risk

Index

• Access to finance for farmers • Corruption

• Urban absorption capacity

Food Price Adjustment Factor

Quality and Safety

External Adjustment

• Diet diversification

• Government commitment to increasing nutritional standards

Food Price Adjustment Factor

• FAO global food price index adjusted for income growth, pass-through coefficient of

• Micronutrient availability

• Protein quality

• Food safety

pass through coefficient of global to national food prices, exchange rates and import dependency

• Applied to Affordability score

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Applied to Affordability score

* Composite indicators are bolded.

Capturing the full timeline of food insecurity

Structural /

long-term

Policy driven /

medium term

High frequency /

short termlong-term medium term short term

GDP per head Government

d li

Global commodity

Infrastructure

trade policy

Food safety

commodity prices

Exchange rates

Food consumption / h h ld

programmes

National nutrition

g

Income changehousehold expenditure

nutrition standards

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Results for the 2013 Global Food Security Index

12 Base annual index, without quarterly price adjustment factor

Top and bottom countries in the Index

S /

BEST ENVIRONMENT NEEDS IMPROVEMENT

RankScore /

100

1 United States 87.0

2 Norway 86.0

98 Sierra Leone 28.8

99 Malawi 28.5

3 Netherlands 85.1

4 Belgium 84.5

5 Austria 84.2

100 Zambia 28.2

101 Haiti 27.9

102 Mali 26.9

6 France 84.1

7 Switzerland 83.8

8 Ireland 82.8

k

103 Burundi 26.4

104 Sudan 25.1

105 Togo 22.8

106 Ch d 22 29 Denmark 82.4

10 Canada 82.3

106 Chad 22.2

107 Congo (Dem. Rep.) 20.9

13 Base annual index, without quarterly price adjustment factor

Tool has analytical functions: correlations, weights, etc

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Price trends

Food commodity prices since 1845

3000 First published in 1864, with figures stretching back to 1845, The Economist's commodity-price index is probably the world's oldest regularly published price

2000

2500 index.

1000

1500 Economist food price index

500

1000

0 1845-50

1861-Ja

1868

1875

1882

1889

1896

1903

1910

1917

1924

1931

1938

1945

1952

1959

1966

1973

1980

1987

1994

2001

2008

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0 an

1845=100. Nominal; US dollar terms. Source: The Economist

Food commodity prices: High volatility, but how harmful?

80The food price spike between June 2010 and February 2011 pushed 44m people in emerging markets into “extreme poverty,” according to the World Bank. But the FAO now says that recent data suggest that food price hikes at the primary commodity level generally have little effect on consumer

i

40

60prices.

20

-20

0

-40 Jan-9

Mar-9

May-

Jul-9

Sep- 9

Nov-9

Jan-9

Mar-9

May-

Jul-0

Sep- 0

Nov-0

Jan-0

Mar-0

May-

Jul-0

Sep- 0

Nov-

Jan- 1

Mar-1

FAO IMF WB

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91 92 93 4 95 96

98 99 00 1 02 03

05 06 07 8 09 10

12 13

Food commodity prices indices: Jan 2001=100. Sources: FAO, IMF, World Bank; Haver Analytics

Price adjustment factor: Rough & ready guide to vulnerability

• We took the quarterly change in global food prices (FAO index) for the last 10 years and compared it

ith f d i i fl ti (CPI) f ll t i i thwith food price inflation (CPI) for all countries in the index to determine a long-run relationship.

• Each quarter, we adjust this “pass-through” priceEach quarter, we adjust this pass through price factor for exchange rates, import dependency and estimated per capita income growth.

W l th dj t t t th A il bilit• We apply the adjustment to the Availability score.

• The PAF does not consider unique, short-term developments in each country, such as recent p y,political turmoil, transportation or distribution issues, local food shortages or policy responses to food price shocks, such as price controls or export restrictions.

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restrictions.

Visit www.foodsecurityindex.eiu.com

Explore drivers of food security Compare country scores Find country profiles

Perform scenario analysis by adjusting indicator weights or

’

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a country’s score