Global Hunger Index 2011

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Global HunGer IndexThe Challenge o hunger:Taming PriCe SPikeS and exCeSSive ood PriCe volaTiliTy

2011


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Global HunGer IndexThe Challenge o hunger:Taming PriCe SPikeS and exCeSSive ood PriCe volaTiliTy

2011

IFPRI:Klaus von Grebmer, Maximo Torero, Tolulope Olo nbiyi,Heidi Fritschel, Doris Wiesmann, Yisehac Yohannes

Concern Worldwide and Welthungerhil e:Lilly Scho eld, Constanze von Oppeln

Bonn, Washington, DC, DublinOctober 2011


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2 Name des Teilbereich | Chapter 1 | 2011 Global Hunger Index

p c s p ct t stay high and volatile t s bt ts t p st t t b t st.

UK Hunger Alliance, 2011


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2011 Global Hunger Index | Foreword 3

The dogs of hunger are not dead: some are sleeping, others are biting.

In mid-2011 a ood emergency un olded in the Horn o A rica.Suddenly pictures o emaciated children were back in the media. Mil-lions o people in East A rica are acing a ood crisis caused by a per-ect storm o severe drought, ood price spikes, and confict, and ex-acerbated by the vulnerability o people and communities across theregion.

Recent events in the Horn o A rica are a terrible reminder o thevulnerability o millions o poor around the world to weather and other

shocks that interrupt their access to ood. This humanitarian tragedyhighlights two important motivations behind the Global Hunger Index

(GHI) the need or in ormation and the need or action. Addressing theproblem o hunger requires in ormation about where and why hunger isoccurring. In ormation will not ll peoples stomachs, but policymakersand national and international agencies need it in order to take steps toensure that people have access to su cient and nutritious ood. The

broader task, though, is to take action to address the root causes o hun-ger and to reduce poor peoples vulnerability to shocks such as droughtand ood price spikes in the short, medium, and long term.

The 2011 Global Hunger Index, published jointly by the Interna-

tional Food Policy Research Institute (IFPRI), Concern Worldwide, andWelthungerhil e, shows that although the world has made some progressin reducing hunger, the proportion o hungry people remains too high. Ocourse, the absolute number o hungry people remains unacceptably high

as well. This is the sixth year that IFPRI has calculated the Global Hun-ger Index and analyzed this multidimensional measure o global hunger.It is important to note that the GHI scores present country averages: even

in countries classi ed as having moderate or serious hunger, therecan be areas where the situation is alarming or extremely alarming.Additionally, gains in hunger eradication can be eroded or even washedaway by severe shocks, as evidenced by the 2011 ood crisis in the Horn

o A rica, when underlying vulnerabilities persist and are not adequatelyaddressed. This series o reports records the state o hunger worldwideand country by country, drawing attention to the countries and regionswhere action is most needed. In this way, the reports support both na-tional and international policy e orts and advocacy work.

Foreword

Dr. Shenggen Fan Director GeneralInternational Food PolicyResearch Institute

Tom ArnoldChie ExecutiveConcern Worldwide

Dr. Wol gang JamannSecretary General andChairpersonWelthungerhil e

This report o ers a picture o the past, not the present. The calculationo the GHI is limited by the data collection o governments and interna-tional agencies, and up-to-the-minute data on global hunger are simplynot available. We hope that governments and international agencies willwork together to gather more timely and complete data on hunger world-wide. The report incorporates the most recent data available and thusdoes not refect the impact o the latest events. It does, however, iden-ti y the countries and regions where hunger is most severe and persist-ent. Twenty-six countries have levels o hunger that are alarming or ex-

tremely alarming. Among the worlds regions, South Asia andSub-Saharan A rica continue to su er rom the highest levels o hunger.These results represent extreme su ering or millions o poor people.

The 2011 GHI report ocuses particular attention on the issueo ood price spikes and volatility, which have played a large role in theglobal ood crises o 200708 and 201011. Many poor people already

spend large shares o their incomes on ood, and surges in ood pric-es leave them unable to pay or the ood, healthcare, housing, educa-tion, and other goods and services they need. In this report, IFPRI de-scribes the actors that have contributed to the increasing and morevolatile ood prices o recent years and their e ects on poor people in

developing countries. Taming ood price spikes and volatility will re-quire that we understand the causes and address them appropriately.Concern Worldwide and Welthungerhil e provide on-the-ground per-spectives on the negative impacts o ood price increases on poor peo-ple in Kenya and Tajikistan and describe the work o their organizationsin helping to alleviate these impacts. Based on these research ndingsand experiences in the eld, IFPRI, Concern Worldwide, and Welthun-gerhil e propose actions to help prevent and mitigate the e ects o highand volatile ood prices and increase the resilience o households, com-

munities, countries, and regions.Recent events in the Horn o A rica remind us o an enduring

truth: weather disasters and economic shocks will come, and they willstrike the poor and the hungry hardest. But we have already learned agreat deal about how to reduce vulnerability and how to work withpeople and institutions to e ectively tackle poverty. It is time to applythis knowledge on a scale that will overcome hunger or all people.


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4 Contents | 2011 Global Hunger Index

Contents

summary 5

CHapter

01 The Concept o the Global Hunger Index 602 Global, Regional, and National Trends 1003 Combating Hunger in a World o High and Volatile Food Prices 2004 The Impacts o Food Price Spikes and Volatility at Local Levels 3205 Policy Recommendations: Taming Price Spikes and Excessive Volatility and Building Resilience to Future Shocks 42

appendIxa Data Sources and Calculation o the 1990, 1996, 2001, and 2011 Global Hunger Index Scores 48b Data Underlying the Calculation o the 1990, 1996, 2001, and 2011 Global Hunger Index Scores 49C Country Trends or the 1990, 1996, 2001, and 2011 Global Hunger Index Scores 51d Technical Notes on the Measurement o Excessive Food Price Volatility 55

bIblIoGrapHy 56

partners 59


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2011 Global Hunger Index | Summary 5

This years Global Hunger Index (GHI) shows that global hunger has de-clined since 1990, but not dramatically, and remains at a level char-acterized as serious. Across regions and countries, GHI scores varygreatly. The highest GHI scores occur in South Asia and Sub-SaharanA rica. South Asia reduced its GHI score substantially between 1990and 1996, but this ast progress could not be maintained. Though Sub-

Saharan A rica made less progress than South Asia a ter 1990, it hascaught up since the turn o the millennium.

From the 1990 GHI to the 2011 GHI, 15 countries were able

to reduce their scores by 50 percent or more. Nineteen countries movedout o the bottom two categories extremely alarming and alarm-ing. In terms o absolute progress, Angola, Bangladesh, Ethiopia, Mo-zambique, Nicaragua, Niger, and Vietnam saw the largest improve-ments between the 1990 GHI and the 2011 GHI.

Twenty-six countries still have levels o hunger that are ex-

tremely alarming or alarming. The countries with extremely alarming2011 GHI scores Burundi, Chad, the Democratic Republic o Con-go, and Eritrea are in Sub-Saharan A rica. Most o the countrieswith alarming GHI scores are in Sub-Saharan A rica and South Asia.Among the six countries in which the hunger situation worsened, the

Democratic Republic o Congo stands out. Its GHI score rose by about63 percent owing to confict and political instability. (Because o timelags in the availability o data, the 2011 GHI does not refect the im-pacts o the 201011 ood price crisis or the 2011 amine in the Horno A rica.)

In recent years world ood markets have been characterized byrising and more volatile prices. This situation has serious implicationsor poor and hungry people, who have little capacity to adjust to pricespikes and rapid shi ts. Price increases and volatility have arisen orthree main reasons: increasing use o ood crops or bio uels, extremeweather events and climate change, and increased volume o trading

in commodity utures markets. These actors are exacerbated by high-ly concentrated export markets that leave the worlds staple ood im-porters dependent on just a ew countries, a historically low level ograin reserves, and a lack o timely in ormation about the world oodsystem that could help prevent overreaction to moderate shi ts in sup-ply and demand. Price increases and price volatility have been shownto cut into poor households spending on a range o essential goodsand services and to reduce the calories they consume. It can also a -ect poor peoples nutrition by causing them to shi t to cheaper, lower-quality, and less micronutrient-dense oods.

summary

Addressing the problem o ood price spikes and excessive volatility re-quires action to both reduce volatility and bu er the most vulnerablepeople rom the worst e ects o higher and more variable prices. It isimportant to address the drivers o ood price volatility and price in-creases by revising bio uel policies, regulating nancial activity on oodmarkets, and adapting to and mitigating climate change. It is also es-sential to build up ood reserves and share in ormation on ood mar-kets. To build resilience to changing ood prices, it is crucial to strength-

en social protection systems, improve emergency preparedness, invest

in sustainable small-scale agriculture, improve livelihood opportunitiesor both the rural and urban poor, and strengthen the provision o ba-sic services such as education, healthcare, and sanitation.


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01

B s w ss c t c s ,t ghi s t t actions to reduce hunger .


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2011 Global Hunger Index | Chapter 01 | The Concept o the Global Hunger Index 7

The Global Hunger Index (GHI) is designed to comprehensively mea-sure and track hunger globally and by country and region. 1 Calculatedeach year by the International Food Policy Research Institute (IFPRI),the GHI highlights successes and ailures in hunger reduction and pro-vides insights into the drivers o hunger. By raising awareness and un-derstanding o regional and country di erences in hunger, the GHI aims

to trigger actions to reduce hunger.A number o di erent indicators can be used to measure hun-

ger (see de nition on page 9). To refect the multidimensional nature

o hunger, the GHI combines three equally weighted indicators in oneindex number:

1. Undernourishment: the proportion o undernourished as a percent-age o the population (refecting the share o the population with in-su cient calorie intake);

2. Child underweight: the proportion o children younger than the ageo ve who are underweight (low weight or age refecting wasting,stunted growth, or both), which is one indicator o child undernutri-tion; and

3. Child mortalit : the mortality rate o children younger than the ageo ve (partially refecting the atal synergy o inadequate dietary in-take and unhealthy environments).

This multidimensional approach o ers several advantages. It takes intoaccount the nutrition situation not only o the population as a whole,but also o a physiologically vulnerable group children or whom alack o nutrients creates a high risk o illness, poor physical and cog-nitive development, and death. In addition, by combining independent-ly measured indicators, it reduces the e ects o random measurement

errors.2

The GHI ranks countries on a 100-point scale. Zero is the best

score (no hunger), and 100 is the worst, although neither o these ex-tremes is reached in practice. The scale on the ollowing page showsthe severity o hunger rom low to extremely alarming associ-ated with the range o possible GHI scores. The 2011 GHI is calculat-ed or 122 countries or which data on the three components are avail-able and or which measuring hunger is considered most relevant (some

higher-income countries are excluded rom the GHI calculation because

the prevalence o hunger is very low).

tHe ConCept oF tHe GlobalHunGer Index

The GHI is only as current as the data or its three component indica-tors. This years GHI refects data rom 2004 to 2009 the most re-cent available country-level data on the three GHI components. It isthus a snapshot not o the present, but o the recent past. For somecountries, such as A ghanistan, Iraq, Papua New Guinea, and Soma-lia, insu cient data are available to calculate any value or the GHI atall. Even though abundant technological tools exist to collect and as-sess data almost instantaneously, enormous time lags persist in report-ing vital statistics on hunger. More up-to-date and extensive country

data on hunger are urgently needed a situation explicitly recognizedby the Group o Twenty (G20) countries in their 2011 action plan onood price volatility (G20 2011). Improvements in collecting high-qual-ity data on hunger and ood consumption will allow or a more com-plete and current assessment o the state o global hunger and, in turn,more e ective steps to reduce hunger.

The source data on which the GHI scores are based are con-tinually revised by the United Nations agencies responsible or com-piling them, and each years GHI report refects these revisions. Therevisions result in improvements in the data, but they also mean thatthe GHI scores rom di erent years GHI reports are not comparable

with one another. This 2011 report, however, o ers an advantage overother recent GHI reports in that it contains not only the 2011 and

1990 GHI, but also GHI scores or two other re erence periods 1996and 2001 that are comparable with one another, allowing or in-

depth analyses o trends. In other words, comparable source data wereused to calculate the GHI scores or all our re erence periods in thisreport.

1 For background in ormation on the concept, see Wiesmann (2004) and Wiesmann, von Braun,and Feldbrgge (2000).

2 For a multidimensional measure o poverty, see the index developed by the Ox ord Poverty andHuman Development Initiative (OPHI) or the United Nations Development Programme (Alkireand Santos 2010).


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8 The Concept o the Global Hunger Index | Chapter 01 | 2011 Global Hunger Index

wHat Is tHe Global HunGer Index?

4.9low

5.09.9moderate

10.019.9serious

1050

The 1990, 1996, 2001, and 2011 GHI scores presented in thisreport refect the latest revised data or the three components othe GHI. Where original source data were not available, estimateswere made or the GHI components, based on the most recent da-ta available. The child mortality component and undernourish-ment components or the 1990 GHI were revised on the basis oupdated 1990 data to refect the latest updates rom the UnitedNations Childrens Fund (UNICEF) and the Food and Agriculture

Organization o the United Nations (FAO), respectively. In addition,revised calorie data rom the FAO were used or the 1990 GHI,1996 GHI, 2001 GHI, and 2011 GHI child underweight esti-

mates. The latest additions to the World Health OrganizationsGlobal Database on Child Growth and Malnutrition were taken intoaccount or the child underweight component o the our GHI

scores, as were the most recent Demographic and Health Surveyreports or the 2011 GHI. These enhancements in the underlyingdata improve the quality o the GHI. For the rst time since 2006,GHI scores are presented and compared or our years, which al-lows or in-depth analysis o trends.

ConstruCtInG tHe GHI: about tHe data

As already noted, data or the 2011 GHI span the period 200409. The data on the proportion o undernourished are or 200507 (FAO 2010; IFPRI estimates); data on child mortality are or2009 (UNICEF 2011); and data on child underweight are or thelatest year in the period 200409 or which data are available(WHO 2011; UNICEF 2010; MEASURE DHS 2011; authors esti-mates). See Appendixes A and B or more detailed background in-ormation on the data sources or and calculations o the 1990 GHI,

1996 GHI, 2001 GHI, and 2011 GHI.

Note: For previous GHI calculations, see von Grebmer et al. (2010); von Grebmer et al. (2009);von Grebmer et al. (2008); IFPRI/Welthungerhil e/Concern (2007); Wiesmann (2006a, b);and Wiesmann, Weingrtner, and Schninger (2006).


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2011 Global Hunger Index | Chapter 01 | The Concept o the Global Hunger Index 9

20.029.9alarming

30.0e tremel alarming

403020

ConCepts oF HunGer

The terminology used to re er to di erent concepts o hunger canbe con using. Hunger is usually understood to re er to the dis-com ort associated with lack o ood. The FAO de nes it speci -cally as consumption o ewer than about 1,800 kilocalories a day the minimum that most people require to live a healthy and pro-ductive li e. The term undernutrition signi es de ciencies in

energy, protein, essential vitamins and minerals, or any or all othese. Undernutrition is the result o inadequate intake o ood

in terms o either quantity or quality or poor utilization o nutri-ents due to in ections or other illnesses, or a combination o thesetwo actors. Malnutrition re ers more broadly to both undernu-trition (problems o de ciencies) and overnutrition (consumptiono too many calories in relation to requirements, with or withoutlow intake o micronutrient-rich oods). Both conditions contrib-ute to poor health. In this report, hunger re ers to the index

based on the three indicators described on page 7.


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02

P ss S t st as l t a c t C bb w sp t c b , w t t ghi sc s decreasing by 44 percent c .


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2011 Global Hunger Index | Chapter 02 | Global, Regional, and National Trends 11

Global hunger has declined since 1990, but not dramatically. Althoughthe number o undernourished people was on the rise rom the mid-1990s until 2009, the proportion o undernourished people in theworld has declined slightly during the past decade (FAO 2010). Be-cause the GHI measures relative hunger that is, it re ers to the pro-portion o people who su er rom hunger, broadly de ned and goesbeyond measuring calorie de ciency, the index shows a positive trend.The 2011 world GHI ell by 26 percent rom the 1990 world GHI, roma score o 19.7 to 14.6 (see gure below). 3 This progress was driven

mainly by reductions in the proportion o children younger than the ageo ve who are underweight. The largest decline in the world GHI 3points occurred between 1990 and 1996 and was ollowed by a slow-down in progress.

Undernourishment and underweight in children improved mostbetween 1990 and 1996, whereas progress in reducing child mortal-ity has accelerated since 1996. The proportion o undernourished hasremained almost constant at the global level since 199597, alling byonly 1 percentage point.

All three index components have improved since 1990 and con-tributed to reducing the world GHI score: the proportion o children who

are underweight ell by 8 percentage points, the proportion o undernour-ished by 4 percentage points, and the under- ve mortality rate by 3 per-centage points. The global hunger situation, however, remains serious.

Global, reGIonal, and natIonaltrends

The recent increase in the level and volatility o ood prices is again,as in 2008, threatening sustained global ood security and puttingmany poor people and vulnerable groups at risk o increased hunger,and a ood emergency has struck in the Horn o A rica. Because o timelags in the availability o data, however, the 2011 GHI does not refectthe impact o these new developments.

Large Di erences in Regional Trends

Global averages mask dramatic di erences among regions and coun-

tries. The 2011 GHI score ell by 18 percent in Sub-Saharan A ricacompared with the 1990 score, by 25 percent in South Asia, and by39 percent in the Near East and North A rica (see gure below).Progress in Southeast Asia and Latin America and the Caribbean wasparticularly remarkable, with the GHI scores decreasing by 44 per-cent each, although the score was already low in Latin America andthe Caribbean. In Eastern Europe and the Commonwealth o Inde-pendent States, the 2011 GHI score ell by 47 percent compared with

the 1996 score. 4

Notes: For the 1990 GHI, data on the proportion o undernourished are or 199092; data on child underweight are or the year closest to 1990 in the period 198892 or which data are available;and data on child mortality are or 1990. For the 1996 GHI, data on the proportion o undernourished are or 199597; data on child underweight are or the year closest to 1996 in the period199498 or which data are available; and data on child mortality are or 1996. For the 2001 GHI, data on the proportion o undernourished are or 200002; data on child underweight are or theyear closest to 2001 in the period 19992003 or which data are available; and data on child mortality are or 2001. For the 2011 GHI, data on the proportion o undernourished are or 200507,data on child underweight are or the latest year in the period 200409 or which data are available, and data on child mortality are or 2009.

GHI GHI GHI GHI

'90 '96 '01 '11

World

GHI GHI GHI GHI

'90 '96 '01 '11

South Asia

GHI GHI GHI GHI

'90 '96 '01 '11

Sub-SaharanA rica

GHI GHI GHI GHI

'90 '96 '01 '11

Southeast Asia

GHI GHI GHI GHI

'90 '96 '01 '11

Near East &North A rica

GHI GHI GHI GHI

'90 '96 '01 '11

GHI GHI GHI GHI

'90 '96 '01 '11

Latin America &Caribbean

ContrIbutIon oF Components to 1990 GHI, 1996 GHI, 2001 GHI, and 2011 GHI

Under- ve mortality ratePrevalence o underweight in childrenProportion o undernourished

5

10

15

20

25

30

35

19.7

30.0

23.6 23.5 22.6

25.1 25.123.8

20.5

14.4

11.99.7

8.0 8.8 7.36.1

4.9

7.9

5.1 4.42.7

7.05.5 4.8

17.016.0

14.6

Eastern Europe &Commonwealth oIndependent States

3 The world includes all countries or which the GHI has been calculated. As noted earlier, dataor some countries are not available, and most high-income countries are excluded rom the GHI

calculation. The year 1990 was chosen or comparison because it is a re erence point or achiev-ing the Millennium Development Goals.

4 For Eastern Europe and the Commonwealth o Independent States, the 1996 GHI score was usedor comparison because data are not available to calculate the 1990 score.

G H I s c o r e


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12 Global, Regional, and National Trends | Chapter 02 | 2011 Global Hunger Index

An analysis o the GHI in relation to grossnational income (GNI) per capita shows thateconomic resources are an important deter-

minant o hunger. The black line in theabove graph was predicted rom a regres-sion o the GHI on GNI per capita andshows that hunger declines with increasesin national incomes. Regions with datapoints above the predicted line have morehunger than would be expected given theirper capita income, and regions with data

points below the line have less hunger thanexpected.South Asia and Sub-Saharan A rica have

higher regional GHI scores than predicted,suggesting that, broadly speaking, theireconomic resources have not been optimal-

ly used to ght hunger. From the startingpoint o 1990, the orange trend line orSub-Saharan A rica moves to the le t, show-

ing stagnation in the GHI and a small re-duction in per capita income up to 1996.When economic growth resumed a ter1996, GHI scores ell notably and almostin parallel with the predicted line (the 2011crisis in the Horn o A rica is not capturedin the latest GHI). The dark green trend lineor South Asia ollows quite a di erentcourse: during a period o growth a ter1990, the GHI declined steeply, approach-ing the predicted line in 1996. Whereas

economic growth continued and even accel-erated a ter 2001, reductions in GHI scores

were modest a ter 1996 and the gul be-

tween the trend line or South Asia and theexpected GHI score widened. The low sta-tus o women in the region is one o the pri-

mary actors contributing to a persistentlyhigh prevalence o child undernutrition,which in turn has impeded progress in re-ducing GHI scores. India largely shapes thetrend in the region because o its sheer size(see India in Appendix C).Until recently, Southeast Asia had lowerGHI scores than would have been expectedgiven its per capita income. China made alarge contribution to the avorable trend inthis region by reducing hunger through sus-

tained growth and a ocus on poverty reduc-tion, agricultural development, and provi-sion o social services.

Source: Based on data on per capita GNI rom World Bank (2011).Note: Data on gross national income (GNI) per capita are based on purchasing power parity and expressed in constant 2005 international dollars. The black trend line was predicted rom a r e-gression o 1990, 1996, 2001, and 2011 country-level GHI scores on GNI per capita. Data points or GHI 1990, GHI 1996, GHI 2001, and GHI 2011 correspond with GNI per capita or1989-91, 1995-97, 2000-02, and 2007-09, respectively. Because countries population size a ects regional aggregates and the graph is used to analyze regional per ormance, the regressionwas weighted by population size. National di erences are not refected in the regional aggregates shown in this graph ( or country-level trends in GHI scores, see Appendix C).

reGIonal trends In GHI sCores and Gross natIonal InCome per CapIta

Gross national income per capita

G H I s c o r e

35

30

25

20

15

10

5

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000

South AsiaSub-Saharan A ricaSoutheast AsiaLatin America & CaribbeanNear East & North A rica

Eastern Europe & CIS

GHI 1990GHI 1996GHI 2001GHI 2011


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Zimbabwe

Zambia

YemenVietnam

Venezuela

Uzbekistan

Uruguay

United Statesof America

U.A.E.

Ukraine

Uganda

TurkmenistanTurkey

Tunisia

Trinidad & TobagoTogo

Thailand

Tanzania

Tajikistan

Syria

Switz.

Sweden

Swaziland

Suriname

Sudan

Sri Lanka

Spain

SouthAfrica

Somalia

Slov.

Slova.

Sierra Leone

Senegal

Saudi Arabia

Rw.

Russian Federation

Rom.

Qatar

Portugal

Poland

Philippines

Peru

Paraguay

PapuaNewGuinea

Panama

Pakistan

Oman

Norway

Nigeria

Niger

Nicaragua

Nepal

NamibiaMozambique

Morocco

MongoliaMold.

Mexico

Mauritius

Mauritania Mali

Malaysia

Malawi

Madagascar

Mace.

Lithuania

Libya

Liberia

Lesotho

Lebanon

Latvia

LaoPDR

Kyrgyz Rep.

Kuwait

S. Korea

N. Korea

Kenya

Kazakhstan

Japan

Jamaica

Italy

Israel Iraq Iran

Indonesia

India

Iceland

Hung.

Honduras Haiti

Guyana

Guinea-BissauGuinea

Guatemala

Greece

Ghana

Georgia

The Gambia

Gabon

French Guiana

France

Finland

Ethiopia

Estonia

Eritrea

Equatorial Guinea

El Salvador

Egypt

Ecuador

Timor-Leste

Dom. Rep.

Djibouti

Czech Rep.

Cyprus

Cuba

Cted'Ivoire

Costa Rica

Congo,Rep. Congo,

Dem. Rep.

Colombia

China

Chile

Chad

Central AfricanRepublicCameroon

Cambodia

Bur.

Myanmar

Burkina Faso

Bulg.

Brunei

Brazil

Botsw.

Bolivia

Bhutan

Benin

Belize

Belarus

Bangladesh

Azerb.

Aust.

Australia

Armenia

Argentina

Angola

Algeria

Alb.

Afghanistan

Western Sahara

Bos. & Herz. Serb.Mont.

Cro.

Bahrain

Comoros

Jordan

GermanyNeth.

Bel.Lux.

UnitedKingdom

Canada Ireland

Denmark

Note: An increase in the GHI indicates a worsening o a countrys hunger situation. A decreasein the GHI indicates an improvement in a countrys hunger situation. GHI scores were not cal-culated or countries or which data were not available and or certain countries with very smallpopulations.

Country proGress In reduCInG GHI sCores

(percentage decrease in 2011 GHI compared with 1990 GHI)

IncreaseDecrease o 0.024.9%

Decrease o 25.049.9%Decrease o 50% or moreStriped countries have 1990and 2011 GHI o less than veNo dataIndustrialized country

Southeast Asia, the Near East and North A rica, and Latin America andthe Caribbean have witnessed a steady decline in GHI scores since

1990. In South Asia and Sub-Saharan A rica, however the two re-

gions with the highest GHI scores at 22.6 and 20.5 respectively therates o progress were uneven.

South Asia has the highest regional 2011 GHI score. The re-gion reduced its score by more than 6 points between 1990 and 1996 mainly through a large, 15-percentage-point decline in underweightin children but this ast progress could not be maintained. Stagna-tion ollowed, and South Asia has lowered its GHI score by only 1 pointsince 2001 despite strong economic growth. The proportion o under-

nourished has even risen by 2 percentage points since 199597. So-cial inequality and the low nutritional, educational, and social status owomen, which is a major cause o child undernutrition in this region,

have impeded improvements in the GHI score.5

Though Sub-Saharan A rica made less progress than SouthAsia a ter 1990, it has caught up since the turn o the millennium. Be-cause Sub-Saharan A rica had a lower 1990 GHI score to start with,its 2011 GHI score ell below that o South Asia, although the overalldecline was smaller. Sub-Saharan A ricas GHI score stagnated between

1990 and 1996, ell slightly until 2001, and declined more markedlyup to the period refected in the 2011 GHI score. Large-scale civil wars

Kuwait -72Turke -67Mala sia -64

Me ico -62Iran, Islamic Rep. -60

Albania -60Peru -59

Nicaragua -59Ghana -59

Fiji -57 Congo, Dem. Rep. +63Burundi +21

North Korea +18Comoros +17

Swaziland +15Cte dIvoire +8

0 20 40 60-20-40-60-80

GHI wInners and losers From 1990 GHI to 2011 GHI

Note: Countries with both 1990 GHI and 2011 GHI scores o less than ve are excluded.

Winners (Percentage decrease in GHI) Losers (Percentage increase in GHI)


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o the 1990s and 2000s ended, and political stability improved inormer confict countries. Economic growth resumed on the continent,and advances in the ght against HIV and AIDS contributed to reduc-ing child mortality in the countries most a ected by the epidemic. Al-though the crisis in the Horn o A rica occurring at the time o writingis not refected in the 2011 GHI, it shows that achievements in oodsecurity remain ragile in parts o Sub-Saharan A rica and that vulner-ability to shocks is still high.

Best and Worst Countr -Level ResultsFrom the 1990 GHI to the 2011 GHI, 15 countries were able to reducetheir scores by 50 percent or more. More than two- ths o the coun-tries made modest progress, reducing their GHI scores by between 25.0and 49.9 percent, and about one-third decreased their GHI scores bybetween 0.0 and 24.9 percent. 6 Only one country in Sub-Saharan A -rica Ghana is among the 10 best per ormers in improving their GHIscore since 1990 (see gure on page 13 and box below). The six bestper ormers had moderate GHI scores in the range o 5.7 to 9.3 in 1990,and the declines were modest in absolute numbers. Kuwaits seeming-ly remarkable progress in reducing hunger is due mainly to its unusual-

ly high level in 1990, when Iraq invaded the country: its GHI score ellby more than 5 points (or 58 percent) up to 1996 and only slightly (byabout 1 point) a terward (see country trends in Appendix C). The sec-ond-best per ormer, Turkey, reduced hunger through large reductionsin the prevalence o child underweight by almost two-thirds and in childmortality by more than three-quarters, while levels o undernourishment

in the country remained low. Overall, between the 1990 and the 2011GHI, 19 countries moved out o the bottom two categories extremelyalarming and alarming (see box on page 15).

Among the six countries in which the hunger situation wors-ened (all in Sub-Saharan A rica, except or North Korea), the Demo-cratic Republic o Congo stands out. There, the GHI score rose by about

63 percent. Confict and political instability have increased hunger inthe country (see box on page 16), as well as in Burundi, the Comoros,and Cte dIvoire. With the transition toward peace and political

stabilization in the Democratic Republic o Congo and Burundi around200203, these two countries have begun to slowly recover romdecades o economic decline. Their GHI scores rose dramaticallybetween 1990 and 2001 and slightly decreased a terward. Hunger is,however, still extremely alarming in both countries.

In Cte dIvoire, confict and political turmoil erupted a ter amilitary coup in 1999, and the GHI score has increased by 1.6 pointssince 2001. The GHI ell in the Comoros a ter a peak in 2001, but itis not yet clear i this constitutes a reversal o past trends. Both coun-tries are vulnerable to price volatility in international agricultural mar-kets: Cte dIvoire is the worlds largest producer and exporter o co-

coa beans and also exports signi cant quantities o co ee and palmoil. The Comoros depends on rice imports or its ood security and onthree main crops vanilla, cloves, and ylang ylang oil or its exportincome (CIA 2010).

At an estimated 26 percent in 2009, Swaziland has the highestadult HIV prevalence in the world (UNAIDS 2010). The epidemic, along

aGrICultural transFormatIon and demoCratIC reForms In GHana

One o the top ten per ormers in tacklinghunger has been Ghana, which reduced itsGHI score by 59 percent rom the 1990GHI to the 2011 GHI. Ghanas success re-sulted rom a combination o investmentsin agriculture, rural development, educa-tion, and health, including strong increas-es in the rate o immunization against com-mon childhood diseases (GSS, GHS, andICF Macro 2009). The government provid-ed armers with in ormation, agricultural in-

puts such as pesticides and ertilizer, andin rastructure such as roads and storage a-cilities.

Former President John Ku uor, who led thecountry rom 2001 to 2009 and is a 2011World Food Prize laureate, explained in anessay published by IFPRI how these in-vestments in agriculture helped improveother sectors as well: For a country likeGhana, where more than hal its peoplearm the land, trans orming agriculturehelps to trans orm everyone. The armersprogress did not just result in increasedexports; the government launched an am-

bitious program to give all kindergartenand primary school pupils a daily hot andnutritious meal made rom locally pro-

duced ood, which resulted in a monumen-tal increase in school enrollment. The pol-icy provided proper nourishment or thechildren and also support or the armers(Ku uor 2011, 5).In addition, Ku uor noted that the coun-

trys economic, agricultural, and socialpolicies were accompanied by re orms de-signed to expand democratic reedoms.Ghana o cially entered the ranks o mid-dle-income countries in 2007 and is con-

sidered one o the most politically stable,astest-growing countries in Sub-SaharanA rica.



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with the countrys high income inequality, has severely undermined oodsecurity despite growth in national income. Although GHI scores in-creased throughout the 1990s, the negative trend has been partly re-versed since 2001. Swaziland and several other A rican countries havemade great strides in preventing mother-to-child transmission o HIV,and child mortality rates have dropped again a ter rising between 1990and 2001 (UNAIDS 2010; IGME 2010). Botswana and Lesotho have al-so been heavily a ected by HIV and AIDS and have bene ted rom ad-vances in treatment and improved access to anti-retroviral drugs. They

show a pattern in GHI scores similar to Swaziland, with peaks in GHIscores in 1996 and 2001, partly caused by transient increases inundernourishment.

In North Korea, widespread starvation threatened in 1995 andwas averted by large-scale ood aid deliveries (CIA 2010). The GHIrose sharply between 1990 and 1996 and has declined only slight-ly since then, giving evidence o chronic ood insecurity in spite oconsiderable international humanitarian assistance. A weak econo-my, high military spending, weather-related crop ailures, and sys-temic problems in the agricultural sector have hampered progress(CIA 2010).

Some countries achieved noteworthy absolute progress in im-

proving their GHI scores. Between the 1990 GHI and the 2011 GHI,Angola, Bangladesh, Ethiopia, Mozambique, Nicaragua, Niger, andVietnam saw the largest improvements with scores alling by 13 points


HunGer sInCe 1990

Note: This box shows only countries or which data are available to calculate 1990 and 2011 GHI scores.

CHANGE AMONG THE WORST OFF

CHANGEOVERALL

1 9 9 0

G H I

2 0 1 1 G H I

Countries in bottomtwo categories

Countries in topthree categoriesVS

43

26

56

96

AngolaBangladeshDjiboutiEthiopiaHaiti

IndiaMozambiqueNigerSierra LeoneYemen, Rep. A

L A R M I N G

E X T R E M E L Y

A L A R M I N G

BeninBurkina Faso

CameroonCongo, Rep.

GuineaGuinea-Bissau

KenyaMalawi

MaliMauritania

MyanmarNamibia

NepalNigeria

Sri LankaVietnam S

E R

I O U S

countries movedfrom alarming toserious

countries movedfrom extremelyalarming to alarming

country movedfrom alarming toextremely alarming

10

1

16

Dem. Rep. of Congo

Ghana and Nicaraguaimproved from alarmingto moderate.

Cambodia improvedfrom extremelyalarming to serious.

MOVING UP

DRC was the only countryto drop from alarming toextremely alarming.

Burundi and Chad are theonly two countries that havenot moved out of theextremely alarming category.

PERSISTENT HUNGER

WHO MOVED? Since 1990, 19 countrieshave moved out o the bottom twocategories alarming and extremely

alarming and 10 out o the bottom.In the 2011 GHI, 26 countries remainin the two most severe GHI hungercategories, compared with 43 in the1990 GHI.


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an onGoInG struGGle to aCHIeve Food seCurIty In tHe

demoCratIC republIC oF ConGo

As in years past, the Democratic Republic o Congo has the high-est proportion o undernourished people about 70 percent othe population and one o the highest child mortality rates inthe world. The country is still recovering rom the massive dis-placement and economic collapse that occurred during its 1998

2003 civil war and is now trying to rebuild. To climb out o its

precarious ood security situation, the Democratic Republic oCongo will require strong development programs that include ood

security, nutrition, and health components (Rossi et al. 2006).

or more. In the Democratic Republic o Congo and Burundi, however,the GHI rose by 15.0 and 6.5 points respectively.

Twenty-six countries still have levels o hunger that are ex-tremely alarming or alarming (see map on pages 18 and 19). Thecountries with extremely alarming 2011 GHI scores Burundi, Chad,the Democratic Republic o Congo, and Eritrea are in Sub-SaharanA rica. Most o the countries with alarming GHI scores are in Sub-Sa-haran A rica and South Asia.

In terms o the GHI components, Burundi, the Democratic Re-

public o Congo, Eritrea, and Haiti currently have the highest proportiono undernourished people more than 50 percent o the population. 7 Haiti, like other countries with a heavy reliance on ood imports and ahigh GHI, is highly sensitive to the adverse impacts o ood price volatil-ity. High and volatile ood prices are especially harm ul or poor consum-ers who spend a large proportion o their income on ood and have littleability to adapt quickly to steep ood price increases. To cope, many poorhouseholds cut back on the quantity and quality o ood consumed, re-sponses that in turn lead to increased hunger and micronutrient de -ciencies, particularly among vulnerable groups such as women and chil-dren. The GHI trends show that hunger has increased in Haiti since 2001,

a ter a period o improvement. Bangladesh, India, and Timor-Leste havethe highest prevalence o underweight in children younger than ve more than 40 percent in all three countries. A ghanistan, Chad, Demo-cratic Republic o Congo, Guinea-Bissau, Mali, and Sierra Leone havethe highest under- ve mortality rates, ranging rom 19 to 21 percent.

5 For more on hunger and gender inequality, see the 2009 GHI report (von Grebmer et al. 2009).6 The numbers and proportions in this paragraph and the ollowing one re er to the 88 countries

or which data or the 1990 and 2011 GHI scores are available and the score is greater than 5or the 1990 GHI score, the 2011 GHI score, or both.

7 A ghanistan and Somalia, which are likely to have high proportions o undernourished people,could not be included in this comparison because o lack o data.


During the past years, I have observed that ood

prices are rising steadily. But, this year the price orrice has doubled and that has not happened be ore.I think the price increase is related to the current

scarcity o rice. Farmers have eaten their whole stocko last years production. Now, no rice is le t in their

hands and they have to buy rice rom the market. Thisincreases the price.

Another actor is the increasing transport and uelcosts. Traders add the transport costs to the sale

prices o their goods.

Un ortunately, our government does nothing toinfuence the rice price. Costs or staple oods

remain high.

Our li e has become much more di cult compared tolast year. Im always looking or work. Its not easy nowthat the price o everything has increased almost three-

old. Sometimes we go to bed without having eatenanything.

The only people who bene t rom the higher cornprices are the traders. They buy corn in Tanzania andsell it here at a higher price. We dont grow corn here,

our soil isnt suitable.

Aiah KoromaBo District, Sierra Leone

Mary PaulMakueni District, Kenya


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Country Global HunGer Index sCores by ranK, 1990 GHI, 1996 GHI, 2001 GHI, and 2011 GHI

CountrIes wItH 2011 GHI sCores less tHan 5Countr 90 96 01 11

Albania 8.9 5.2 8.2


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21/64

Zimbabwe

mbia

Yemen

Vietnam

Uzbekistan

U.A.E.

Ukraine

Uganda

TurkmenistanTurkey

Thailand

Tanzania

Tajikistan

Syria

Swaziland

Sudan

Sri Lanka

ha

Somalia

Saudi Arabia

Rw.

Russian Federation

ania

Qatar

Philippines

PapuaNew Guinea

Pakistan

Oman

Nepal

Mozambique

Mongolia

Mold.

Mauritius

Malaysia

Malawi

Madagascar

huania

Lesotho

Lebanon

via

LaoPDR

Kyrgyz Rep.

Kuwait

S. Korea

N. Korea

Kenya

Kazakhstan

Jordan

Japan

Israel IraqIran

Indonesia

India

Georgia

nland

Ethiopia

onia

Eritrea

Egypt

Timor-Leste

Djibouti

Cyprus

o,Rep.

China

Cambodia

Bur.

Myanmar

garia

Brunei

wana

Bhutan

Belarus

Bangladesh

Azerb.

Australia

Armenia

Afghanistan

Bahrain

Comoros

Note: For the 2011 GHI, data on the proportion o undernourished are or 200507, data onchild underweight are or the latest year in the period 200409 or which data are available,and data on child mortality are or 2009. GHI scores were not calculated or countries or whichdata were not available and or certain countries with very small populations.



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03

B c t p t t b fts biofuel policies w t t p t tt p cts ts s t c s.


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2011 Global Hunger Index | Chapter 03 | Combating Hunger in a World o High and Volatile Food Prices 21

Agricultural markets and ood prices are no longer stable and predict-able, i they ever were. A ter decades o gradually alling ood prices,the world is experiencing a period o spikes and rapid swings in oodprices and may ace more o the same in the coming years. This dra-matic shi t could have serious implications or the hundreds o millionso people who are already hungry or who are poor and spend a highproportion o their income on ood. E orts to reduce hunger will takeplace in a new global ood economy.

This new reality involves both higher and more volatile prices

two di erent conditions with distinct implications or consumers andproducers. For consumers, rising ood prices may have a substantialimpact on their wel are by curtailing their ability to purchase ood andother necessary goods and services. For producers, higher ood pricescould raise their incomes but only i these producers are net sellerso ood, i increased global prices reach the markets they participatein, and i their input costs do not also rise. Many o these conditionswere not present in the 201011 ood price crisis.

Price volatility also has signi cant e ects on producers and con-

sumers. First, higher price volatility is associated with greater potentiallosses or producers because it implies large, rapid changes in prices,

making it more di cult or producers to make optimal decisions abouthow to allocate inputs into agricultural production. In a period o highprice volatility, producers may use ewer inputs like ertilizer and high-quality seeds in their production, they may become more pessimistic intheir long-term planning, and they may dampen their investments in

areas that improve productivity. These responses by producers reducesupply and lead to increased price levels, which in turn hurt consum-ers. Second, many rural households are both producers and consumerso agricultural commodities. As prices become more volatile, thesehouseholds will be hit rom both sides. They will nd their incomes re-duced because o their inability to optimally allocate inputs and their

consumption decisions a ected by higher prices in the markets. Final-ly, increased price volatility over time can also generate larger returnsor investors, drawing new investors into the market or agricultural com-

modities. Increased price volatility may thus lead to increased poten-tially speculative trading that exacerbates price swings.

This is the situation that has prevailed in the years leading upto 2011. The ood price crisis o 200708 saw a steep rise in oodprices (see gure on page 22) that brought ood security to the ore-ront o global attention. Then, in June 2010 ood prices started risingagain; between June 2010 and May 2011 the international prices omaize and wheat roughly doubled. The peak came in February 2011,

according to the Food and Agriculture Organization o the United Na-tions (FAO), in a spike that was even more pronounced than in 2008(see, or example, the evolution o prices or maize in the gure on page22, which exceed 2008 price levels even when adjusting or infation).

CombatInG HunGer In a world oFHIGH and volatIle Food prICes

Moreover, recent increases in price volatility are not in line with the his-torical data (dating back to the late 1950s) and have particularly a -ected wheat and maize in recent years. For hard wheat (used or breadand four), or example, there were 165 days o excessive price volatil-ity between December 2001 and December 2006 (an average o 33days a year), whereas there were 381 days o excessive price volatilitybetween January 2007 and June 2011 (an average o 85 days a year)(see gure on the top o page 23).

Although changes in ood prices in international markets do not

always reach local markets (see box on ollowing page), the 200708ood price crisis led to economic di culties or a number o countries,and particularly or already poor populations. It generated social and po-litical turmoil in many countries: Bangladesh, Cte dIvoire, Egypt, Hai-ti, Indonesia, Uzbekistan, Yemen, and 26 other countries saw violent ood

riots, demonstrations, or social unrest as a result o rising ood prices.In addition to their economic, social, and political impacts, ood

price spikes and excessive volatility worsen the problem o hunger byincreasing poverty. They can lead to long-term, irreversible nutritional

a Few deFInItIons

> Price volatilit : Price volatility measures the relative rate atwhich a price o a commodity varies rom one period day,month, or year to another. Under normal market condi-tions, some price volatility is expected. I the price oa commodity moves up and down rapidly over a short timeperiod, it has high volatility. I the price almost neverchanges, it has low volatility. High price volatility can leadto large positive or negative returns or investors.

> Price spike: A large, quick, temporary rise or all in price.

> E cessive price volatilit : IFPRI has developed a precisede nition o excessive price volatility. Using a statisticalmodel based on price data since 1950 and updated daily,it has identi ed a band within which the change in pricemoves 95 percent o the time. When the change in priceexceeds this threshold at a high requency (de ned with

a statistical test) within a 60-day rolling window, pricechanges are considered to have reached a period o

excessive volatility.

Note: For technical details on de nitions, see Appendix D.


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22 Combating Hunger in a World o High and Volatile Food Prices | Chapter 03 | 2011 Global Hunger Index

InFlatIon-adjusted prICes oF aGrICultural CommodItIes and oIl, 19902011 (weeKly data)

prICe transmIssIon From InternatIonal to domestIC

prICes

The degree to which prices are transmitted rom internationalto domestic markets varies among regions. Several IFPRI casestudies rom A rica, Asia, and Latin America analyzed the trans-

mission o ood price changes rom international markets to do-mestic markets. Researchers ound that in Latin America, about

20 percent o the change in the international price o wheat istransmitted to the domestic price o bread. There was also ev-

idence that changes in international rice prices are transmittedto domestic markets in most Latin American countries. In Asia,all three countries studied showed transmission o changes inworld rice prices to domestic markets, and two out o threeshowed transmission o world wheat prices. In Sub-Saharan A -rica, however, only 13 o 62 price series showed evidence oprice transmission over the our to seven years in question. Thisdi erence partly refects the act that maize, the staple ood inmany A rican countries, is not widely traded. Rice prices weremore likely to be linked to world prices than maize prices. Onthe other hand, almost all A rican countries studied experienced

higher ood prices during the 200708 global ood crisis.Source: For Latin America, Robles and Torero (2010); or Asia, Robles (2010); and orA rica, Minot (2010).

damage, especially among children (von Grebmer et al. 2010). For ex-ample, across several Latin American countries, simulations haveshown important reductions in calorie intake at both the national lev-el and the household level, especially among poor households with chil-dren in the critical window rom conception to age two. In all o theLatin American countries studied, poorer households with consump-tion levels that were already below the calorie adequacy thresholdshowed greater reductions in calorie intake (Robles and Torero 2010).These long-term e ects are especially detrimental to already vulner-able populations, such as those in countries whose GHI score is alreadyalarming or extremely alarming. The e ects o high and volatile ood

prices are also particularly harm ul or countries with high net ood im-ports. Because these countries purchase a large share o their ood re-quirements on global ood markets, price volatility transmits aster andmore directly to the national level. Additionally, countries with high netood imports tend to have high GHI scores (see gure on the bottomo page 23), and high ood infation a ects countries with large num-bers o poor people such as China, India, and Indonesia.

Making headway in reducing hunger in this new environmentwill require an understanding o the causes o ood price spikes andexcessive price volatility, how these can be curtailed, and the most e -ective steps to minimize their harm ul e ects on poor peoples ood

security and well-being.

Source: FAO (2011a), International Grains Council (2009), and US Energy In ormation Administration (2011).

Note: Prices are adjusted or infation using a consumer price index base year o 198284 (that is, 198284 = 100). Maize is U.S. No. 2 Yellow, wheat is U.S. No. 2 Hard Red Winter, rice is White Thai A1Super, soybeans are U.S. No. 1 Yellow, and crude oil is the spot price or West Texas Intermediate at Cushing, Oklahoma.

0 1 / 9 0

0 8 / 9 0

0 3 / 9 1

0 9 / 9 1

1 1 / 9 2

0 1 / 9 4

0 4 / 9 2

0 3 / 9 5

0 6 / 9 7

0 3 / 9 9

0 7 / 0 1

1 0 / 0 3

0 6 / 9 3

0 8 / 9 4

0 5 / 9 6

0 8 / 9 8

0 5 / 0 0

0 8 / 0 2

1 2 / 0 4

0 2 / 0 6

0 4 / 0 7

0 5 / 0 8

1 2 / 0 8

0 2 / 1 0

1 0 / 9 5

1 1 / 9 6

0 1 / 9 8

1 0 / 9 9

1 2 / 0 0

0 2 / 0 2

0 3 / 0 3

0 5 / 0 4

0 7 / 0 5

0 9 / 0 6

1 1 / 0 7

0 7 / 0 9

0 9 / 1 0

0 4 / 1 1

A g r

i c u

l t u r a

l c o m m o d

i t y p r i c e s

( U S $ p e r m e t r i c

t o n

)

C r u

d e o i

l p r i c e s

( U S $ p e r

b a r r e

l )MaizeRiceCrude oilHard wheatSoybeans

400

250

150

100

50

0

200

300

350 80

50

30

20

10

0

40

60

70

90


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35

30

15

10

5

0

G H I s c o r e

Sources: World Development Indicators (WDI) database or 2009; 2011 GHI scores.Note: Food trade balance as a percentage o GDP is determined by calculating the total amount o ood exports and imports in current US dollars, estimating the trade balance, and expressing it as a percentage oGDP in current US dollars. The correlation between the ood trade balance and the GHI is -0.311, and this value is statistically signi cant at the 5 percent level (that is, the simultaneous change in value o GHIscore and ood trade balance). This gure gives estimates only or those countries with a GHI greater than 5. Thirty-six countries were dropped rom the graph because they did not have in ormation or their tradebalance. Malawi and Cte d'Ivoire were also dropped rom the calculations because they are outliers in terms o their positive trade balances (more exports than imports): Malawi because o its signi cant ertilizersubsidies in recent years, and C te d'Ivoire because it produces 40 percent o the world's cocoa crop.

20

25

40

exCessIve Food prICe varIabIlIty For Hard wHeat

GHI sCores and Food trade balanCe

Source: Martins-Filho, Torero, and Yao (2010). See details at http://www. oodsecurityportal.org/so t-wheat-price-volatility-alert-mechanism.Note: The green line is a logarithm o the observed daily return (rate o increase o prices rom one day to the next) on investment. The orange line represents a level below which returns have a 95 percent probability ooccurring. When the green line (return) exceeds the orange line (95th percentile), it is characterized as an excessively large return. One or two such returns do not necessarily indicate a period o excessive volatility. Pe-riods o excessive volatility are identi ed based on a statistical test applied to the number o times the extreme value occurs in a window o 60 consecutive days ( or details on the de nition see Appendix D).

0.08

0.04

0.02

-0.04

-0.06

-0.08

-0.02

0

0.06

15

10

-5

-10

-15

F o o

d t r a d e

b a l a n c e

( % o

f G D P )

0

5

20

B u r u n

d i

E t h i o p

i a

Y e m e n ,

R e p .

Z a m

b i a

M o z a m

b i q u e

M a d a g a s c a r

I n d i a

R w a n

d a

K e n y a

N i g e r

i a

S e n e g a l

P h i l i p p

i n e s

D j i b o u

t i

S u

d a n

T a n z a n

i a

B u r k

i n a

F a s o

G u a t e m a l a

B o l

i v i a

A r m e n

i a

T h a i

l a n

d

H o n

d u r a s

P a n a m a

S o u

t h A f r i c a

P e r u

P a k

i s t a n

N e p a l

Z i m b a b w e

T h e

G a m

b i a

S r i

L a n

k a

B o t s w a n a

I n d o n e s

i a

D o m .

R e p .

N i c a r a g u a

E c u a d o r

G u y a n a

M o r o c c o

C o l o m

b i a

T r i n

i d a

d &

T o

b a g o

C h i n a

E l S a l v a

d o r

K y r g y z

R e p .

M a u r i

t i u s

P a r a g u a y

Lowhunger

Highhunger

Highimports

HighexportsGHI score

Food trade balance

1 2 / 1 2 / 0 1

3 / 1 2 / 0 2

6 / 1 2 / 0 2

9 / 1 2 / 0 2

3 / 1 2 / 0 3

9 / 1 2 / 0 3

1 2 / 1 2 / 0 2

3 / 1 2 / 0 4

3 / 1 2 / 0 5

1 2 / 1 2 / 0 5

1 2 / 1 2 / 0 6

1 2 / 1 2 / 0 7

6 / 1 2 / 0 3

1 2 / 1 2 / 0 3

9 / 1 2 / 0 4

9 / 1 2 / 0 5

6 / 1 2 / 0 6

6 / 1 2 / 0 7

6 / 1 2 / 0 8

1 2 / 1 2 / 0 8

6 / 1 2 / 0 9

1 2 / 1 2 / 0 9

3 / 1 2 / 1 0

9 / 1 2 / 1 0

6 / 1 2 / 0 4

1 2 / 1 2 / 0 4

6 / 1 2 / 0 5

3 / 1 2 / 0 6

9 / 1 2 / 0 6

3 / 1 2 / 0 7

9 / 1 2 / 0 7

3 / 1 2 / 0 8

9 / 1 2 / 0 8

3 / 1 2 / 0 9

9 / 1 2 / 0 9

6 / 1 2 / 1 0

1 2 / 1 2 / 1 0

3 / 1 2 / 1 1

6 / 1 2 / 1 1

AlertReturns95th Percentile

C h a n g e

i n r e t u

r n s

( l o g r e

t u r n s )


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How Did We Get Here?

The crises o 200708 and 201011 were triggered by a complex seto long- and short-term actors, including policy ailures and marketoverreactions. The gure below shows the key actors behind the in-crease in prices and in price volatility; several studies have addressedthe di erent demand- and supply-side actors that contributed to theprice crises. 8 O these actors, three have played the largest role in cre-ating price volatility:1. an increase in bio uel production through xed mandates that made

demand unresponsive to prices, even with volatile oil prices;2. an increase in nancial activity through commodity utures markets;

and3. the medium- and long-term e ects o climate change.

Any o these actors can also be exacerbated by policy responses suchas export restrictions by major ood exporters. During the 200708ood price crisis, 15 countries, including major producers, imposed ex-

port restrictions on agricultural commodities. These restrictions led tolower supplies on the global market and contributed to the crisis byprovoking panic buying, hoarding, and more export restrictions in oth-er countries, urther increasing the amplitude o price movements.IFPRI research has shown that these trade restrictions can explain asmuch as 30 percent o the increase in prices in the rst six months o2008. 9 Export restrictions have also contributed to the price increas-es and general market nervousness experienced in 2010 and 2011.

BIOFUELS ARE BOOMING. With oil prices at an all-time high (close toUS$120 a barrel or Brent crude oil and close to US$100 a barrel orWest Texas Intermediate crude oil in July 2011) and with the UnitedStates and the European Union subsidizing and setting mandates orbio uel production, armers have shi ted their cultivation toward bio-uel crops, and maize production in the United States is increasinglyused to produce ethanol (see gure on page 25). Other countries, in-cluding emerging economies such as India and Peru, are also enactingbio uel mandates. This new demand or crops or uel places new pres-sures on agricultural markets, which are characterized by temporal re-strictions (the time it takes to increase production), limited resources

(land, water, and nutrients), and growing demand driven by demograph-ic and income increases. In addition to magni ying the tensions be-tween supply and demand, the rigidity o bio uel mandates exacerbatesprice fuctuations and magni es global price volatility. Last but notleast, bio uels gradually increase the link between energy markets(which are highly volatile) and ood markets (also volatile), urther in-creasing the volatility o the latter. Traditionally, the energy and oodmarkets have been linked through the agricultural supply channel (suchas electricity or irrigation systems and petroleum or ertilizer produc-tion). Now energy and ood markets are increasingly linked through anew channel increased demand or crops or uel even when bio uel

mandates are not binding. This link is expected to be stronger as de-mand or bio uel expands. According to OECD/FAO (2011), bio uel pro-duction is projected to more than double rom 200709 to 2019 andbio uel demand is expected to grow our old rom 2008 to 2035 (IEA2010). 10 In addition, bio uel support is predicted to increase romUS$20 billion in 2009 to US$45 billion by 2020 and to US$65 bil-lion by 2035. At the same time, the environmental bene ts o bio uelproduction are being questioned (Al Ri ai, Dimaranan, and Laborde2010a; Laborde 2011).

ExTREME WEATHER AND CLIMATE CHANGE ARE PUTTING PRESSURE ON

AGRICULTURAL PRICES. Extreme weather events played a role in raisingood prices and ueling price volatility in 200708 and in 2010. Look-ing ahead, various climate scenarios predict an increase in variability.Climate change could result in more intense and requent natural disas-

Key FaCtors beHInd tHe InCrease In aGrICulturalCommodIty prICes and prICe volatIlIty

Source: Maximo Torero.Note: Because o their impact on t ransportation and input costs, oil prices directly a ect

domestic and international ood prices. They also indirectly a ect international ood pric-es by altering the competitiveness o bio uel production. Similarly, bio uel policies infu-ence water management by creating competition between bio uel production and oodproduction or access to water.

Oilprices

Internationalood prices

Futures prices

Environment &climate change

Bio uel policies

Watermanagement

Tradeliberalization

Domestic ooddemand

Domestic oodprices

Domestic oodsuppl

> Domestic oodproduction

> Food exports()

> Food imports(+)


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We exchange the rice and beans we grow or other ood,such as sugar, oil, and four. Every time we have to sello more o our products to get the same amount ogoods in exchange.

Allen Rudlen ElistonHomphriezAutonomous Region o the NorthernAtlantic, Nicaragua

ters (such as droughts and foods), which could trigger signi cant yieldlosses, production cuts, and price increases and lead to higher volatili-ty. IFPRI simulations show that prices are likely to rise as a result o cli-mate change under both pessimistic and optimistic scenarios o popu-lation growth (see gure on page 26). A recent IFPRI study o oodsecurity and climate change (Nelson et al. 2010) suggests that in con-trast to the 20th century, when real agricultural prices declined, the rsthal o the 21st century is likely to see increases in real agricultural

prices. Food demand driven by population and income growth is ris-ing aster than agricultural productivity, which is hampered by the e -ects o climate change. In the gure on page 26 income and demo-graphic changes between 2010 and 2050 result in price increases thatrange rom 20.4 percent or rice in the optimistic scenario to 52.4 per-cent or maize in the pessimistic scenario. These substantial increasesshow the underlying pressures on the world ood system, even in the un-likely event that per ect mitigation is achieved. With climate change, to-tal price increases will range rom 31.2 percent or rice in the optimis-tic scenario to 106.3 percent or maize in the pessimistic scenario.

COMMODITy FUTURES TRADING IS UP. Since 2008, one indication o high-er price volatility has been the signi cant increase in the volume o agri-cultural commodity utures traded on the Chicago Board o Trade (CBOT),

a leading agricultural utures exchange. From 2005 to 2006, the aver-

I usually sell most o my palm oil to traders in the town

and not to middlemen at the nearby periodic market. Ihave a mobile and call my sister in the town or pricein ormation. This allows me to plan my sales trips andto receive a better income or my products. Then, Iam buying imported rice or my amily. In the town,the prices or imported rice are lower compared to theperiodic market in the chie dom.

Marruf JallohBo District, Sierra Leone

M a i z e p r o

d u c t

i o n

( m i l l i o n s o f m e t r i c

t o n s )

% o

f m a i z e u s e

d f o r e t

h a n o l

400 40

300 30

250 25

100 10

50 5

150 15

200 20

350 35

2000 2005 20101995

Maize production% o maize used or ethanol

maIze produCtIon and use For Fuel etHanol In tHe

unIted states, 19952010

Source: Data rom Earth Policy Institute (2011).

We can a ord two meals a day, no more. We have break-ast and then a hot meal at around 5 pm. We never have

meat. At the moment, we cant a ord vegetables eitherapart rom onions. Vegetables, in particular, have be-come more expensive: theyre not so plenti ul any more

because o the foods.

Sajad HussainMuza argarh District, Pakistan


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age monthly volume o utures or wheat and maize grew by more than60 percent, while the volume or rice utures rose by 40 percent. In 2007,

traded volumes again rose signi cantly or wheat, maize, rice, and soy-beans especially soybeans, whose monthly average was 40 percenthigher than in 2006 (see upper Figure on ollowing page). In all commod-

ities, volumes continued to increase during 201011. Moreover, open in-terest has also been growing in recent years, a trend that may refect theentry o medium- and long-term speculators into commodity utures mar-

kets (see gure on the bottom o page 27). Such speculation may haveplayed a role in the 200708 ood price crisis (Robles, Torero, and vonBraun 2009; Welthungerhil e 2011). Speculators normally make short-term investments; as they swarm into a market, they exacerbate the ini-tial increase in price, and when they fee a market, they contribute to aall in prices. In addition, agricultural commodities (including ood prod-ucts) have recently attracted more investment. They are regarded as astore o wealth that can protect against infation or defation o monetary

assets, a characteristic that could explain the signi cant infux o moneyinto index unds that include ood commodities. Investment in such undsincreased rom US$13 billion to US$260 billion between the end o 2003

and March 2008, pushing up the prices o those commodities.

world Food prICe InCreases under varIous ClImate CHanGe sCenarIos, 201050

Source: Nelson et al. (2010).Note: The study or this graph considers three combinations o income and population growth: a baseline scenario (with moderate income and population growth), a pessimistic scenario (with low incomegrowth and high population growth), and an optimistic scenario (with high income growth and low population growth). Each o these three income/population scenarios is then combined with our plausi-ble climate scenarios that range rom slightly to substantially wetter and hotter on average, as well as with an implausible scenario o per ect mitigation (a continuation o todays climate into the uture).The climate change e ect presented in the graph is the mean o the our climate change scenarios.

Todays agricultural markets have three key characteristics that increaseprice responses to the bio uels, climate change, and commodity tradingchallenges. First, expor t markets or all staple commodities rice, maize,

wheat, and soybeans are highly concentrated in a ew countries or very

Maize,baseline

Rice,baseline

Wheat,baseline

Maize,optimistic

Rice,optimistic

Wheat,optimistic

Maize,pessimistic

Rice,pessimistic

Wheat,pessimistic

% c

h a n g e

f r o m

2 0 1 0

20

40

60

80

100

120Climate change e ectEconomic growth e ect

about CommodIty Futures

A utures contract re ers to an agreement between two par-ties to exchange a speci ed quantity and quality o a commod-ity at a speci ed price on a certain date in the uture. Futurestrading is used by agricultural producers to reduce the risk theyace rom changing prices and by speculators to take advan-tage o price shi ts in commodities.Open interest is the total number o outstanding utures con-

tracts held by market participants at the end o each day thatis, contracts that have not yet been o set by an opposite uturesposition or ul lled by delivery o the commodity.


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Source: CBOT (2011).Note: Rice utures are not shown because they are traded in such low numbers.

montHly volume oF open Interest, 20022011

Source: CBOT (2011).

Note: Rice utures are not shown because they are traded in such low numbers.

montHly volume oF Futures tradInG, 20022011

9

7

6

3

2

1 N u m

b e r o f

t r a d e s o n

f u t u r e s c o n

t r a c

t s ( m i l l i o n s )

4

5

8

2002

2002

2003

2003

2004

2004

2005

2005

2006

2006

2007

2007

2008

2008

2009

2009

2010

2010

2011

2011

10

MaizeSoybeansWheat

1.4

1.2

0.6

0.4

0.2

T o t a l n u m

b e r o f o u

t s t a n

d i n g

f u t u r e s c o n

t r a c

t s ( m i l l i o n s )

0.8

1.0

1.6

1.8

MaizeSoybeansWheat


30/64


thin (that is, only a small share o production is traded). In the case oboth maize and rice, the top ve producers account or more than 70percent o global production, and the top ve exporters account or about

80 percent o world exports (see gure below). For wheat, the top veproducers and exporters account or about 50 and 60 percent o globalproduction and exports, respectively. The United States is by ar the larg-est global supplier o maize, wheat, and paddy rice, as well as the ourth-largest supplier o broken rice. Argentina and France are also among thetop suppliers o maize and wheat, and Brazil is among the top produc-

ers o maize and rice. China is the largest producer o wheat and paddyrice, as well as the second-largest producer o maize; however, its pro-duction is locally oriented. These high levels o concentration imply thatthe worlds capacity or coping with geographical risk is limited. Anyweather shock or exogenous shock to production in these countries willimmediately have an e ect on global prices and price volatility.

Second, the worlds reserves or maize and restricted reservesor wheat are now at historically low levels (see gure below right). Tounction e ectively, the market requires a minimum level o grain re-

serves to serve as a bu er against sudden changes in supply or demand.These reserves are needed because, in the short term, supply and de-

mand or grain are not very responsive to price. When prices go up, orexample, it is di cult or armers to immediately produce more or or

consumers to immediately consume less. As a result, any supply shock,such as a drought or food, can lead to price spikes and hoarding by arm-

ers seeking to take advantage o higher prices in the uture. In both 1973and 2007 global grain stocks hit record lows, prompting global ood cri-ses. Although the di erence between too ew grain stocks and just enoughis relatively small, a lack o su cient stocks can lead to large price in-creases and a breakdown o unctioning markets. In 200708, grainstocks were only about 60 million tons (2.7 percent o global production)less than in 200405. But with prices rising sharply in 200708, this

di erence in grain stocks was enough to cause serious problems in themarket, especially or commodities such as rice, the production o whichis concentrated in just a ew countries (Timmer 2010).

Third, appropriate, timely in ormation on ood production, stock

levels, and price orecasting is lacking. When this in ormation gap leads tooverreactions by policymakers, the result can be soaring prices. IFPRI hasdeveloped a way to measure this phenomenon and make it accessible asa use ul tool or policymakers. In August 2010, Russia banned wheat ex-

ports in response to ongoing drought and wild res. As the gure on page29 (bottom le t) shows, in the period in which Russia imposed the exportban, utures returns or wheat showed three days o excessive, or abnor-

mal, returns (that is, returns exceeded the threshold they stay below95 percent o the time) even when supply and demand actors suggest

major exporters oF maIze, wHeat, and rICe, 2008

(% oF world exports)

Source: FAO (2011a).

Source: FAO, Food Outlook , various years.Note: World excluding China is shown because China is an outlier in terms o reserves, and thereare several questions about the quality o its data reports.

maIze

84%wHeat

63%

rICe

95%( )

rICe

80%( k )

United States (53.0%)Argentina (15.1%)Brazil (6.3%)France (6.0%)India (3.5%)

United States (22.9%)France (12.4%)Canada (12.0%)Russian Federation (8.9%)Argentina (6.7%)

Thailand (54.8%)Pakistan (9.1%)

Brazil (7.3%)United States (4.4%)Belgium (4.0%)

United States (90.4%)Paraguay (1.4%)

France (1.2%)China (1.1%)Brazil (0.9%)

ratIo oF GraIn stoCKs to use, 1996/972011/12

R a t

i o ( % )

9 6 / 9 7

9 7 / 9 8

9 8 / 9 9

9 9 / 0 0

0 0 / 0 1

0 1 / 0 2

0 2 / 0 3

0 3 / 0 4

0 4 / 0 5

0 5 / 0 6

0 6 / 0 7

0 7 / 0 8

0 8 / 0 9

0 9 / 1 0

1 0 / 1 1

1 1 / 1 2

WorldWorld excluding China

35

30

25

20

15

10

5


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they should not have done so. At that time global wheat stocks stood ataround 175 million metric tons nearly 50 million metric tons more thanin 200708. Russias export ban removed less than 18 million metric tons

rom the market well below the 26 million metric tons held in reserve bythe United States alone. Moreover, the United States the worlds largestwheat exporter had enjoyed a good harvest. When in ormation on the US

harvest and existing stocks became available, prices immediately dropped,as shown in the gure below. US wheat production could easily have cov-

ered the gap in exports rom Russia, and i this in ormation had been known

sooner, global wheat prices should not have increased substantially.The media overreacted to the news o Russias export ban and

ailed to explain that global wheat production and stocks were su -cient to compensate or the loss o Russias wheat. Moreover, every

piece o news during August through October 2010 even the US De-partment o Agricultures better-than-expected projection that the world

would harvest only 5 percent less wheat that year than the previousone seemed to elicit a spike. The number o media articles on theprice o wheat rose signi cantly between August and October 2010,and 57 percent o the total number o media articles with any re er-ence to wheat prices reported that wheat prices were going to increase.

This number was 93 percentage points higher than the same measurein an average quarter or 2010 (see table below). 11

Among the major reasons or the price increases reported in the me-dia were the res in Russia (62 percent) and low inventories becauseo low production and stocks (25 percent), even though the inventoriesand stocks were su cient and signi cantly higher than in the 2008crisis. Only 7 percent o articles re erred to policies, such as exportbans, which had in act been the major reason or the increase in pric-es. This lack o in ormation on global production led governmentsaround the world to engage in panic buying that exacerbated the situ-ation and pushed up prices.

The Impacts o Rising Food Prices and E cessive Volatilit on the Poor

Rising ood prices and excessive price volatility can a ect households di -erently, depending on whether they are in rural or urban areas or are net

consumers or net producers. Higher ood prices and excessive volatilitycan lead to deterioration o diets, as well as signi cantly erode householdspurchasing power, a ecting the purchase o other goods and services es-sential or health and wel are, including heating, lighting, water, sanita-

tion, education, and healthcare. The coping mechanisms that poor house-holds use will ultimately determine the severity o the impact o high oodprices on their livelihoods and on the well-being o their members in the

short, medium, and long term. Similarly, households access to social sa e-ty nets and other social protection schemes will also be a key determinant

Source: Mar tins-Filho, Torero, and Yao (2010).Note: An abnormality occurs when an observed return exceeds a certain preestablished threshold.This threshold is normally taken to be a high order (95 percent) quantile that is, a value o re-turn that is exceeded with low probability (5 percent).

Source: Calculations by Maximo Torero.a August 1, 1998, to July 22, 2011.b January 1, 2010, to December 31, 2010.c August 1, 2010, to October 31, 2010.Note: The quali ers used in each o the categories are as ollows: (a) nancial: domestic ood price,

expectations, expected prices, utures markets, hedge, hedging, interest rate, international ood price,monetary policy, rates, speculation, trade, trade barrier, trading volume; (b) inventories: corn produc-tion, domestic production, domestic supply, emergency reserves, maize production, reserves, riceproduction, storage, supply, surplus, and wheat production; (c) policies: export bans, export quotas,ood security, import quota, import restrictions, price controls, and taxes; and (d) disasters and civile ects: drought, earthquake, amine, re, food, rost, hurricane, nutrition, plague, poverty, riots.

analysIs oF medIa artICles reFerrInG to wHeat prICes

78

222

84

377

761

1,238

Financial

Inventories

Policies

Disasters and civile ects

Total re erences towheat price increases

Total number oarticles on wheatprices

Reason given orprice increase

Re erences to wheat prices going up2010 b Aug.Oct. 2010 c19982011 a

42

99

37

159

337

585

10

40

12

101

163

288 C h a n g e

i n r e

t u r n s

( l o g r e

t u r n s )

abnormalItIes In prICes oF wHeat Futures

0.04

0.06

0.08

0.02

0.00

-0.02

-0.04

-0.06

-0.08

-0.10

0 7 / 2 7 / 1 0

0 7 / 2 6 / 1 0

0 7 / 2 3 / 1 0

0 7 / 2 2 / 1 0

0 7 / 2 1 / 1 0

0 7 / 2 0 / 1 0

0 7 / 2 8 / 1 0

0 7 / 2 9 / 1 0

0 7 / 3 0 / 1 0

0 8 / 0 2 / 1 0

0 8 / 0 3 / 1 0

0 8 / 0 4 / 1 0

0 8 / 0 5 / 1 0

0 8 / 0 6 / 1 0

0 8 / 0 9 / 1 0

0 8 / 1 0 / 1 0

95th percentileRealized return

Abnormalities

In ormationon US stocks

released

Russianexport banannounced

Wild res inRussia


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o the level o su ering they will experience because o higher ood pric-es. Sa ety nets in many countries still reach only a small proportion o thepoorest population. Ethiopias government sa ety net program, or exam-

ple, reaches 8 million people but covers only about 25 percent o the coun-trys poor; in Bangladesh a country where 25 percent o the populationis ultra-poor roughly 7 percent o the population has access to social

protection or sa ety net programs (von Braun et al. 2008).

estImatInG tHe eFFeCts oF rIsInG Food prICes and

exCessIve volatIlIty on tHe poor In banGladesH,

paKIstan, and vIetnam

To examine how much rising ood prices and increased pricevolatility made poor people worse o , IFPRI estimated the im-pact o price changes between 2006 and 2008 on the wel areo poor people in three countriesBangladesh, Pakistan, andVietnam:

> In both Bangladesh and Pakistan, increasing ood pricesle t an estimated 80 percent o households worse o . InVietnam, 51 percent o all households were likely worse o ,whereas 64 percent o rural households in Vietnam may

have been better o .> Among households that were worse o , the poorest house-

holds were estimated to experience the greatest losses inspending.

> Households in Bangladesh lost

Global Hunger Index 2011

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