Impacts of the Global Economic and Financial Crisis on Food Security William H. Meyers Professor of Agricultural Economics and Co-Director, FAPRI and Co-Director, FAPRI University of Missouri Social Impact of the Economic Crisis in Eastern Europe, Central Asia and Turkey Almaty, Kazakhstan 7-8 December 2009
Comparison of real GDP growth rates in selected regions
Outline � Food price surge and (partial) retreat � Where from and where to? � Macroeconomic crisis and (slow) recovery � How is food security jeopardized? � Challenges and opportunities � Challenges and opportunities � Policy priorities � Short term � Long term
“Where from” story � Gradual declining in stocks set the stage � Declining real prices, aided by OECD subsidies � Slowing production growth � Area declining � Area declining � Yield growth slowing � Consumption growth also slowing but not as much � Then the perfect storm
World Crop Productivity and Consumption by decade 1960-1970 1970-1980 1980-1990 1990-00 2000-07 Grains Yields 2.7 1.9 2.1 1.23 1.56 Area 0.5 0.9 -0.5 -0.41 0.47 Production Production 3.3 3.3 2.8 2.8 1.6 1.6 0.82 0.82 2.03 2.03 Consumption 3.3 2.6 1.7 0.94 1.70 Grains and Oilseeds Area 1.6 1.3 -0.03 0.18 0.79 Production 4.0 3.0 2.0 1.29 2.32 Consumption 4.1 2.9 2.0 1.31 2.05 Source: USDA PSD
Exponential Growth Rates for Yields Previous 10 years
Declining assistance to agriculture
Why did prices rise, then decline? Can it ALL happen again? Why prices rose Why prices fell � Reduced grain production � Sharp increase in global in Europe, Australia grain production in 2008 � Economic growth in Asia � Economic growth in Asia � Financial crisis and world � Financial crisis and world and elsewhere economic slowdown � Weaker dollar � Stronger dollar � Higher petroleum prices � Lower petroleum prices � Rapid biofuel expansion � Slower biofuel growth � Policy interventions � Many interventions stop � Speculation rose � Speculation declined
“Where to” story � Good weather and yields in 08/09, but costs and poor weather dampen 09/10 growth, except oilseeds � Price surge has abated, BUT not everywhere � Trade “safeguard” interventions mostly gone � Trade “safeguard” interventions mostly gone � Biofuel growth slowed, but policies remain � Strong influence of petroleum price continues
Bread prices in Dushanbe and Bishkek, June 2009
Unknowns and uncertainties � Major uncertainties in food market � Oil price � US dollar � The global financial crisis and � The global financial crisis and impacts on demand growth � trade financing � Weather
Comparison of real GDP growth rates in this region, 2009 and 2010
Comparison of real GDP growth rates in selected regions, 2009
Comparison of real GDP growth rates in selected regions, 2010
Value of exports and imports for net fuel exporters and net fuel importers
Remittances as a share of GDP in 2007
How is food security jeopardized? � Reduction in the quantity and/or quality of food purchases � High food prices High food prices � Loss of employment or reduction of wages and income � Market disruption or policy reaction that impairs availability
How is food security jeopardized? � Reduction in food production � High prices of feed and other inputs � Lack of credit access � Reduction in the quantity and/or quality of Reduction in the quantity and/or quality of food aid � High food prices � Decline of government/international donor financial resources � Macro instability, market disruption or policy reaction that impairs availability
Growth of net exports from the region
A more uncertain future Road to economic recovery? 1. Timing and size of oil price volatility? 2. Will biofuel policies change? 3. Will other policies be unstable? 4. Will DDA be completed in near term? 5. Climate change and policy impacts? 6. Wider range of possible outcomes 7. Complicated decision making and planning 8. Larger impacts on low income consumers 9.
Challenge and Opportunity Challenge - how to provide safety net measures 1. for the most vulnerable populations Opportunity - higher prices can increase 2. availability and access National and international policy actions National and international policy actions 3. 3. needed Short run � Long run �
Policy priorities � Short run � Twin track approach � Expand food assistance and early warning and rapid response capacities � Target food production programs with inputs, credit � Target food production programs with inputs, credit and extension education packages � Accelerate local adaptation and dispersion of currently existing technology � Complete the Doha Round of trade negotiations and Restore trust in the international trading system with improved multilateral or plurilateral rules and agreements
Policy priorities � Long run (but start yesterday) � Investment (not land grabs) in agric. development AND R&D for production and post harvest � Improve market functioning to facilitate price transmission and integration with global markets � Risk management tools for farmers � Enhance rural development and rural infrastructure investments � Invest in social protection or safety net measures to protect vulnerable populations
Thank you! CONTACT INFORMATION: EMAIL: MEYERSW@MISSOURI.EDU WEB: WWW.FAPRI.MISSOURI.EDU
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