FeaturedNationalVOLUME 17 ISSUE # 27

Global food crisis and the World Bank role

The world is once again faced with a serious food shortage crisis. Following the devastation caused by the coronavirus pandemic, the Ukraine-Russia war has come as another shock. The two warring countries are among the top wheat growers in the world and considered to be the breadbasket of Europe. Supplies from the two sources have dwindled dangerously in recent months. The Ukrainian government has banned the export of wheat and other food staples in order to protect essential supplies for its own population.

Wheat prices are soaring, raising the spectre of severe food shortages and hunger across the globe. Much of the western US has been hit by drought, which has been made worse by climate change.

It is relevant to note here that combined together Ukraine and Russia make up about 30 percent of global wheat exports. In recent years growing hunger has afflicted a large number of people around the world. From 720 million to 811 million people faced hunger in 2020, according to a recent report by the Food and Agriculture Organization of the United Nations.

A recent UN report said that world food prices, already surging because of the pandemic, reached an all-time high in February this year, when they increased by about 2.1 percent. Wheat is a global commodity and war-related shortages are making prices more volatile. The United States exports about half of its wheat supply but is now limiting the supplies.

According to experts, in the coming days, the situation threatens to become more severe for countries that rely heavily on grain imports. They include countries in the Middle East, Northern Africa and Asia. About one-third of Ukraine’s total wheat exports go to three countries: Egypt, Indonesia and Bangladesh.

To deal with the situation, the World Bank has announced a range of actions as part of a comprehensive, global response to the ongoing food security crisis, with up to $30 billion in existing and new projects in areas such as agriculture, nutrition, social protection, water and irrigation. This financing will include efforts to encourage food and fertilizer production, enhance food systems, facilitate greater trade, and support vulnerable households and producers.

“Food price increases are having devastating effects on the poorest and most vulnerable,” said World Bank Group President David Malpass. “To inform and stabilize markets, it is critical that countries make clear statements now of future output increases in response to Russia’s invasion of Ukraine. Countries should make concerted efforts to increase the supply of energy and fertilizer, help farmers increase plantings and crop yields, and remove policies that block exports and imports, divert food to biofuel, or encourage unnecessary storage.”

The World Bank is working with countries on the preparation of $12 billion of new projects for the next 15 months to respond to the food security crisis. These projects are expected to support agriculture, social protection to cushion the effects of higher food prices, and water and irrigation projects, with the majority of resources going to Africa and the Middle East, Eastern Europe and Central Asia, and South Asia. In addition, the World Bank’s existing portfolio includes undisbursed balances of $18.7 billion in projects with direct links to food and nutrition security issues, covering agriculture and natural resources, nutrition, social protection, and other sectors. Altogether, this would amount to over $30 billion available for implementation to address food insecurity over the next 15 months. This response will draw on the full range of the Bank’s financing instruments developed over the years.

According to the latest report, the World Bank Group’s global response will focus on four priority areas: One, it will support production and producers: Take actions to enhance next season’s production by removing input trade barriers, promoting more efficient use of fertilizers, and repurposing public policies and expenditures to better support farmers and output. Two, the WB will facilitate increased trade: Build international consensus (G7, G20, others) and commitment to avoid export restrictions that increase global food prices and import restrictions that discourage production in developing countries.

Three, the World Bank will lay special emphasis on vulnerable households: Scale up targeted, nutrition-sensitive social protection programs and replenish early-response financing mechanisms. Four, the Bank will invest in sustainable food and nutrition security: Strengthen food systems to make them more resilient to rising risks (conflict, climate, pests, diseases), trade disruptions and economic shocks – balance immediate/short-term needs with long-term investments.

According to international food experts, the World Bank gained extensive experience in response to the 2007-2008 global food price crisis through the temporary Global Food Crisis Response Program (GFRP) that received donor contributions and channeled funds to 49 affected countries through 100 projects. Since then, the Bank has built up new tools dedicated to responding to food security crises, including the IDA Crisis Response Window. The World Bank also hosts the Global Agriculture and Food Security Program (GAFSP), which is an existing financial intermediary fund dedicated to improving food security in low-income countries and could be replenished to help fund the response to the current global food crisis.