Global Food Crisis Demands Support for People, Open Trade, Bigger Local Harvests

Food insecurity has been rising since 2018. Even before Russia’s invasion
of Ukraine, the increasing frequency and severity of climate shocks,
regional conflicts and the pandemic were all taking their toll, disrupting
food production and distribution, and driving up the cost of feeding people
and families.

The situation took an even more dramatic turn with the war in Ukraine. This
pushed the prices of food and fertilizers higher still—hurting importers
and prompting several countries to impose export restrictions.The result is an unprecedented 345 million people
whose lives and livelihoods are in immediate danger from acute food
insecurity. And around the globe more than 828 million people
go to bed hungry every night, according to the World Food Programme.

The impact of the food shock is felt everywhere. The suffering is worst in
48 countries, many highly dependent on imports from Ukraine and
Russia—mostly low-income countries. Of those, about half are especially
vulnerable due to severe economic challenges, weak institutions, and
fragility.

Alongside the human toll, the financial costs are also escalating.
A new paper
by IMF staff estimates the impact of higher import costs for food and
fertilizer for highly exposed to food insecurity will add $9 billion to their balance of payments
pressures—in 2022 and 2023. This will erode countries’ international
reserves, and their ability to pay for food and
fertilizer imports.

In many places, even though food prices have eased somewhere from recent
peaks,

still high food—and energy—prices have fueled a cost-of-living crisis
that is likely to increase poverty and hurt growth, potentially fueling
political instability.

As a result, policymakers in many countries have introduced fiscal measures
to protect people from the current food crisis. For this year alone, we
estimate that highly exposed countries need as much as $7 billion to help
the poorest households cope.

Rapid response

Strong and swift policy action is needed across four areas to mitigate the
global food crisis and avert human suffering.

First, rapidly and adequately support people vulnerable to
food insecurity through humanitarian assistance from the World Food
Programme and other organizations, alongside effective domestic fiscal
measures.

Policymakers around the world should prioritize fighting inflation and
protecting the most vulnerable to alleviate the burden of the
cost-of-living crisis. Near-term

social assistance should focus on providing emergency food relief or cash
transfers to the poor, such as those recently announced by Djibouti,
Honduras, and Sierra Leone. Where this is not possible, second-best
subsidies and tax measures can provide temporary relief.

Second, maintaining open trade, including within regions,
to allow food to flow from surplus areas to those in need. We should build
on the progress made under the

Black Sea Grain Initiative

and at the

12th Ministerial Conference

of the World Trade Organization by urgently phasing out export bans imposed
by major food producers. Protectionist measures only serve to make the food
crisis worse, accounting for as much as 9 percent of the increase in world
wheat prices, according to the

World Bank
.

Third, increase food production and improve distribution,
including through ensuring adequate

access to fertilizers

and crop diversification. Increasing trade financing and reinforcing supply
chains is vital to addressing the current food price shock. The World Bank
and other multilateral development banks play a key role as they increase
trade financing for agricultural commodities and other food products and
their support to countries for critical logistics and infrastructure
upgrades.

Fourth, investing in climate-resilient agriculture will be
vital to increasing future harvests. More intense and more unpredictable
climatic events are increasing food insecurity. Low-income countries,
particularly in

sub-Saharan Africa

, are among the least prepared to face the effects of climate change.
Solutions should be tailored to country circumstances, with a focus on
low-cost, high-impact measures, such as investing in new crop varieties,
improving water management, and information dissemination. For example,
Ethiopia, Kenya, and Rwanda are

leveraging mobile technology

to provide farmers with rainfall forecasts to optimize the planting of
crops and the purchase of crop insurance.

Decisive action

The international community must also take decisive action to ensure that
the needed financing is in place to deal with the immediate crisis and to
strengthen food security in the medium-to-long term.

Institutions specialized in food security, such as the World Food Programme
and the

Food and Agriculture Organization of the United Nations
, need to be adequately funded because they play a vital role with their local presence in many
nations and an unwavering focus on the human cost of acute food insecurity.

More grants and concessional financing from donors and international
organizations, are urgently needed to support cash and in-kind assistance
for people suffering most acutely from food insecurity. In some countries,
debt relief will also be needed.

As an additional line of defense, IMF financing supports countries in
meeting external financing needs associated with the global food shock.
Since Russia’s invasion of Ukraine, new Fund-supported economic programs in

Benin,

Cabo Verde,

Georgia,

Mozambique,

Tanzania, and

Zambia, included policies to address the impact of the food crisis. Additional
financing for existing programs in

Jordan

,

Moldova,

Pakistan, and

Senegal

provided support for additional measures to strengthen social safety nets
and address food insecurity.

A new food shock window under the IMF’s emergency financing is expected to
be approved this week by our Executive Board. The proposed window will
provide increased access to emergency financing for a year for countries
that are most vulnerable. Where grants and concessional financing from
partners are not enough, or a Fund-supported program is not possible, it
will offer a new channel of IMF support.

This global food crisis has staggering humanitarian impact and large
financial costs. It requires a comprehensive and well-coordinated approach
to ensure complementarity and maximum efficiency in resource use. Together
with the World Bank and our global partners, we recently issued a

second joint statement

calling for action on global food insecurity.

We must all act now to ease the suffering of those experiencing hunger, by
supporting countries who take strong policy action with the financing they
need.


—This blog also reflects contributions by Guillaume Chabert, Daehaeng
Kim, Lukas Kohler, Gaëlle Pierre, Naoya Kato, Majdi Debbich and Chiara
Castrovillari.