Global food price crisis: lessons and ideas for relief planners and managers

Summary of published research¹

Food prices have increased by an average of 52% between 2007 and 2008. ALNAP² has recently published a paper which aims to assist those agencies undertaking operational relief and recovery work in the context of high food prices.

The key areas affected by the food price crisis are said to be Asia, sub-Saharan Africa and Central America. Experts do not agree on how long the price crisis will continue. However, most analyses suggest that within 15 months, most of the price spike will disappear. The possible exception is maize prices where the impact of United States (US) ethanol production may still keep prices high. In the medium term, staple food prices are expected to be 20-40% higher in 10 years than they were in 2002 in real terms, owing largely to increased real costs of oil and bio-fuel production. The impact of rising food prices can be seen in places like Kenya. Here the Kenya Food Security Steering Group (KFSSG) has identified a number of effects. These included increased population below the poverty line, diet changes and reduction in meal frequency, informal wage rates declining due to increased demand for casual jobs, rise in school drop outs, civil unrest, distress livestock sales amongst pastoralists, and livelihood crises in urban slums and amongst pastoral, agro-pastoral and marginal agricultural farmers.

A detailed set of policy prescriptions has been laid out in the Comprehensive Framework for Action, developed by the High Level Task Force on the Global Food Crisis³. A number of stakeholders have already begun to address the consequences of the crisis. Actions include reallocation of resources, mobilisation of new funds, nutritional care and support, supporting social safety nets for the most vulnerable, and supply of seeds, fertilisers and other basic inputs to smallholders. In addition, major pledges of support for agriculture have been made by the African, Asian, Islamic and Inter-American Development Banks, as well as bilateral donors and nongovernmental organisations (NGOs). Given all the above, relief managers and planners are faced with a range of challenges, problems and questions and will need to adapt and/or expand humanitarian aid programming to food insecure people. There has already been some evidence of action, in Kenya for example (see Box 1).

Ideas and lessons

The ALNAP paper suggests a number of ideas and lessons:
Food price rises call for stronger analysis and monitoring of food and other basic commodity prices and markets and their impact on the needs and vulnerabilities of different livelihood groups. Such analysis is necessary to understand what type of assistance is appropriate in which context - food, seeds or cash, for example. However, analysis alone is not sufficient. It is also important to anticipate how the situation might change over time and to build in contingency measures to ensure that a programme can be adapted in response, to undertake evidencebased advocacy and to coordinate efforts. The livelihoods framework provides a tool for analysing people's livelihoods and the impact of specific threats or shocks on livelihood vulnerability.

In the context of livelihoods, it is especially important to develop integrated information strategies that bring together early warning, assessment, targeting and monitoring and evaluation. Here, the Integrated Phase Classification (IPC) work provides invaluable lessons, where bringing together information specialists, managers and local partners has ensured that the benefits of an integrated information strategy have been realised across regions and countries facing high food prices.

In the context of high food prices, it is especially important to analyse the specific vulnerabilities of particular household groups, e.g. agricultural, agro-pastoral, pastoralist and urban poor households.

There are also many reasons why it is valuable for humanitarian agencies to assess and understand markets rapidly in emergency situations, all of which are relevant to food-price rises:

• Markets may offer a fast, cost-effective and empowering way to respond to people's priority needs.
• Inappropriate relief responses can do further damage to market systems.
• The way markets respond to interventions can indicate whether the response is working as intended.
• Market recovery is a necessary aspect of livelihood rehabilitation and food security.
• Crises in market systems can also be opportunities for reconstruction and addressing issues of market power, equity and access.

Market analysis by institutions such as CILSS⁷, FEWS NET⁸, SIMA⁹ and the WFP have generated important lessons, e.g. a sub-regional approach is preferable to a purely national approach and assessments should devote more attention to demand factors at the micro-level. Also, market monitoring should be conducted on the basis of an agreed understanding of market structures, conduct and performance, and the analysis should cover flow information as well as prices.

Once analysis of the current situation is complete, it is important to extend it into the future and consider different scenarios (see Table 1). There are several different methods of scenario development, e.g. best to worst approach (self-explanatory), and augmentation or step scenarios that try to set levels at which additional action and response capacity is required. A 'time' approach defines conditions at set points in time starting with the onset of the emergency, while the 'operational resource' approach is based on understanding the types of operation required under different circumstances.

Contingency planning can make a significant contribution to improving operational anticipation and flexibility (see example in Box 2). It provides an opportunity to identify constraints and focus on operational issues prior to the onset of a crisis, enables individuals, teams and organisations to establish working relationships, helps reinforce coordination mechanisms by keeping them alive and allows organisations to put in place measures that enhance preparedness. Good contingency planning will include appropriate programming options and triggers for action, as well as predetermined roles and responsibilities amongst different actors. There are two broad approaches in humanitarian contingency planning:

• Needs-based planning, where planners must analyse existing operational capacity to determine how much strengthening will be needed to meet anticipated needs.
• Capacity-based planning, which uses available capacity as a basis for planning, regardless of anticipated needs. This approach can be used to plan for the initial phase of a crisis where external resources are not readily available.

Coordination and partnerships between humanitarian organisations, development organisations, national and local governments and private firms are vital to an effective response. Coordinated advocacy is especially important in the face of rising food prices, to ensure that the conditions faced by the most vulnerable are addressed in timely and effective manners.

To counteract dramatic increases in costs and demand and bring food prices back to levels that the poor can afford, agriculture needs to make big leaps in productivity. Investments are therefore needed by the private sector. Equally important are good seeds, improved crop varieties and support systems. Water harvesting and water storage systems are needed to reduce stress caused by dry spells and pastoralists need support. It is also important to ensure that financial services, such as insurance and credit, are available to poor farmers.

Careful decisions also have to be made over whether cash or food or a combination of both is needed to support the worst affected. The decision should not be resource driven. Recent experiences with cash programmes have shown that:

• Where markets can provide enough food, and food insecurity is a result of lack of purchasing power, cash can work.
• The combination of food plus cash can provide all the benefits of both while avoiding the limitations of each.
• Cash may be more appropriate for certain groups, such as pastoralists.

Key points to consider when deliberating over a cash-based response are:

• Accurate market analysis and monitoring is crucial.
• There must be realistic assessment of the capacity to distribute cash and sufficient funds for capacity building.
• Monitoring the impact of cash distributions requires gender sensitivity.

Social protection is an umbrella term used to describe a broad range of initiatives and transfers intended to reduce the economic and social vulnerability of the poor and food insecure. Instruments that provide a seasonal safety net, coupled with other options, can offer a livelihood package that can meet immediate needs, while building a buffer for the future. Instruments to offer a safety net include employment-guarantee schemes or conditional cash transfers, microcredit, food for work or cash for work, asset transfer or production support.

Governments, rather than the humanitarian community, should manage and implement social protection. NGO involvement should be geared towards facilitation rather than direct implementation and look to increasing their role in lobbying, advocacy, and capacity building. There is also a role for NGOs to participate in social mobilisation by engaging with civil society to hold states accountable to their social contracts and monitor the extent to which social transfers are carried out and who these are serving.

Different social protection instruments are appropriate for different sources of vulnerability. A mix of different approaches will be needed in different settings (see Table 2).

There is growing concern about the implications of rising food prices for cash-based social protection, given the eroding value of cash transfers in the face of food price inflation. Some argue that this makes the case for index-linking transfers. However, this requires governments or donors to take on the price risk that poor people face all the time and demands a degree of flexibility in planning and budgeting that governments and donors may find daunting.

¹ALNAP (2008): The global food price crisis: Lessons and ideas for relief planners and managers. Available at www.alnap.org

²http://www.alnap.org/

³CFA Report

⁴Food and Agricultural Organisation, World Food Programme, United Nations Children's Fund, United Nations Development Programme, Office for Coordination of Humanitarian Affairs

⁵Solidarites is a humanitarian organisation which provides aid and assistance to victims of war or natural disaster.

⁶Peste des petits ruminants (PPR), is an acute or sub acute viral disease of goats and sheep characterized by fever, stomatitis, gastro-enteritis arid pneumonia.

⁷Permanent Interstate Committee for Drought Control in the Sahel

⁸Famine Early Warning System, http://www.fews.net/

⁹Niger government's système d'informations sur les marchés agricoles