Household budgets everywhere are impacted by high food, transport and energy prices
by UN News, Global Crisis Response Group
June 2022 (Extract)
More than three months since the start of the war in Ukraine, people globally are facing a cost-of-living crisis not seen in more than a generation, with escalating price shocks in the global food, energy and fertilizer markets - in a world already grappling with the COVID-19 pandemic and climate change.
An estimated 1.6 billion people in 94 countries are exposed to at least one dimension of the crisis, and about 1.2 billion of them live in ‘perfect-storm’ countries which are severely vulnerable to all three dimensions – food, energy and finance - of the cost-of-living crisis, according to the latest findings of the United Nations Secretary-General’s Global Crisis Response Group (GCRG) on food, energy and finance systems.
“For those on the ground in Ukraine, every day brings new bloodshed and suffering. And for people around the world, the war, together with the other crises, is threatening to unleash an unprecedented wave of hunger and destitution, leaving social and economic chaos in its wake,” warned Secretary-General Antonio Guterres at the launch of the GCRG’s latest brief.
“Vulnerable people and vulnerable countries are already being hit hard, but make no mistake: no country or community will be left untouched by this cost-of-living crisis.”
After two years of fighting COVID-19, the world economy has been left in a fragile state. Today, 60 per cent of workers have lower real incomes than before the pandemic; 60 per cent of the poorest countries are in debt distress or at high risk of it; developing countries miss $1.2 trillion per year to fill the social protection gap.
The ability of countries and people to deal with adversity has therefore also been eroding. As the war erupted, global average growth prospects have been revised downward; many countries’ fiscal balances have deteriorated, and the average household has lost 1.5 per cent in real income due to price increases in corn and wheat alone.
Worldwide, more people have been facing famine-like conditions, and more people have faced severe hunger emergencies. The lingering effects of the pandemic, coupled with the war in Ukraine and the impacts of climate change, are likely to further increase the numbers of people experiencing poverty. And as poverty increases so does vulnerability, particularly for women and girls. Countries and people with limited capacity to cope are the most affected by the ongoing cost-of-living crisis.
Three main transmission channels generate these effects: rising food prices, rising energy prices, and tightening financial conditions. Each of these elements can have important effects on its own, but they can also feed into each other creating vicious cycles - something that unfortunately is already happening.
For instance, high fuel and fertilizer prices increase farmers’ production costs, which may result in higher food prices and lower farm yields. This can squeeze household finances, raise poverty, erode living standards, and fuel social instability. Higher prices then increase pressure to raise interest rates, which increase the cost of borrowing of developing countries while devaluing their currencies, thus making food and energy imports even more expensive, restarting the cycle.
These dynamics have dramatic implications for social cohesion, financial systems and global peace and security. Food should never be a luxury; it is a fundamental human right. And yet, this crisis may rapidly turn into a food catastrophe of global proportions.
Higher energy costs, trade restrictions and a loss of fertilizer supply from the Russian Federation and Belarus have led to fertilizer prices rising even faster than food prices. Many farmers, and especially smallholders, are thus squeezed to reduce production, as the fertilizers they need become more expensive than the grains they sell. Critically, new fertilizer plants take at least two years to become operational, meaning that most of the current supply of fertilizers is limited. Because of this key fertilizer issue, global food production in 2023 may not be able to meet rising demand.
Rice, a major staple which up to now has low prices because of good supplies, and is the most consumed staple in the world, could be significantly affected by this phenomenon of declining fertilizer affordability for the next season.
Time is short to prevent a food crisis in 2023 in which we will have both a problem of food access and food availability. If the war continues and high prices of grain and fertilizers persist into the next planting season, food availability will be reduced at the worst possible time, and the present crisis in corn, wheat and vegetable oil could extend to other staples, affecting billions more people.
In one way or another, everyone is exposed to the shock waves of the war. The level of exposure of a country and its ability to deal with the shock determine a country’s vulnerability. And this is a challenge in the developing world.
The UN Global Crisis Response Group, together with the United Nations Regional Economic Commissions, undertook a global vulnerability assessment on the capacity of countries to cope with each of the channels of transmission and the vicious cycles they can create.
The results confirm a widespread picture of vulnerability: 94 countries, home to around 1.6 billion people, are severely exposed to at least one dimension of the crisis and unable to cope with it. Out of the 1.6 billion, 1.2 billion or three quarters live in ‘perfect-storm’ countries, meaning countries that are severely exposed and vulnerable to all three dimensions of finance, food, and energy, simultaneously.
This vulnerability of Governments and people can take the form of squeezed national and household budgets which force them into difficult and painful trade-offs. If social protection systems and safety nets are not adequately extended, poor families in developing countries facing hunger may reduce health-related spending; children who temporarily left school due to COVID-19 may now be permanently out of the education system; or smallholder or micro-entrepreneurs may close shop due to higher energy bills.
Meanwhile countries, unless a multilateral effort is undertaken to address potential liquidity pressures and increase fiscal space, will struggle to pay their food and energy bills while servicing their debt, and increase spending in social protection as needed.
The clock is ticking, but there is still time to act to contain the cost-of-living crisis and the human suffering it entails. Two broad and simultaneous approaches are needed:
1. Bring stability to global markets, reduce volatility and tackle the uncertainty of commodity prices and the rising cost of debt. There will be no effective solution to the food crisis without reintegrating Ukraine’s food production, as well as the food and fertilizer produced by the Russian Federation into world markets – despite the war.
2. Increase people and countries’ capacity to cope. This means helping the most severely exposed countries help their poor and vulnerable populations, by increasing countries’ fiscal space and liquidity access so that they can strengthen social protection systems and safety nets and hence enhance the ability of people to deal with adversity.
Taken together, this suggests – as the United Nations Secretary-General said recently – that “there is no answer to the cost-of-living crisis without an answer to the finance crisis”.
All available rapid disbursement mechanisms at international finance institutions must be reactivated, and a new emission of Special Drawing Rights must be pursued. To succeed, strong political will across the multilateral community is needed. Piece-meal approaches will not work. What will, is a comprehensive approach that looks at the emergency today without forgetting about the future.
The vicious cycles this crisis creates shows that no one dimension of the crisis can be fixed in isolation. This crisis touches all of us. It is everyone’s problem and a common responsibility. Yet, we must accept that not everyone is affected equally. Some countries, communities and people are more vulnerable than others, and those need to be assisted first. It takes a world to fix a world, what is needed now is to start.
According to the brief, the increase in hunger since the start of the war could be higher and more widespread. World Food Programme estimates show that the number of severely food insecure people doubled from 135 million pre-pandemic to 276 million over just two years. The ripple effects of the war in Ukraine, however, are expected to drive this number up to 323 million in 2022.
The Food and Agriculture Organization’s latest food price index had already reached a record high in February 2022 before the war started, since then it has had some of the largest one-month increases in its history.
Despite the widespread impact of the crisis, not all regions and subregions are exposed in the same way, says the report, stressing the fact that some countries and communities are more vulnerable than others and need assistance urgently.
Countries in Sub-Saharan Africa, for example, remain significantly vulnerable with one out of every two Africans in the region exposed to all three dimensions of the crisis. The Latin America and the Caribbean region is the second largest group facing the cost-of-living crisis with nearly 20 countries deeply affected.
In South Asia, which is currently experiencing crippling levels of heatwaves, 500 million people are severely exposed to the food and finance crisis. Countries in Eastern Europe and Central Asia are severely exposed to the energy and finance dimensions, given the importance of remittances and energy exports from Russia.
The brief makes policy recommendations to address the cost-of-living crisis, highlighting immediate action on two critical fronts - the urgent need for stability in the global food and energy markets to break the vicious cycle of rising prices and the imperative to bring relief to developing countries, calling on resources to be made available immediately to help the poorest countries and communities.
“There is no solution to this global crisis without a solution to the economic crisis in the developing world. The global financial system must rise above its shortcomings and use all the instruments at its disposal, with flexibility and understanding, to provide support to vulnerable countries and vulnerable people,” stressed Guterres.
“The message of today’s report is clear and insistent: we must act now to save lives and livelihoods over the next months and years. It will take global action to fix this global crisis.”
* In a number of African countries basic food costs have risen by up to 30%. Globally, rising inflation driven by increasing fuel and food costs and supply chain disruptions are undermining household budgets, impacting low income and working people significantly.
* Access the report: http://bit.ly/GCRG-Brief-02
http://news.un.org/pages/global-crisis-response-group/ http://www.wfp.org/publications/war-ukraine-drives-global-food-crisis http://hungermap.wfp.org/ http://dataviz.vam.wfp.org/version2/ http://www.undp.org/press-releases/global-cost-living-crisis-catalyzed-war-ukraine-sending-tens-millions-poverty-warns-un-development-programme http://www.fao.org/cfs/events/events-details/en/c/1539090/
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We need solutions now to address global food insecurity and prevent future food crises
by Humanitarian and development agencies
Inter Action: NGO Call to Action: Global Food Security Crisis
Right now, 49 million people are at risk of falling into famine. In the next three months, life-threatening hunger is likely to expand for families in 20 hot spots around the world.
The current devastating levels of hunger are expected to persist for years to come. Projections estimate that 670 million people—8% of the world—will still face hunger in 2030.
As U.S.-based humanitarian organizations working to prevent and respond to these unprecedented levels of food insecurity and malnutrition, we urgently call for decisive mobilization and action by the Administration and Congress to mitigate the immediate loss of life and tackle the systemic challenges we face. Doubling down on building resilience has never been more important.
Hunger is rising around the world due to the increasing intensity and frequency of extreme weather events, conflict, economic crises, and disruptions from the COVID-19 pandemic. For many communities, especially those already marginalized, the compounding shocks have eroded the resilience of their food systems and they are reaching their breaking point—the conflict in Ukraine could be the final blow.
The intensity and persistence of the food crisis are also straining local responders and humanitarian actors and forcing painful decisions about where to pull away much-needed aid to account for new hunger hot spots.
Without urgent action, improved access to communities in need, and increased resources for humanitarian needs and long-term development programs, families—particularly children—will continue to face devastating hunger. The world will face the consequences if we do not act: needless suffering and death, unrest, and displacement.
The recent $5 billion in emergency supplemental funds appropriated by the U.S. Congress is an important first step to responding to global hunger. These resources are critical to helping reach people now. The U.S. Government must continue to get these funds out the door as effectively and transparently as possible in a layered and multisectoral approach. We stand ready to work with Congress and the Administration to identify the gaps that remain.
Still, more work is needed to ensure we can prevent future escalations of hunger through improved long-term planning, better alignment of humanitarian and development programs, and an increased focus on adaptation and resilience building. This work will take a step change in USG leadership: significant policy shifts and robust investments in development programs that are proven to help prevent communities from falling into crisis and help them recover from shocks. This is a smart investment—studies have shown that for every $1 invested in resilience efforts, $3 is reduced in humanitarian assistance down the line.
We appreciate recent announcements and urge the Administration to continue to engage all actors and consult with NGOs as the response continues. This long-term effort will require close collaboration with stakeholders, including locally-led organizations.
The world knows too well the consequences of unmet needs and failure to take timely action in the face of severe hunger and malnutrition. This is a critical moment for the global community to rise to the current food security challenge before we see even more devastating and preventable loss of life. The time for action is now.
http://www.interaction.org/blog/ngo-call-to-action-our-statement-on-the-global-food-security-crisis/ http://www.wfp.org/publications/hunger-hotspots-fao-wfp-early-warnings-acute-food-insecurity-june-september-2022 http://press.un.org/en/2022/sgsm21288.doc.htm http://www.fao.org/documents/card/en/c/cc0639en
We need solutions now to address global food insecurity and prevent future food crises
Joint statement: Action Against Hunger USA, Adventist Development and Relief Agency International, CARE, Catholic Agency for Overseas Development, ChildFund Alliance, Christian Aid, Concern Worldwide, Danish Refugee Council, Global Communities, Handicap International - Humanity & Inclusion, Helping Hand for Relief and Development, IMPACT Initiatives, InterAction, International Rescue Committee, INTERSOS, Islamic Relief, Mercy Corps, Norwegian Church Aid, Norwegian People's Aid, Norwegian Refugee Council, Oxfam, People in Need, Plan International, Polish Humanitarian Action - Polska Akcja Humanitarna, Refugees International, Save the Children, Solidarités International, Welthungerhilfe, Women for Women International, Women's Refugee Commission, World Vision.
This week, Government representatives will hold meetings at the United Nations focused on the global hunger crisis in two events: a ministerial-level meeting on May 18 and a Security Council debate on May 19. The overarching aim of these events is to catalyze action on global food security and resilience, focusing on the critical links between conflict and hunger, including the impacts of the war in Ukraine.
As humanitarian and development organizations working around the world to prevent and respond to unprecedented levels of food insecurity and the imminent threat of famine we face today, we welcome the focus on this urgent crisis. We urge governments to seize this opportunity to make concrete and substantial commitments to address the needs of people experiencing hunger.
Global food security has steadily worsened over the past several years. According to the 2022 Global Report on Food Crises, nearly 193 million people experienced crisis level or worse food insecurity in 2021, an increase of almost 40 million over the previous record in 2020. The negative food security outlook is projected to continue or worsen this year, and the global food systems impact of the crisis in Ukraine will only contribute to further decline.
The global hunger crisis is felt most by vulnerable and marginalized people with limited capacity to absorb additional shocks. This includes women and girls who, despite the key role they play in producing and preparing food, often eat last and least during times of acute food insecurity, are at higher risk of experiencing gender-based violence and various forms of exploitation and abuse, and are frequently excluded from conversations about how to address food insecurity.
Food insecurity and malnutrition also has a devastating impact on children, exposing them to immediate and life-long cognitive and developmental impacts, weakening their immune system, and leading to negative household coping strategies like child labor, withdrawal of children from school, and gender-based violence, including child marriage and other forms of violence against children.
The ongoing conflict in Ukraine and resulting disruption to food, fuel, and fertilizer markets has exacerbated an existing food crisis driven by conflict, climatic shocks, COVID-19, and economic pressures, particularly in contexts already experiencing humanitarian crises.
In order to pull people back from the brink of starvation, create sustainable food systems, and prevent future food crises, we need comprehensive solutions that address the myriad drivers and impacts of food insecurity.
Global humanitarian funding to prevent and respond to food insecurity is critical, and the international community must see this moment as a tipping point to avert catastrophe.
However, emergency aid alone is not enough to end this crisis. Donors must get better at leveraging longer-term funding mechanisms to get ahead of rising global hunger levels and promote resilience.
States must also engage in concerted diplomacy and cooperation to put forward rights-based trade, economic, climate, food systems, and social protection policies, and avoid restrictive trade measures that threaten to plunge millions more people into acute food insecurity.
In support of this, state, donor, multilateral, and other stakeholders seeking to address global food security, including conflict-induced hunger, should take the following concrete steps:
First, prioritize inclusive diplomacy to address the root causes of food insecurity and support policy measures that protect poor and vulnerable people’s ability to access food and livelihoods.
This includes keeping ports and trade flows open, mitigating balance of payment pressures, investing in social protection and safety nets, and supporting domestic food production and equitable distribution of land which empowers small scale producers, including women.
It also requires upholding the protection of civilians and civilian objects during conflict and addressing the effects of climate change on food security by delivering on commitments to finance climate action from the Paris Agreement and operationalize the Santiago Network.
Second, protect and increase funding to respond to the short, medium, and long-term impacts of the food security crisis. Donors should increase assistance toward global humanitarian appeals, maintain Official Development Assistance (ODA) commitments, and refrain from diverting aid from pre-existing crises to respond to new emergencies, including the Ukraine crisis and domestic refugee responses. Efforts should be made to direct aid to local organizations, including women-led organizations, that are already responding to hunger in their communities.
Additionally, donors should scale up predictable, multi-year funding for humanitarian, development, and peacebuilding programs to strengthen resilience, ensuring that funding and programs are cohesive, coordinated, and gender transformative.
Third, tailor food assistance modalities – including cash, vouchers, in-kind food assistance, and livelihoods and agricultural support – to each context.
While the overall goal of assistance is to immediately save lives, careful consideration of aid modalities can help to increase resilience to global market disruptions.
Donors should recognize that cash and vouchers can reach hungry people in crisis more quickly than commodity support in the short-term. Increasing support to small-scale farmers and sustainable agriculture practices, such as agroecology and renewable energy for agricultural production, is critical to increase livelihoods and help farmers cope with rising fuel prices and reduced access to fertilizers and other inputs.
Finally, the Security Council must address conflict-induced hunger by fully implementing UNSC Resolutions 2417 (2018) and 2573 (2021).
Monitoring and reporting on the risk of famine and food insecurity in countries with armed conflict should be more systematic, and swift follow-up action must be taken to hold perpetrators of violations of international humanitarian law accountable.
Denial of access to deliver humanitarian assistance, the use of hunger as a weapon of war, and acts of violence that threaten or harm civilians or destroy critical civilian infrastructure, whether intentional or not, cannot be tolerated.
Member States, particularly donors, must strengthen their humanitarian diplomacy to prevent these violations of international humanitarian law and respond to such incidents when they occur.
We hope these critical meetings serve as a first step in a sustained global effort to address the drivers and humanitarian impact of the global hunger crisis. It is essential that the goodwill and commitments put forward this week are translated into immediate and sustained action.
We urge the U.S. government and other Member State participants to keep their attention on this crisis and promote accountability by identifying opportunities for continued high-level engagement and progress-tracking. The G7 Leaders’ Summit in June and the UN General Assembly in September are high visibility moments to galvanize this momentum into tangible outcomes.
The world cannot wait for a declaration of famine to act. By then, it will be too late. We urge the international community to put the full force of resources, diplomacy, and policy action behind preventing large-scale loss of life due to hunger and promoting lasting food security for millions of people around the globe.
http://www.care.org/news-and-stories/press-releases/we-need-solutions-now-to-address-global-food-insecurity-and-prevent-future-food-crises/ http://www.nrc.no/news/2022/may/joint-ngo-statement-on-global-food-security-and-conflict-induced-hunger http://reliefweb.int/report/world/global-report-food-crises-2022 http://www.fightfoodcrises.net/events/grfc-2022/en/ http://www.state.gov/chairs-statement-roadmap-for-global-food-security-call-to-action/ http://www.wfp.org/publications/unprecedented-needs-threaten-hunger-catastrophe-april-2022 http://static.hungermapdata.org/insight-reports/latest/global-summary.pdf http://www.fao.org/cfs/cfs-hlpe/news-archive/en/ http://ipes-food.org/pages/foodpricecrisis http://www.fian.org/en/press-release/article/ukraine-war-highlights-growing-global-food-crises-and-need-for-new-world-food-security-strategy-2951 http://www.ohchr.org/en/special-procedures/sr-food
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