Russia-Ukraine War Impacts on Food Security in Developing Countries
This study explores the impact of the Russia-Ukraine war on poverty and food security in developing countries. It analyzes the shocks, determinants of impacts, and outcomes on economies, populations, and agri-food systems. The study includes in-depth analyses, policy response comparisons, and tailored scenarios for countries affected by the crisis. Key questions addressed include the share of affected commodities in total trade, changes in world prices for essential goods, and the sensitivity of fertilizer demand to rising prices. The study also examines the size and drivers of economic impacts, with variations in GDP and agri-food system performance across different nations.
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Release: July, 08 2022 Acknowledgments: This Ukraine study is conducted by IFPRI with financial support from BMGF, FCDO, and USAID. Study uses data and models developed with ongoing support from BMGF, USAID and CGIAR s Foresight and Metrics initiative. Country analyses were conducted together with IFPRI s country programs and their local partners (Egypt, Ethiopia, Kenya, Malawi, Nigeria, Myanmar) and with the CGIAR s National Policies and Strategies initiative (Egypt, Kenya, Nigeria). Russia-Ukraine War and the Global Crisis Impacts on Poverty and Food Security in Developing Countries Xinshen Diao, Paul Dorosh, James Thurlow, and others International Food Policy Research Institute, Washington DC July 14, 2022 Updated Cross-Country Impact Analysis | July 08, 2022 Xinshen Diao (x.diao@cgiar.org) | Paul Dorosh (p.dorosh@cgiar.org) | James Thurlow (j.thurlow@cgiar.org)
Release: July, 08 2022 Overview Phase 1: Impact analysis Use country models to assess the impacts of global shocks on economies and populations 19 countries included in Phase 1 so far Phase 2: Policy response analysis Compare the effectiveness of broad policy responses by governments and their development partners Included Underway Phase 3: In-depth analysis with partners Tailor scenarios to policy and investment options Bangladesh Cambodia DRC Egypt Ethiopia Ghana Kenya Mali Malawi Myanmar Niger Nigeria Nepal Philippines Rwanda Senegal Tanzania Uganda Zambia Burkina Faso Guatemala Mozambique Tunisia Yemen
Release: July, 08 2022 Shocks, Impacts and Outcomes Shocks accounted for in the analysis Determinants of impacts What is the share of the affected commodities in total trade? Changes in world prices for food, fuels and fertilizers Effect of higher fertilizer prices on fertilizer use in the current cropping season ( 1-year time horizon) How important are imports in local markets and across supply chains? Are commodities a large part of consumer baskets? How much fertilizer was used before the crisis, and how sensitive is fertilizer demand to rising prices? Outcomes reported Economy: National and agri-food system GDP Population: Household incomes, poverty, and food security (i.e., hunger and diet quality)
Release: July, 08 2022 Economy | Agri-Food Systems Adversely Affected Size of economic impacts vary widely Total GDP falls in most countries, but remains largely unchanged in some cases (e.g., Nigeria) Agri-food system GDP falls in most countries, and usually by more than total GDP Impact of world price changes on national and agri-food GDP (%) Drivers of economic losses differ across sectors: Rising world fuel prices are (typically) the main contributor to falling national GDP Fuel imports are often countries largest import Increase trade and transport costs for all products Higher fertilizer prices and falling fertilizer demand drive most agri-food system GDP losses Raises production costs and reduces productivity World food price changes also have larger implications for agri-food system GDP
Release: July, 08 2022 Incomes | Large Impacts on Households Impact of world price changes on household consumption (%) Household consumption (proxy for income) falls by more than GDP Households are hit twice: rising consumer prices and falling incomes Economies also reorient towards producing exports in order to pay for more expensive imports, reducing availability for local consumers Consumption falls for both rural and urban households Higher fertilizer prices affect rural households more, by reducing agricultural production/incomes Fuel prices affect nonagricultural sectors and urban households more Contribution of world price changes to average changes in household consumption (%) Note: Unweighted average across countries
Release: July, 08 2022 Poverty | Poor Population Expands Impact of world price changes on national poverty headcount rate (%-point) Poverty increases in all countries ($1.90 a day poverty line) Additional 25.4 million poor people across the 19 countries Increase in poor population (1000s) 5,078 Most people falling into poverty are in rural areas (i.e., 74%) Rural populations are larger than urban populations Larger increase in rural poverty headcount rate (i.e., average 2.4 vs. 1.6 %-points) 390 1,192 1,314 3,568 153 Higher fertilizer prices drive most of the increase in rural poverty, whereas rising fuel prices drive urban poverty 1,411 702 442 4,099 209 Increase in poor population Contribution of world price changes to increase in rural or urban poor population (1000s people) 472 1,272 485 419 Urban 1,241 388 Rural 159 2,441 Note: Unweighted average across countries
Release: July, 08 2022 Food Security | Hunger Becomes More Pervasive Impact of world price changes on prevalence of undernourishment (%-point) Number of undernourished people rises in all countries Additional 19.2 million undernourished people across the 19 countries Increase in undernourished population (1000s) 3,715 Rising food prices are far more important in driving undernourishment than for poverty Fertilizer prices are equally important for poverty and hunger 212 1,116 1,418 2,336 74 1,093 261 804 995 Increase in undernourished population Contribution of world price changes to increase in rural or urban undernourished population (1000s people) 97 944 1,229 293 479 Urban 1,169 Rural 355 144 2,492 Note: Calibrated to FAO s 2019 PoU indicator Note: Unweighted average across countries
Release: July, 08 2022 Food Security | Diet Quality Deteriorates Population with worsening diets - deprived in at least one more food group (%) Diet quality is based on whether a household s consumption meets the recommended levels for six major food groups (i.e., EAT-Lancet) Population with more inadequate diets (1000s) World price shocks cause diet quality to worsen for many households (i.e., individuals become deprived in at least one additional food group) 105.7 million people across the 19 countries 32,311 973 2,835 26,311 Higher food prices drive most of the deterioration in diets Higher edible oil and cereal prices increase the cost of a recommended diet 5,239 662 3,441 383 244 9,783 Contribution of world price changes to increase in rural or urban diet deprivation (1000s people) Increase in population with deteriorating diets 614 12,673 3,841 1,037 1,635 Urban 3,009 Rural 512 213 2,220 Note: Unweighted average across countries
Release: July, 08 2022 Moving to Policy Response Combined impacts across the 19 countries Phase 1 A few more developing countries being added Validating/revising with IFPRI country programs and partners Phase 2 Engaging governments and other partners on potential policy responses (e.g., food tax relief, fertilizer subsidies, fertilizer use efficiency, fertilizer supply chain development, social protection, etc.) Poor population increases by 25 million people Learning so far Undernourished population increases by 19 million people Focus work on policy responses in countries that are most vulnerable (e.g., large increases in poor population, higher fertilizer use, dependence on wheat and edible oil imports, etc.) Food and fertilizer shocks are most important for poverty and food security, but their relative importance varies and, thus, so should country policy responses Diet quality deteriorates for 106 million people Need to better identify the most affected populations, to ensure they are covered by policy responses (e.g., fertilizer use was already low amongst the poorest farmers)
