Bangladesh: Bank, Donors Take Long-Term View on Food Security

- Global food price spikes in 2007 and 2008 increased undernourishment by an estimated 6.8%, and drove at least 100 million more people into poverty.

- New Global Agriculture and Food Security Program fights food insecurity through improved agricultural productivity among poor, rural populations.

April 22, 2010-Across the globe, more than 1 billion people go to bed hungry each nighta number exacerbated by the 2007-08 food price crisis.

While the global price spike is abating, grain stocks remain low and food prices are forecast to be, on average, 10-20% higher through 2018, compared to the 1997 2006 average. Food price volatilityimpacted by volatile fuel pricescontinues to hurt farmers in food-insecure nations, who are often ill-equipped to manage their crops against market uncertainty.

Against this background, the World Bank Group is set to become trustee of a new fund aimed at reducing global hunger and poverty by focusing on food security and agriculture.

The United States, Canada, Spain, the Republic of Korea and the Bill and Melinda Gates Foundation will together provide about $900 million in support to the Global Agriculture and Food Security Program (GAFSP). The World Bank will serve as trustee and host of a coordination unit for the fund, and if requested, as a supervising entity.

The origins of the new fund stem from the G8-plus meeting in L'Aquila in July 2009, Italy, in which leaders pledged more than $20 billion to boost food security and agriculture.

Leaders at the G20 summit in Pittsburgh in September 2009 then called on the World Bank to "work with interested donors and organizations to develop a multilateral trust fund to scale up agricultural assistance to low income countries." The GAFSP will handle some of the funds originally pledged in L'Aquila.

The fund's aim is to put developing countries in the driver's seat so they can have funds to boost agricultural production and productivity and provide food security for their peoples. The scope of GAFSP will include doing more to connect farmers to markets, reduce risks and vulnerability to income shocks and weather events, improve off-farm livelihoods for people in rural areas, and provide technical assistance to help governments deal with food insecurity.

"With a sixth of the world's people going hungry every day, the crisis in food remains very real, posing a severe economic burden on developing countries, especially in sub-Saharan Africa," said World Bank Group President, Robert B. Zoellick. "Cooperation and coordination are vital to boost agricultural productivity and connect farmers to markets, as agriculture is the main lifeline today for about 75 percent of the world's poor."

A key focus is support to rural areas in poor developing countries rural people make up 75 percent of the world's poor and are largely reliant on agriculture for their livelihoods. Women will also be a key focus, given the strong role of women on the land and as primary caretakers of families.

The fund will have two major components one for countries and the other aimed at increasing private investment in agriculture - to boost food security.

"What poor people need most is jobs and agriculture is the fastest way to create private sector jobs and raise people's incomes." said World Bank Group Managing Director, Ngozi Okonjo-Iweala. "This is particularly true for women and girls. But for this to be sustainable, we also need to help link farmers to global supply chains."

The move to set up the new fund with money from donor countries and private foundations- comes at a time when households in crisis-affected countries face tough choices. Many have reduced their current levels of food consumption, shifted to lower quality and less expensive foods, or deferred critical expenditures on health and education. According to the International Food Policy Research Institute, an additional $14 billion in agricultural investment per year will be needed in developing countries to meet the Millennium Development Goal of halving poverty and hunger by 2015.

Out of Crisis, Initial Relief

For its part, the World Bank Group has been working hard since 2008 to help countries deal with the initial shock of high food prices on the poor. In 2008, the Bank launched its Global Food Crisis Response Program (GFRP) which has made inroads to protect the food-insecure in 37 hard-hit countries.

World Bank Group investment in agriculture also remains a high priority. Bank assistance to agriculture and rural development increased from an average of $4.1 billion from fiscal years (FY) 2006 to 2008 to $7.3 billion in FY09.

The Bank's $2 billion, fast-track GFRP, which also mobilized $337 million in external funds, has provided seeds, fertilizer and tools to nearly 6 million farm households to maintain their crops during the crisis, and direct support for food-related social protection, including providing school meals to children, cash and food for-work programs, and nutrition supplements to 1.5 million people, as of the end of last year.

GFRP support reached vulnerable populations quickly; two years after the program's launch, many countries are reporting improvements.

In Niger, for example, 4,000 metric tons of fertilizer has been distributed at subsidized prices to 33 rice producer cooperatives. The project has reached 20,784 households in total, and net revenues from the sale of fertilizer will be used to pilot a social safety net program. In Moldova, grant support has been used to provide cash transfers to more than 1,645 institutions - such as orphanages, special education schools, and kindergartens - to provide meals to children.

A grant to Senegal is helping to scale up the government's Nutrition Enhancement Program and is providing cash transfers (for purchase of food) to vulnerable mothers of children under five. Ethiopia is using grant support from the European Union Food Facility to scale up a food safety net program for 293,000 additional beneficiaries.

"Colleagues across the World Bank delivered rapidly on the Global Food Crisis Response Program, " said Juergen Voegele, Director of Agriculture and Rural Development at the World Bank. "This responsiveness prompted the call of the international community to do more. We look forward to working with a wide range of partners to deliver on this critical issue.

The World Bank also supports weather index insurance initiatives in Bangladesh, Nicaragua, Senegal, Burkina Faso, Kenya, Jamaica, and Malawi. Analytical and advisory activities related to the food crisis, such as a study on sources of food price inflation in Ethiopia, are ongoing in 40 countries.

The Bank's position is that agriculture is vital to development. Research shows that economic growth originating in agriculture is two to four times more effective in reducing poverty than growth in other sectors making clear the case for placing a high priority on investment in agriculture.