Institute Notes: A Dialogue on Overcoming Hunger and Poverty

From 2000-2007, hunger was creeping into the middle class

The Economic Research Service of USDA just came out with an analysis of food spending in the US from 2000-2007, and the findings are quite interesting. There was little progress against hunger during this period. In fact, it was rising. 

Whenever hunger is rising, the assumption is the ranks of the poor must be growing. That also held true from 2000-2007, but if all we had was our assumptions, we'd be missing an important part of the story. 

Here's what USDA has to say:

From 2000 to 2007, median spending on food by U.S. households declined by 12 percent relative to the (rising) cost of USDA’s Thrifty Food Plan, and by 6 percent relative to the (rising) Consumer Price Index (CPI) for Food and Beverages. Over the same period, the national prevalence of very low food security increased by about one-third, from 3.1 percent of households in 2000 to 4.1 percent in 2007. The deterioration in food security was greatest in the second-lowest income quintile, in which the prevalence of very low food security increased by about half. These estimates, based on data from the nationally representative Current Population Survey Food Security Supplement, are corroborated by corresponding declines in food expenditures by middle- and low-income households in the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey. The decline was largest in the second-lowest income quintile, in which average CPI-infl ation-adjusted spending for food declined by 16 percent. The declines in food spending by middle- and low-income households were accompanied by increases in spending for housing and, in the two lowest income quintiles, by declines in income and total spending. 

Spending on housing gets a mention, and sure enough it deserves it, but the other area of family budgets that has to be drawing spending away from food is health care. Health insurance premiums rose by more than 100 percent during this period. 

Day 4 - Food and Medicine are Just the Start

Our arrival in Burkina Faso is a shock to the system. Just off of the landing strip is the bare hulk of a plane that is slowly being devoured for parts. Like carrion, it’s in a semi-state of disembowelment. Steel bones jabbing at various angles into the clear sky are almost all that is left of it. The heat of the afternoon sun plays off what is left of its shining metallic skin. Even before we leave the airport, the magnitude of poverty in the country hits us squarely in the gut.

From a conversation with Burkina’s WFP Country Director, Anna Lisa Conte, we know hunger has increased across the country. Already vulnerable and suffering seasonal food insecurity, many families faced sharp declines in health and nutrition as a result of the spike in food prices. In response WFP, along with partners such as CRS, have put in place a number of emergency measures including a program that provides families with vouchers they can use to purchase food.

Malnutrition lurks even in the grain belt of Burkina Faso. The major bread basket of the country also has one of the highest rates of malnutrition. The paradox of hunger amidst plenty is in full view as we visit an emergency feeding center for malnourished children in Kirsi, a small nutrition and health clinic near Yako. The clinic is run by Medecins Sans Frontieres (MSF) and provides therapeutic feeding to malnourished children. On the day we are at the clinic more than three dozen children were registered to receive assistance from the clinic because they were suffering severe malnutrition. Eleven were sent to the nearby hospital because diseases such as diarrhea threatened their very life.

After years of experience, trial, error and improvement, the model MSF utilizes for treating malnourished children is down to a fine routine. The recovery rate is high, exceeding 90 percent. Yet, it is also clear, that the critical emergency assistance MSF is providing is not being matched by other interventions that will make emergency feeding programs unnecessary.

At least there is some hope that this will change. In the last few years, the government has been proactive in addressing nutrition as a unique problem requiring specific attention. They have created a Nutrition Directorate within the Ministry of Health and have written a National Nutrition Strategy to help coordinate the activities of the many NGOs and donor agencies currently working to promote child and maternal health. A good start, but as the scenes from the clinic demonstrate, much work remains to be done.

Day 1 - Welcome to Ghana

Driving from the airport into Accra, it’s hard not to feel the city is opening its arms to you. The kind “Akwaba” (“welcome”) greeting is plastered across multiple billboards along the major highway running into the city. Alongside the greeting are pictures of President Obama who visited the country earlier this year on his first official trip to Africa. (A transcript of the President's speech is available here.)

I am traveling with Bread’s Vice President for Policy and Programs, Jim McDonald. We have come to Ghana and Burkina Faso to explore how nutrition and food security link with agriculture. The issue has gained the attention of Congress and the new Administration. We anticipate that talking with folks in countries struggling with high levels of hunger and poverty will help us get a better sense of what can/must be done in Washington to improve food security and development prospects.

Continuing High Food Prices and their Remedy

Two recent publications underscore the continued urgency of this problem and at least part of the  solution. The first is the July 2009 edition of the FAO’s Crop Prospects and Food Situation.  According to the FAO, even though international prices have subsided significantly, domestic food prices in developing countries remain much higher than before the food price crisis of 2007/08. In some cases, prices are still at record levels. In 27 sub-Saharan countries, for more than 80 percent of the local price series analyzed, prices remain more than 25 percent higher than 24 months earlier. In Latin American and Asia, between 40 and 80 percent of prices remain at least 25 percent higher than in the pre-food crisis period.

What accounts for the “downward stickiness” (a highly technical economics term) of domestic food prices in these countries when international cereals prices have returned to 2007 levels, or are only marginally higher? One reason is that imports are down from their five year averages. But that raises its own set of questions: Ocean freight rates remain low due to reduced demand – the result of the on-going recession. So if commodity prices and shipping costs are down, why are imports down?

According to the FAO, reasons for the continued high prices include reduced harvests, civil conflict, and devaluation of national currencies. The main reason, however, is that with imperfect (i.e., restricted, opaque) markets, once prices go up they hardly ever return to their previous level. One cause of this is imperfect knowledge – key actors in the marketing chain may monopolize information to keep prices up. Another important factor is trade barriers – both the physical barriers posed by woefully inadequate transportation networks, and the institutional barriers within and between countries in the form of tariffs and other formal and informal (i.e., corruption) restrictions on the movement of commodities.

Corn, Ethanol Production and Food Prices -- It's Not So Simple

The rapid escalation of food prices in the past few years, peaking in June/July of 2008, exacerbated hunger in the United States and around the world and prompted serious reflection on the causes. One contributor and source of controversy is the use of food – especially corn -- as feedstock for biofuel production. While some decry the dichotomy of “food versus fuel” and the impact of biofuel production on local economies and the environment, others argue that biofuels provide valuable opportunities to reduce dependence on fossil fuels and generate income for farmers without significantly raising food prices. A new Bread for the World Institute internal discussion paper explores these issues and finds that the reality is not so easily distilled to a slogan or a sound bite.

Consensus has emerged that global biofuel production accounted for 40 percent of the corn price increase in 2008. The translated into perhaps 10-15 percent of the total recorded increase in food prices in 2008, which was roughly 5 percent. Since, in the U.S., average spending on food is less than 6 percent of total household expenditure, that increase is relatively insignificant. This is not the case in poor countries where food expenditures constitute a much greater share of household income – as much as 80 percent in some cases.

The increased demand for corn as a feedstock for ethanol could continue to raise food prices if demand for corn, whether for animal feed or ethanol, increases at a faster pace than production. Higher petroleum prices, which increase farmers’ production costs, could also affect consumer food prices regardless of the pace of ethanol production, as would further displacement of soy cropland for corn.

Grim News We Already Knew: Hunger is Increasing

The FAO released new data today about the increase in hunger around the world. In 2009, 1.02 billion people will go hungry.

Number of Hungry People in the World

While Asia and sub-Saharan Africa continue to have the largest number of hungry people, it is surprising that three areas that have had low or stable hunger numbers over the last decade or more saw sharp increases: the Near East/North Africa region, Latin America and the Caribbean and developed countries as a whole

Estimated Regional Distribution of Hunger in 2009 (mil.)
and Increase from 2008 Levels (%)

More on the Madrid Conference

The text of Secretary of State Clinton's video-taped remarks to Summit attendees can be found here.

Also, this article provides some interesting details from the conference. There has been a good deal of talk about the need to coordinate the US response to international hunger - this GAO Report being but the most recent example. The question batted around at the Madrid Conference is how such a coordinating mechanism would operate at the international level.One proposal is to create a new global partnership - less a new structure and more a loose but coordinated alliance - consisting of civil society, business, donor and recipient governments and multilateral institutions.

No decision was reached at the conference on a way forward.

Little Outcome from the Madrid High Level Conference

The good news, for what its worth, is that 62 ministers from 126 countries including a delegation from the United States, attended the Madrid Conference held on Monday and Tuesday of this week. Attendees were even greeted by a message from Secretary of State Hilary Clinton.

But that's about the extent of the good news - at least on first blush. A note from the chair reports that all present recognized the need "to mobilize adequate, predictable, and flexible funding that have already been committed," and to "identify financing gaps and the additional resources needed for existing anti-famine mechanisms." This is a good start, but given that during 2008 well over $20 billion was pledged, the world's poor and hungry people struggling doubly as a result of food price volatility and the recent economic turmoil, deserve more than the recognition that existing pledges should be met. Prior to the Conference, MSF called for "a concrete funding and action plan" to address the plight of the world's 55 million severly malnourished children. This is a good place to start, though long-term food and nutrition security demands more.

The Impact of the Hunger Crisis: What the new numbers tell us

The release of FAOs State of Food Insecurity 2008 provides an update of the impact rising food prices have had on global hunger. The news is sobering and depressing: globally 115 million more people have been pushed into hunger since 2007 as a result of the food price spike (an estimated 75 million in 2007and an addition 40 million in 2008). The report provides data up to 2007 (depicted in the graph below) while the accompanying press statement provides a global estimate for 2008.  Just seven countries - India,Bangladesh, Pakistan, China, Indonesia, the Democratic Republic of Congo, and Ethiopia – account for 65 percent of the world’s hungry people.

It's United Nations Day

If there is one thing that has changed this fall, it's the awakening to the fact that the nations of the world are interconnected in fundamental ways--the global meltdown as a result of the US housing market and the financial instruments that depended on it has underscored what experts and advocates have been saying about climate change and the hunger crisis caused by poor policy choices that led to food prices doubling in the span of a few weeks earlier this year. We live in a world now where our choices and actions have global consequences, intended or unintended.

The founders of the United Nations and other multilateral institutions could not have imagined the world we live in today but they took steps to provide venues for having those conversations. Unfortunately, the nations of the world have not been very good at using these venues to have an honest dialogue about the challenges facing humanity. Instead these institutions have been used to pursue national agendas and protect national interests even if they were at the expense of the global good, leading many to be cynical about the usefulness of these institutions and multilateralism more generally. 

I don't think we have a choice anymore...we need to get real about the world we live and create systems that will help the international community understand the nature of global problems and come up with global solutions. We cannot afford to live in a world where half of world's people, the poor half, the ones who are most vulnerable are "collateral damage," to quote a NY Times article from today, when the financial system implodes or as a result of climate change or our biofuels policy.

With those thoughts, happy United Nations Day!