World Farming Agriculture Commodity news - Short update - February 2024 - 2nd Week

Domestic food price inflation remains high.

 Inflation higher than 5% is experienced in 63.2% of low-income countries (no change since the last update on January 18, 2024), 73.9% of lower-middle-income countries (no change), 48% of upper-middle-income countries (no change), and 44.4% of high-income countries (1.9-percentage-point decrease). In real terms, food price inflation exceeded overall inflation in 71% of the 165 countries where data is available.

Since the last update, of January 18, 2024, the agricultural, export, and cereals price indices closed 3%, 7%, and 1% higher, respectively. Cocoa and coffee (Arabica) prices, which increased by 8% each, drove the increase in the export price index. Among cereals, maize and wheat prices closed 1% and 4% higher, while rice prices closed at the same level as two weeks ago. On a year-on-year basis, maize prices are 33% lower, wheat prices are 20% lower, while rice prices are 32% higher. Maize prices are 13% lower than in January 2021, wheat prices 7% lower, while rice prices 24% higher (See “pink sheet” data for agricultural commodity and food commodity prices indices, updated monthly.)

The World Bank’s Global Economics Prospects 2024 report emphasizes the critical problem of food insecurity within the context of various challenges. In 2023, food prices, a significant component of the agricultural price index, declined 9% because supplies of major crops were ample, except for rice, which rose by 27%. Food prices are expected to decline further in 2024 and 2025, although potential risks such as energy cost increases, adverse weather events, trade restrictions, and geopolitical uncertainty could affect them. The report underscores the need for global policy efforts to address food insecurity, given high consumer food price inflation. Policy makers face challenging trade-offs in addressing debt challenges and climate change and supporting populations facing food insecurity. Increasing international trade is crucial, considering signs of trade fragmentation and the use of restrictive measures.

A World Bank blog discusses the urgent need for circular food systems to address environmental challenges caused by the linear "take-make-consume-dispose" model dominating the global food system. The linear model is responsible for crossing planetary boundaries and generating hidden costs of $12.7 trillion. Circular food systems, which emphasize "reduce-reuse-recycle-remove" approaches, are proposed as a way to build profitable, sustainable, low-emission food systems. The blog highlights global efforts to promote circularity, including policy benchmarks, investments, business models, and digital technology's role in enhancing resource efficiencies.

According to the International Food Policy Research Institute (IFPRI), the recent attacks by Houthi rebels on ships in the Red Sea have triggered a 40% decrease in trade volumes in the Suez Canal, which is decreasing global food security. Shipping disruptions along critical global trade routes have become more frequent, causing concerns about the transportation of key commodities, especially grains, from Europe, Russia, and Ukraine. A Chatham House analysis indicates that approximately 14% of cereals and 4.5% of soybeans traded globally pass through the Suez Canal. The disruption in the Red Sea is affecting key wheat exporters such as the European Union, Russia, and Ukraine. Shipping through alternative routes, such as around Cape Horn, substantially increases distances and voyage times, driving up fuel and operational costs. Countries in East Africa, South Asia, Southeast Asia, and East Asia are particularly vulnerable to the current Red Sea crisis.

Following Russia’s invasion of Ukraine, trade-related policies imposed by countries have surged. The global food crisis has been partially made worse by the growing number of food trade restrictions put in place by countries with a goal of increasing domestic supply and reducing prices. As of January 30, 2024, 15 countries have implemented 21 food export bans, and 11 have implemented 14 export-limiting measures

 World Farming Agriculture Commodity news - Short update - January 2024- 2nd Report

World Bank Action
In May 2022, the World Bank made a commitment of making available $30 billion over a period of 15 months to tackle the crisis. We have surpassed that goal. The World Bank has scaled up its food and nutrition security response, to now making $45 billion available through a combination of $22 billion in new lending and $23 billion from existing portfolio.

Our food and nutrition security portfolio now spans across 90 countries. It includes both short term interventions such as expanding social protection, also longer-term resilience such as boosting productivity and climate-smart agriculture.

The Bank's intervention is expected to benefit 335 million people, equivalent to 44% of the number of undernourished people. Around 53% of the beneficiaries are women – they are disproportionately more affected by the crisis. Some examples include:

In Honduras, the Rural Competitiveness Project series (COMRURAL II and III) aims to generate entrepreneurship and employment opportunities while promoting a climate-conscious, nutrition-smart strategy in agri-food value chains. To date, the program is benefiting around 6,287 rural small-scale producers (of which 33% are women, 15% youth, and 11% indigenous) of coffee, vegetables, dairy, honey, and other commodities through enhanced market connections and adoption of improved agricultural technologies and has created 6,678 new jobs.In Honduras, the Corredor Seco Food Security Project (PROSASUR) strives to enhance food security for impoverished and vulnerable rural households in the country’s Dry Corridor. This project has supported 12,202 extremely vulnerable families through nutrition-smart agricultural subprojects, food security plans, community nutrition plans, and nutrition and hygiene education. Within the beneficiary population, 70% of children under the age of five and their mothers now have a dietary diversity score of at least 4 (i.e., consume at least four food groups).The $2.75 billion Food Systems Resilience Program for Eastern and Southern Africa, helps countries in Eastern and Southern Africa increase the resilience of the region’s food systems and ability to tackle growing food insecurity. Now in phase three, the program will enhance inter-agency food crisis response also boost medium- and long-term efforts for resilient agricultural production, sustainable development of natural resources, expanded market access, and a greater focus on food systems resilience in policymaking.

A $95 million credit from IDA for the Malawi Agriculture Commercialization Project (AGCOM) to increase commercialization of select agriculture value chain products and to provide immediate and effective response to an eligible crisis or emergency.

The $200 million IDA grant for Madagascar to strengthen decentralized service delivery, upgrade water supply, restore and protect landscapes, and strengthen the resilience of food and livelihood systems in the drought-prone ‘Grand Sud’.

A $60 million credit for the Integrated Community Development Project that works with refugees and host communities in four northern provinces of Burundi to improve food and nutrition security, build socio-economic infrastructure, and support micro-enterprise development through a participatory approach.

The $175 million Sahel Irrigation Initiative Regional Support Project is helping build resilience and boost productivity of agricultural and pastoral activities in Burkina Faso, Chad, Mali, Mauritania, Niger, and Senegal. More than 130,000 farmers and members of pastoral communities are benefiting from small and medium-sized irrigation initiatives. The project is building a portfolio of bankable irrigation investment projects of around 68,000 ha, particularly in medium and large-scale irrigation in the Sahel region.

Through the $50 million Emergency Food Security Response project, 329,000 smallholder farmers in Central Africa Republic have received seeds, farming tools and training in agricultural and post-harvest techniques to boost crop production and become more resilient to climate and conflict risks.

The $15 million Guinea Bissau Emergency Food Security Project is helping increase agriculture production and  access to food to vulnerable families. Over 72,000 farmers have received drought-resistant and high-yielding seeds, fertilizers, agricultural equipment; and livestock vaccines for the country-wide vaccination program. In addition, 8,000 vulnerable households have received cash transfer to purchase food and tackle food insecurity.

The $60 million Accelerating the Impact of CGIAR Research for Africa (AICCRA) project has reached nearly 3 million African farmers (39% women) with critical climate smart agriculture tools and information services in partnership with the Consortium of International Agricultural Research Centers (CGIAR). These tools and services are helping farmers to increase production and build resilience in the face of climate crisis. In Mali, studies showed that farmers using recommendations from the AICCRA-supported RiceAdvice had on average 0.9 ton per hectare higher yield and US$320 per hectare higher income.

 World Farming Agriculture Commodity news - Short update - February 2024 - 1st Week

The $766 million West Africa Food Systems Resilience Program is working to increase preparedness against food insecurity and improve the resilience of food systems in West Africa. The program is increasing digital advisory services for agriculture and food crisis prevention and management, boosting adaption capacity of agriculture system actors, and investing in regional food market integration and trade to increase food security. An additional $345 million is currently under preparation for Senegal, Sierra Leone and Togo.

A $150 million grant for the second phase of the Yemen Food Security Response and Resilience Project, which will help address food insecurity, strengthen resilience and protect livelihoods.
$50 million grant of additional financing for Tajikistan to mitigate food and nutrition insecurity impacts on households and enhance the overall resilience of the agriculture sector.

A $125 million project in Jordan aims to strengthen the development the agriculture sector by enhancing its climate resilience, increasing competitiveness and inclusion, and ensuring medium- to long-term food security.

A $300 million project in Bolivia that will contribute to increasing food security, market access and the adoption of climate-smart agricultural practices.

A $315 million loan to support Chad, Ghana and Sierra Leone to increase their preparedness against food insecurity and to improve the resilience of their food systems.

A $500 million Emergency Food Security and Resilience Support Project to bolster Egypt's efforts to ensure that poor and vulnerable households have uninterrupted access to bread, help strengthen the country's resilience to food crises, and support to reforms that will help improve nutritional outcomes.

A $130 million loan for Tunisia, seeking to lessen the impact of the Ukraine war by financing vital soft wheat imports and providing emergency support to cover barley imports for dairy production and seeds for smallholder farmers for the upcoming planting season.

With the onset of 2024, commodity markets remain relatively calm, at least compared to the recent past. Wheat, maize and soybean export prices were at their lowest of the past two years. Rice prices remain the exception: due to El Niño-induced production shortfalls and India's ongoing export restrictions, these are almost a third higher than they were one year ago. Markets will be watching the development of Brazil soybean production which have been under some stress due to below normal rainfall.

Yet, potential for shocks abounds: shipping disruptions in the Panama Canal, the Red Sea and many inland waterways could threaten established trade routes, and alter the competitiveness of different origins, with implications for planting intentions for 2024 crops.

EAST 

Cumulative inflation of more than 30 per cent in agricultural inputs since 2019, the impact of the cost-of-living on consumer demand and policy uncertainty will challenge the long-term resilience in farming in 2024. According to the latest AHDB agri-market outlook, food businesses and consumers were still battling with the ongoing challenges of inflation, with recent developments in the Middle East adding an extra layer of risk. Input inflation was pressuring farming businesses, with consumer inflation also likely to impact food consumption trends.

Grains