Impacts of the Global Economic and

Financial Crisis on Food Security

William H. Meyers
Professor of Agricultural Economics
and Co-Director, FAPRI
University of Missouri

Social Impact of the Economic Crisis in Eastern Europe, Central Asia and
Turkey
Almaty, Kazakhstan
7-8 December 2009
Comparison of real GDP growth rates in
selected regions
Outline

Food price surge and (partial) retreat
 Where from and where to?

Macroeconomic crisis and (slow) recovery

How is food security jeopardized?

Challenges and opportunities

Policy priorities
 Short term
 Long term
“Where from” story

Gradual declining in stocks set the stage

 Declining real prices, aided by OECD subsidies
 Slowing production growth
 Area declining
 Yield growth slowing
 Consumption growth also slowing but not as much

Then the perfect storm
World Crop Productivity and Consumption
by decade
1960-1970 1970-1980 1980-1990 1990-00 2000-07
Grains
Yields 2.7 1.9 2.1 1.23 1.56
Area 0.5 0.9 -0.5 -0.41 0.47
Production 3.3 2.8 1.6 0.82 2.03
Consumption 3.3 2.6 1.7 0.94 1.70
Grains and Oilseeds
Area 1.6 1.3 -0.03 0.18 0.79
Production 4.0 3.0 2.0 1.29 2.32
Consumption 4.1 2.9 2.0 1.31 2.05

Source: USDA PSD

Exponential Growth Rates for Yields
Previous 10 years
Declining assistance to agriculture
Why did prices rise, then decline?
Can it ALL happen again?
Why prices rose

Reduced grain production
in Europe, Australia

Economic growth in Asia
and elsewhere

Weaker dollar

Higher petroleum prices

Rapid biofuel expansion

Policy interventions

Speculation rose
Why prices fell

Sharp increase in global
grain production in 2008

Financial crisis and world
economic slowdown

Stronger dollar

Lower petroleum prices

Slower biofuel growth

Many interventions stop

Speculation declined
“Where to” story

Good weather and yields in 08/09, but costs
and poor weather dampen 09/10 growth,
except oilseeds

Price surge has abated, BUT not everywhere

Trade “safeguard” interventions mostly gone

Biofuel growth slowed, but policies remain

Strong influence of petroleum price continues
Bread prices in Dushanbe and Bishkek, June
2009
Unknowns and uncertainties

Major uncertainties in food market
 Oil price

 US dollar

 The global financial crisis and

impacts on demand growth
 trade financing

 Weather
Comparison of real GDP growth rates in this
region, 2009 and 2010
Comparison of real GDP growth rates in
selected regions, 2009
Comparison of real GDP growth rates in
selected regions, 2010
Value of exports and imports for net fuel
exporters and net fuel importers
Remittances as a share of GDP in 2007
How is food security jeopardized?

Reduction in the quantity and/or quality of

food purchases
 High food prices
 Loss of employment or reduction of wages
and income
 Market disruption or policy reaction that
impairs availability
How is food security jeopardized?

Reduction in food production
 High prices of feed and other inputs
 Lack of credit access

Reduction in the quantity and/or quality of
food aid
 High food prices
 Decline of government/international donor
financial resources
 Macro instability, market disruption or policy
reaction that impairs availability
Growth of net exports from the region
A more uncertain future
1. Road to economic recovery?
2. Timing and size of oil price volatility?
3. Will biofuel policies change?
4. Will other policies be unstable?
5. Will DDA be completed in near term?
6. Climate change and policy impacts?
7. Wider range of possible outcomes
8. Complicated decision making and planning
9. Larger impacts on low income consumers
Challenge and Opportunity
1. Challenge - how to provide safety net measures
for the most vulnerable populations
2. Opportunity - higher prices can increase
availability and access
3. National and international policy actions
needed
 Short run
 Long run
Policy priorities

Short run
 Twin track approach

Expand food assistance and early warning and rapid
response capacities

Target food production programs with inputs, credit
and extension education packages
 Accelerate local adaptation and dispersion of
currently existing technology
 Complete the Doha Round of trade negotiations
and Restore trust in the international trading
system with improved multilateral or plurilateral
rules and agreements
 Policy priorities

Long run (but start yesterday)
 Investment (not land grabs) in agric. development
AND R&D for production and post harvest
 Improve market functioning to facilitate price
transmission and integration with global markets
 Risk management tools for farmers
 Enhance rural development and rural infrastructure
investments
 Invest in social protection or safety net measures to
protect vulnerable populations
 Thank you!

CONTACT INFORMATION:
EMAIL: MEYERSW@MISSOURI.EDU
WEB: WWW.FAPRI.MISSOURI.EDU