Food Crisis:What the World Bank Is Doing

1.1 billion people were living on less than $1 a day and 923 million were undernourished, even before the food, fuel and financial crises.

Food prices remain volatile. Local food prices in many countries haven’t come down, although international food prices have fallen.



In response to the severity of the food crisis and the need for prompt action, the World Bank Group set up the Global Food Crisis Response Program (GFRP) in May 2008 to provide immediate relief to countries hard hit by food high prices. The Bank response has been articulated in coordination with the United Nations’ High-Level Task Force on food security.

* The World Bank Group increased the GFRP to $2 billion in April 2009 to provide immediate relief to countries hard hit by food high prices. GFRP was created in May 2008 to reduce the threat high food prices and rising agricultural production and marketing costs pose to the livelihoods of the world’s poor. The expedited processing of GFRP projects, up to an initial ceiling of $1.2 billion, helped speed response.

On April 16, 2009, the Board endorsed a rise in the ceiling from $1.2 billion to $2 billion, but shortened the use of expedited processing by one year to June 30, 2010. In light of the recent rise in food prices again from June 2010, the Board reinstated the initial time period for the use of expedited processing to June 2011. The money is used to feed poor children and other vulnerable groups, provide for nutritional supplements to pregnant women, lactating mothers, infants and small children, to meet additional expenses of food imports or to buy seeds for the new season.

* Grant funding has also been made available through several external-funded trust funds in support of the full range of interventions available under the GFRP. A Multi-Donor Trust Fund (MDTF) has received contributions of AUD 50 million from the Australian government, €80 million from the government of Spain, 3 billion Korean Won from the Republic of Korea, CAD 30 million from the government of Canada, and $0.15 million from International Finance Corporation (IFC).

The Russian Federation has also allocated $15 million for the Kyrgyz Republic and Tajikistan, through the Russia Food Price Crisis Rapid Response Trust Fund, which became operational in April 2009. The European Commission has allocated has allocated €111.8 million to support operations in 10 countries. Together the three Trust Funds amount to about $352 million equivalent.

As of January 2011, GFRP has approved $1,443.6 million. To date, $1,077.8 million out of the $1,443.6 million in total approved funding has been disbursed (75% of approved funds).

Total Bank-funded, Board-approved GFRP projects amount to $1,238.2 million, of which $202.4 million is from the Food Price Crisis Response (FPCR) Trust Fund for 27 countries, 17 of which are in Africa; $835.8 million is from IDA for 13 countries; and $200 million is from IBRD for a project in the Philippines. 80 percent of Bank-sourced Board-approved funds have been disbursed).

Under the externally-funded GFRP trust funds, we have approved operations totaling $205.4 million — 10 MDTF-funded projects, two Russia FPCR Trust Fund-funded operations, and 11 European Union (EU) Food Crisis Rapid Response Facility-financed operations.

* The quality of results from World Bank investment in agriculture and rural development through the regular programs remains among the highest priorities. In FY10, IBRD/IDA assistance to agriculture and related rural development, as described in Implementing Agriculture for Development: World Bank Group Agriculture Action Plan, FY10-12, was $4.1 billion (7% of total IBRD/IDA). This is a decrease from the $5.3 billion in FY09, but is higher than the average of $3 billion per year over FY06-08. One reason for the drop in assistance was the food crisis response that induced “front-loading” of projects into FY09 originally scheduled for FY10. The rapidly emerging financial crisis, which led to strong competing demand for large financial transfers vis-a-vis investment projects, also contributed to the drop in FY10 agricultural lending.
* In addition to the IBRD/IDA investments of $4.1 billion, IFC invested $2 billion in agribusiness and related sectors, resulting in total World Bank Group assistance of $6.1 billion to agriculture and related rural development lending.
* The Bank tripled investments in safety nets and other social protection programs in health and education to $12 billion over next two years, as announced in April 2009.

* The Bank established an Agriculture Finance Support Facility to expand rural finance through a $20 million Bill & Melinda Gates Foundation contribution, as announced in June 2009. The Facility will increase access to financial services, such as savings, credit, payments and insurance.

* The Bank helps countries develop financial market insurance products and risk management strategies to ensure increased capacity to respond to future prices increases, such as weather derivatives and crop insurance.

* Through the HLTF Secretariat, the Bank works through existing country-level coordination mechanisms and regional initiatives such as the Comprehensive African Agriculture Development Program (CAADP) to identify opportunities and constraints in CFA implementation on the ground. The Bank actively participated in the updating of the U.N.’s Comprehensive Framework for Action (CFA). (Source: World Bank, January, 2011)