Forecast 2020: Financial Meltdown and Malnutrition


In the aftermath of the recent global food crisis and economic downturn, the world's poor face unparalleled challenges to their food and nutrition security. While increased volatility in food prices will likely continue, wages for unskilled labour are failing to keep pace. Meanwhile, the financial crisis has pushed up unemployment and further reduced the purchasing power of poor people, who in a globalized economy now feel the effects of economic shocks more acutely. The crisis has also limited the funds available for social protection, which are essential for protecting the most vulnerable people from malnourishment. Under these circumstances health expenditures are often unaffordable. Because poor people in developing countries spend between 50 to 70 per cent of their income on food, they have little capacity to adapt, and their health is being sacrificed as a result.

Restricted Budgets, Lower Food Consumption, Micronutrient Deficiencies

To cope with financial constraints, households reduce their food consumption and calorie intake. With reduced wages, households also cut spending on goods and services that are essential for their health and welfare, such as clean water, sanitation, education, and health care. In the context of economic pressures, nutritious food is now more expensive, which means developing country consumers shift to even less-balanced diets.

In Guatemala, for example, the price of a diet based on corn tortilla, vegetable oil, vegetables, and beans -- which supplies key recommended micronutrients -- was almost twice as high in 2008 as the price of a less-nutritious diet based on tortilla and vegetable oil alone. However, the cost of the balanced diet accounts for more than half the total income of a poor household living on one dollar a day per person. In Bangladesh, a 50 per cent increase in the price of food is estimated to raise the prevalence of iron deficiency among women and children by 25 per cent. Micronutrient deficiencies have negative consequences on nutrition and health, and include impaired cognitive development, lower resistance to disease, and increased risks during childbirth for both mothers and children. Micronutrient malnutrition can also impact economic productivity.

Substantial new research has shown that good nutrition in the first two years of life is especially critical. Researchers at the International Food Policy Research Institute (IFPRI) found that boys who benefited from a nutrition programme within their first two years earned wages as adults that were 46 per cent higher than those who did not participate. This study suggests that even a temporary crisis that reduces food intake for young children may have untold effects on children's physical and cognitive development, as well as their productivity and earnings, for many years to come.

2020: High Food Prices and Child Malnutrition
Projections by IFPRI for the year 2020 suggest that conditions for the poor could actually worsen over time. IFPRI researchers found that the shortages from the food crisis and global economic slowdown could result in long-term, irreversible nutritional damage for developing country consumers, especially children.

If agricultural investment and productivity decline in a depressed economic climate, which is likely, the prices of major cereals would increase significantly, due to lack of investment in agriculture and rural services. By the year 2020, prices for maize, wheat, and rice might increase by 27, 15, and 13 per cent respectively, compared to a scenario where investment and productivity are maintained. Changes in the market price of staple foods would be transmitted directly to consumers in poor countries, who rely on these crops for most of their daily calories.

With these conditions, global per capita calorie consumption will be 5 per cent lower in 2020, while in sub-Saharan Africa per capita calorie consumption will be 10 per cent lower. Globally, 16 million more children will be malnourished in 2020, and sub-Saharan Africa's share of the number of malnourished children globally will increase from one-fifth in 2005 to one-fourth in 2020. If current economic trends continue while agricultural productivity falls, the poor will face an even more daunting challenge to achieving food security.

Strengthening Poor Peoples' Resilience to Crises

The international food price crisis is continuing to impose hardships on poor people, and actions for both the immediate and long term are needed. IFPRI recommends that policymakers expand child nutrition and social safety net programmes and promote pro-poor agricultural growth. Countries should target childhood health and nutrition programmes to where they will have the largest impact. Research shows that focusing on preventing malnutrition in mothers during pregnancy, in infants and young children within their first two years is one of the best ways to do this.

Another intervention with demonstrated results -- conditional cash transfer programmes -- can increase the education, health, and nutrition of children by influencing the behaviour of household members. These programmes provide cash payments to poor families while some programmes provide food or nutritional supplements as well. In some countries, payments are conditional on households ensuring that their children attend school or receive health check-ups and that mothers attend health and nutrition education workshops. IFPRI researchers found that in Latin America, for example, conditionality has been shown to improve nutrition, if combined with increase in the supply and quality of health centres and schools.

Countries should also institute social safety net programmes, which strengthen poor people's resilience to economic shocks. When provided with resources and services at a critical time, households can meet their food consumption needs and avoid selling critical assets, such as livestock or seeds. Families can keep their children in school, instead of sending them to work. Poor people can avoid accumulating crushing debts simply to survive. By enabling people to save, invest, and accumulate assets over time, these programmes can prevent households from falling into poverty traps and also fuel future economic growth. Fortunately, research on safety nets in Ethiopia and South Africa demonstrates that these programmes are no longer only within the reach of rich countries.

Finally, to encourage agricultural growth that reduces poverty for the long term, policymakers should invest in research and development, build rural infrastructure and institutions, and strengthen information monitoring and sharing. If developing countries can maintain agricultural productivity during an economic slowdown, they can avoid many of the negative effects of slower growth. For example, IFPRI researchers found that if research and development investments are targeted at sub-Saharan Africa and South Asia, overall agricultural output growth would lift about 282 million people out of poverty by 2020. Cereal prices and the number of malnourished children would also be much lower, and per capita calorie consumption would be much higher in 2020.

Well-targeted policies would not only increase the number of food-secure people, but also allow them to withstand the global economic downturn. The world's poor and food-insecure people need a bailout now. Wealthy and developing countries alike need to invest substantial resources in basic nutrition, social safety nets, and agricultural growth. Such a bailout is not only an ethical and humanitarian imperative, but also makes economic sense.

IFPRI research on the impact of the food and financial crisis can be found at: http://ifpri.org/pubs/fpr/pr20.pdf

References

Adato, M. and J. Hoddinott. 2008. Social Protection: Opportunities for Africa. IFPRI Policy Brief 5. Washington, DC: International Food Policy Research Institute.

Bouis, H. 2008. Rising food prices will result in severe declines in mineral and vitamin intakes of the poor. Washington, DC: HarvestPlus. http://ifpriblog.org/files/43162-39414/Rising_Food_Prices.pdf.

FAO (Food and Agriculture Organization of the United Nations). 2008. Number of hungry people rises to 963 million. Briefing paper. Rome.

Hoddinott, J., J.A. Maluccio, J.R. Behrman, R. Flores, and R. Martorell. 2008. Effect of a nutrition intervention during early childhood on economic productivity in Guatemalan adults. The Lancet 371 (610): 411-16.

Ruel, M. and J. Hoddinott. 2008. Investing in Early Childhood Nutrition. IFPRI Policy Brief 8. Washington, DC: International Food Policy Research Institute.

von Braun, J. 2008. Food And Financial Crises - Implications for Agriculture and the Poor. International Food Policy Research Institute, Washington D.C., Food Policy Report. Joachim von Braun is Director General, International Food Policy Research Institute (www.ifpri.org).