Households Go Hungry as Financial Crisis Bites

Published on 11 June 2009

ROME – The United Nations World Food Programme (WFP) today announced the results of a ground-breaking five-country study on the effects the financial crisis is having on families, many of whom were already going hungry.

As G8 development ministers meet today in Rome ahead of the July summit, WFP’s Executive Director, Josette Sheeran, called on governments to boost social safety-net programmes at this critical moment, as the impact of the economic crisis on poor households begins to hit hard.

“In each of the five countries, we were alarmed that projections were for more hunger and struggling in dozens of developing-world countries. It demonstrates that for those living on less than $2 a day, the financial crisis is accelerating hunger and the worst is yet to come,” said Sheeran.

Fewer meals, less nutritious food

The case studies focussed on Armenia, Bangladesh, Ghana, Nicaragua, and Zambia, but are intended to illustrate the situation in countries facing similar challenges. WFP food security experts reported that the majority of households are coping by reducing the number of meals eaten per day or serving up cheaper but less nutritious foods. Some families are spending less on health care or withdrawing their children from school.

WFP has designed an Economic Shock and Hunger Index (ESHI), which uses economic variables and food security indicators to identify which countries will be hit hardest by the financial crisis. It analysed 126 countries and drew up a “watch list” of countries where factors such as workers’ remittances, exports, debt or exchange rate fluctuations could limit people’s ability to put food on the table. Based on the ESHI index it initiated five case studies.

Reeling from price rises

Communities are still reeling from food and fuel price rises which peaked in 2008, said Sheeran, and the present crisis threatens to undermine progress made in the fight against hunger. Prices remain stubbornly high and with the economic downturn, many workers abroad can no longer send home money to feed their families.

“There is a real risk of aggravating chronic hunger, reversing the hard-won gains of recent years,” said Sheeran.

The studies found the groups most affected by the financial crisis were unskilled workers in urban areas, families who rely on remittances from abroad, workers laid off from the export sectors and those working in mining and tourism. The worst hit were not necessarily the poorest of the poor, however, but a new group of people who face a downward slide into poverty.

Recommendations include:

• More advocacy to encourage governments to safeguard budgets for social safety-net programmes.
• Assist governments to enhance national social safety net programmes including public works projects, as well food and nutrition-related interventions particularly targeting children and women, such as school feeding programmes.
• Strengthen flexible monitoring, to track changes in the food security situation.

Executive Director Sheeran pointed out that the cost of alleviating world hunger was relatively inexpensive compared to the trillion dollar rescue packages designed to save financial institutions and the automotive industry. In 2009, WFP needs US $6.4 billion to meet the urgent hunger needs of 105 million people.

The Five Case Studies

• In Armenia, a country typical of economies dependent on workers’ remittances, the impact of the crisis was felt immediately. The study highlights the plight of what in Armenia have become known as “the new poor.” Many workers travel abroad to work in construction in Russia and Europe. Remittances -- which account for 20 percent of the country’s GDP and are a main source of income for about a quarter of all households -- dropped by one third in the first quarter of 2009 compared to the previous year. WFP is concerned about the risk of shortages, particularly in the coming winter. Many households are already buying food on credit, risking getting into a debt trap.

• Nicaragua is also highly dependent on workers’ remittances and illustrates a country particularly vulnerable to the effects of the slowdown of the US economy. The economy was already battered in the aftermath of flooding and Hurricane Felix. Food price inflation peaked at 34 per cent in August 2008. Food consumption patterns are changing, with people cutting back on meat and dairy produce. Families are trying to make ends meet by selling off livestock, spending less on health and education and in some cases withdrawing children from school. The world crisis is likely to hit valuable exports such as coffee and seafood as well garments made for the US market.

• In Zambia, food prices are exceptionally high, with the cost of staple foods some two thirds higher than at the same time last year. Many families have begun cutting down on the number of meals per day, eating cheaper, less nutritious food. As in many countries, exchange rates and exports have been badly hit. The local currency lost a third of its value against the US$ between March 2008 and 2009 and the price of copper, the main export, has fallen sharply. There have been an estimated 8 000 job losses in the relatively prosperous Copperbelt province, where some 30 000 are employed in mining. Many miners depended on their employers for meals and for health care such as HIV medication. The tourism industry is also badly affected. Theft and prostitution are on the rise.

• Bangladesh is one of the top five countries to receive remittances from abroad and is a country that has made impressive progress towards achieving some of the Millennium Development Goals. In recent months, however, thousands of Bangladeshi workers have been forced to return home and in the first quarter of 2009, migration decreased by 40 per cent compared to the same period the previous year. Now, export orders of ready-made garments are falling, and valuable fish exports have also declined. It is a country which still faces challenges. A survey carried out by WFP, UNICEF and the Bangladeshi government at the end of 2008 found that one in four Bangladeshis did not have reliable access to food supplies. Severe, chronic malnutrition now stands at 20 per cent.

• One of WFP’s greatest fears is that the global downturn will reverse many of the gains made in combating hunger in recent years. Ghana was chosen as a case study because it represents a country which has made significant progress in reducing poverty and its social protection system provides a safety net. But capital inflows, remittances, and exports of pineapple and timber have fallen, although so far exports of its two main commodities, cocoa and gold, have remained stable. Food prices are also high. The study reports evidence of a reduction in quality and quantity of food consumed. In the most hunger-prone area, the savannah, women who collect shea nuts for use in the cosmetics industry are particularly hard hit.

For more details on the individual studies, go to: www.wfp.org