The document discusses the 2006-2008 global food crisis and its impact on the Caribbean region. It provides the following key points: 1) International food prices rose sharply between 2006-2008, with the FAO Food Price Index increasing nearly 78% during this period. This represented the most significant rise in global food prices seen in 30 years. 2) The food crisis had significant economic and social impacts across the Caribbean. It contributed to accelerated inflation, with food inflation higher than non-food and headline inflation in most Caribbean countries. Rising food costs also likely increased poverty and indigence rates. 3) While international food prices have declined from their 2008 peaks, prices remain higher than pre-crisis levels in

1. 1
ECLAC Subregional Headquarters for the Caribbean
Food Security, food crisis and
its impact on the Caribbean
October 2009

2. 2
Outline
I. The 2006 – 2008 food crisis
II. Assessing the economic and social impact on
the Caribbean
III. Conclusions and policy recommendations

3. 3
I. The Food Crisis

4. 4
 There is consensus that the “official” start for the food
crisis can be dated to mid 2006, when international
food prices began to rise at an accelerated pace
 However, problems had been brewing for a while, with
a mixture of structural and external factors driving food
prices up
 According to the FAO Food Price Index, between June
2006 and June 2008, the overall rise of international
food prices amounted to a staggering 77.7%
I. The Food Crisis

5. 5
Source: Food and Agriculture Organisation.
* Data up to August 2009.
0
100
200
300
400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*
FAO General Food Index
Meat
Dairy
Cereals
Oil and Fats
The rise of food
prices reached its
zenith in June 2008

6. 6
Structural Temporary
Demand side  Sustained rapid growth and
changes in consumption
patterns in emerging
countries, driving food
demand up (China)
 Surge in bio-fuel production
(Corn)
 Speculative investment in
agriculture commodities futures
and options markets
Supply side  Increases in production costs
(Oil, fertilizers)
 Poor harvest due to natural
phenomena in some cases
(Australia – wheat)
Other  Depreciation of the United
Sates dollar
Main drivers of world food inflation

7. 7
0
100
200
300
400
500
600
700
Maize (US) Rice (Thai) Sorghum (US) Soybean (US) Wheat (US)
2006 2007 2008 Jan-Jun 2009
Source: Food and Agriculture Organisation.
* Data up to June 2009.
After 3 years of
continuous increase,
food prices declined
during the first half
of 2009

8. 8
Recent Trends:
 From 2008 on, international food prices have
contracted significantly
 The global financial and economic crisis that started in
2008 is one of the main factors explaining this:
 Stagnation in the growth of food demand
 Fall in the price of oil and other inputs
 Collapse of speculative drives in the food markets
 However, international food prices have not returned to
pre-crisis levels yet
 The food crisis is “over”… by now

9. 9
II. Economic and social impact on the Caribbean

10. 10
657
868
785
0
2,755
1,737
2,000
820
2,119
2,883
2,125
2,000
0
1000
2000
3000
Corn Rice Coarse grains Wheat
Thousandofmetrictonsin2008/2009
Domestic production Domestic consumption Imports
Source: United States Department of Agriculture
*Accumulated data for the whole Caribbean area for 2008/2009.
Imports are reported on a trade year basis. All other data are reported using local marketing years.
A fact: The Caribbean is very dependent on imported food
The Caribbean does not
produce wheat, which,
is extensively imported
and consumed

11. 11
Economic impact: Price inflation accelerated in the Caribbean,
driven by rising food prices
9.1
14.9
7.6
22.7
45.5
21.4
29.5
17.1
27.8
22.8
30.8
64.7
33.4
64.5
7.8 7.8
-0.3
16.8
33.3
15.6 16.2
-10
0
10
20
30
40
50
60
70
Bah Bar Bel Guy* Jam Sur T&T
AccumulatedinflationfromJune2006toJune2009
Headline inflation Food inflation Non-food inflation
Source: ECLAC on the basis of official data
* Data up to March 2009 in the case of Guyana
In all the cases, food
inflation was higher
than non-food and
headline inflation

12. 12
15.5
5.2
9.1
11.2 11.1 11.5
10.1
17.7
29.9
18.4
22.6
21.6 21.6
17.5
14.4
25.9
9.4
1.8 2.2
5.0
2.0
9.2
7.4 7.8
-10
0
10
20
30
40
Ang* A&B Dom Gre Mon St KN St L St VG
AccumulatedinflationfromJune2006toJune2009
Headline inflation Food inflation Non-food inflation
Source: ECLAC on the basis of official data
* Data up to March 2009 in the case of Anguila
Food inflation also was considerable in the smaller Caribbean
countries, pushing headline inflation up

13. 13
Source: ECLAC on the basis of official data
* Data up to March 2009 in the case of Guyana and Anguila
Food inflation was the main contributor to headline inflation in
almost all Caribbean countries
Percentage points contributed by
food inflation to headline inflation
July 2006-June2009
MDCs
Bahamas 2.5
Barbados 9.9
Belize 7.8
Guyana* 13.1
Jamaica 25.1
Suriname 11.2
Trinidad and Tobago 17.7
ECCU
Anguila* 8.8
Antigua and Barbuda 3.8
Dominica 7.7
Grenada 8
Montserrat 10.1
St. Kitts and Nevis 4.8
St. Lucia 5.4
St. Vincent and the Grenadines 14.2
In Jamaica, food
inflation added 25.1
percentage points to
headline food

14. 14
Inflation in the Caribbean Region, 2006 - 2009
Guy
Bel
Sur
T&T Jam
Bar
Bah
Ang
A&B
Dom
Gre
Mon
St. K&N
St. L
St. V&G
AVERAGE
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
0% 5% 10% 15% 20% 25% 30% 35%
Non-Food Inflation Jul 2006 - Jun 2009
FoodInflationJul2006-Jun2009
Source: ECLAC on the basis of official data
Guyana, Jamaica, Suriname and Trinidad and Tobago suffered the
highest food inflation and non-food inflation rates

15. 15
1.5
7.8
3.9
5.4
18.0
3.2
11.5
3.7
6.1
8.1
8.9
14.3
19.0
10.4
5.2
9.7
6.8
2.5
8.6
2.0
18.3
1.4
-3.6 -3.2
-4.0
3.6
-1.5
-5
0
5
10
15
20
Bah Bar Bel Guy* Jam Sur T&T
Foodinflationbysemesters
2007-II 2008-I 2008-II 2009-I
Source: ECLAC on the basis of official data
* Data up to March 2009 in the case of Guyana
In any case, during 2009 food inflation has slowed down in most
Caribbean countries
In some cases, food
inflation during the first
half of 2009 was
negative, reflecting a net
reduction of food prices

16. 16
3.8 3.7
6.3
9.7
3.0
2.1
8.5
7.2
11.6
7.0
3.9 3.8
10.1
3.2
1.7
6.8
5.0
6.4
3.9
1.2
5.8
-5.0
1.5
-1.9
-3.4
5.7
2.0
-0.7
5.8
1.8
2.0
-0.3
-5
0
5
10
15
20
Ang* A&B Dom Gre Mon St KN St L St VG
Foodinflationbysemesters
2007-II 2008-I 2008-II 2009-I
Source: ECLAC on the basis of official data
* Data up to March 2009 in the case of Anguila
The ECCU countries have benefitted from a slowdown, or even a
reversal, of food inflation during 2009

17. 17
Food prices in the Caribbean are downward rigid
75
100
125
150
175 Jun-06
Aug-06
Oct-06
Dec-06
Feb-07
Apr-07
Jun-07
Aug-07
Oct-07
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
World Food Index
Bah
Bar
Bel
Guy*
Jam
Sur
T&T
Source: ECLAC on the basis of official data
* Data up to March 2009 in the case of Guyana
Most food price
indexes in the
Caribbean are
still higher than
world food index

18. 18
Food prices in the Caribbean are downward rigid
75
100
125
150
175 Jun-06
Aug-06
Oct-06
Dec-06
Feb-07
Apr-07
Jun-07
Aug-07
Oct-07
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
World Food Index
Ang*
A&B
Dom
Gre
Mon
St KN
St L
St VG
Source: ECLAC on the basis of official data
* Data up to March 2009 in the case of Anguila
Interestingly, food
price indexes within
the ECCU, are
closer to the current
level of the world
food price index

19. 19
 Some possible explanations for this phenomenon of
food prices being downward rigid
 Price distortions due to monopolistic or oligopolistic market
structures
 Lagged impact of the 2006-2008 food crisis still reverberating
across the Caribbean
 Adaptive expectations among consumers and producers
keeping food prices up
 Changes in consumer behaviour contributing to keep food
demand at high levels

20. 20
Social impact: The food crisis may have translated into an increase
in poverty and indigence rates in the Caribbean
Indigence rate Poverty rate (including
indigence)
MDCs
Bahamas (2001) .. 9.3
Barbados .. ..
Belize (2002) 10.8 33.5
Guyana (2007) 13.0 31.0
Jamaica (2006) .. 14.3
Suriname (2000) 20.0 63.1
Trinidad and Tobago (2005) 1.2 16.7
ECCU
Anguilla (2002) 2.0 23.0
Antigua and Barbuda (2005-2006) 3.7 18.3
Dominica (2002-2003) 15.0 39.0
Grenada .. ..
Montserrat .. ..
St. Kitts and Nevis (1999-2000) 12.9 31.0
St. Lucia (2005-2006) 1.6 28.8
St. Vincent and the Grenadines .. ..
Source: Survey of Living Conditions except for Belize (Living Standards Measurement Survey), Guyana
(Household Income and Expenditure Survey) and Suriname (General Bureau of Statistics).
.. = not available
Poverty and indigence
rates in the Caribbean are
very heterogeneous, and,
due to methodological
differences, not strictly
comparable

21. 21
36.5
31.0
26.1
14.3
21.0
16.7
0
10
20
30
40
50
Guyana 1999 Guyana 2007 Jamaica 1996 Jamaica 2006 Trinidad &
Tobago 1995
Trinidad &
Tobago 2005
PercentageofPoorinTotalPopulation
Available data strongly suggests that the region has made advances
in poverty reduction during the last decade
Source: ECLAC on the basis of official data
Due to methodological
differences between
countries and surveys,
the data are not strictly
comparable

22. 22
Bah
Bel
Jam
Sur
T&T
Ang
A&B
Dom
St. L
AVERAGE
0%
10%
20%
30%
40%
50%
60%
70%
0% 10% 20% 30% 40% 50% 60% 70%
Average Household Expediture on Food
IncidenceofPoverty
Countries with high poverty rates and high household expenditure
on food are particularly vulnerable to food inflation
Source: ECLAC on the basis of official data

23. 23
Source: ECLAC’s calculations on the basis of Kairi Consultants Ltd. (2007).
e = estimation
Household Cumulative percentage of
population
Per capita monthly
consumption expenditure
Per capita monthly
consumption expenditure
percentile (% ) 2005 2008 (estimated)
(% ) TT$ at current prices TT$ at current prices
0.8 (Indigence line 2005) 1.2 255 343
1 1.5 262 352
2 3.0 301 405
3 4.5 341 458
3.3 (Indigence line 2008e) 5.0 354 476
4 6.2 387 520
5 7.7 427 574
6 9.2 467 627
7 10.7 506 680
8 12.2 546 734
9 13.7 586 787
10 15.2 625 840
11 (Poverty line 2005) 16.7 665 894
12 18.1 689 926
12.8 (Poverty line 2008e) 19.1 708 951
13 19.5 714 959
14 20.8 738 992
15 22.2 762 1,025
16 23.6 787 1,057
17 25.0 811 1,090
18 26.3 835 1,123
19 27.7 848 1,139
20 29.1 884 1,188
An exercise: Rising food prices may have pushed up the poverty and
indigence lines in Trinidad and Tobago
A simulation
conducted by ECLAC
suggests that food
inflation in Trinidad
and Tobago
contributed to rise the
indigence line from
TT$ 255 to 476, and
the poverty line from
TT$ 665 to 951,
between 2005 and
2008

24. 24
Therefore, indigence and poverty rates could be rising in Trinidad
and Tobago, due to high food prices
1.2
5.0
15.5 16.7
19.1
14.1
-5
0
5
10
15
20
25
2005 Survey 2008 Estimate 2005 Survey 2008 Estimate
Percentageofpopulation
Indigent Poor but not indigent Total poor
Source: ECLAC’s calculations on the basis of Kairi Consultants Ltd. (2007).
e = estimation
The simulation by
ECLAC suggests that
the indigence rate
could have gone from
1.2% to 5.0% and the
overall poverty rate
from 16.7% to 19%

25. 25
 However, it is important mentioning that this exercise
make several assumptions:
 The distribution of consumption remains constant within
the population
 The population is not capable of increasing their income
high enough to compensate for the higher prices
 Government policies totally fail to diminish the
enhancement of poverty and indigence

26. 26
III. Conclusions and policy recommendations

27. 27
 Due to the food crisis and the current global crisis, it is
not clear if the Region will be able to keep improving
social standards
 Progress already made in social development is in
jeopardy
 What will happen depends on how well governments
secure resources, maintain social expenditures at
acceptable levels, and allocate them efficiently
 However, many Caribbean countries are having a hard
time financing those expenditures

28. 28
What is the current status of the food crisis in the
Caribbean?
 Food prices are still at very high levels across the
Caribbean, and, in the case of some countries, prices
are still rising
 Furthermore, the structural weaknesses of the region
regarding food security and food dependency still
remain strong
 One fact is undeniable: in the future there will be new
episodes of food crisis and the region needs to
prepare for such scenarios

29. 29
Policy recommendations include:
 Foster anti-inflationary policies
 Introduce greater competition in the distribution and
commercialisation of imported food
 Reduce imported food dependency by promoting domestic
production
 Decrease food consumption promoting changes in nutrition
patterns
 Implement well targeted social programs to reduce poverty
and indigence and emphasize healthy living styles
 Link nutrition and health policies to food production and
consumption

30. 30
Thank you for your
attention
ECLAC Subregional Headquarters for the Caribbean