African nations dominate Maplecroft's new Food Security Risk Index - China and Russia will face challenges
Commodity price hikes due to climate events will hit the neediest countries
With global wheat prices expected to spike following an export ban in Russia due to fires destroying millions of hectares of crops, a new study measuring global food security has identified the food supplies of Afghanistan and nine Africa states as the countries which are most at risk and vulnerable to rising costs.
The Food Security Risk Index 2010, released by risk analysis and rating firm Maplecroft, evaluates the risks to the supply of basic food staples for 163 countries. It uses 12 criteria developed in collaboration with the World Food Programme, to calculate the ranking including: the nutritional and health status of populations, cereal production and imports, GDP per capita, natural disasters, conflict, and the effectiveness of government.
Afghanistan (1) is rated as least secure in food supplies, whilst the African nations of the Democratic Republic of Congo (2), Burundi (3), Eritrea (4), Sudan (5), Ethiopia (6), Angola (7), Liberia (8), Chad (9) and Zimbabwe (10) are also considered "extreme risk." In all, African nations make up 36 of the 50 nations most at risk in the index.
Food Security Risk Index 2010
© Maplecroft 2010
Sub-Saharan Africa is particularly vulnerable to food insecurity because of the frequency of extreme weather events, high rates of poverty and failing infrastructures, including road and telecommunications networks, which decrease both production and distribution capacity. Conflict is also a major driver of food insecurity and the ongoing violence in Afghanistan and DR Congo is largely responsible for the precarious food security situation in both countries.
"Russian brakes on exports, plus a reduction in Canada's harvest by almost a quarter due to flooding in June, are provoking fluctuations in the commodity markets. This will further affect the food security of the most vulnerable countries" said Fiona Place, Environmental Analyst at Maplecroft.
Professor Alyson Warhurst, CEO of Maplecroft adds "Food security is a critical geopolitical issue and an important factor for investors concerned with sovereign risk, food and agricultural business with respect to supply chain integrity and foreign direct investments. The world will now look to China (96) as one of the biggest storage countries; however, food consumption there is on the increase and surpluses are not quantified. Traders report 200m tones are held in reserve globally - an improvement on 2008; but, this is no comfort for countries such as Haiti and Pakistan, which are heavily dependent on food aid."
Climate change is having a profound effect on global food security. The heat wave in Russia (115 and medium risk) has come at the same time as devastating floods in Pakistan, which will have long term effects on the country's food security situation. Pakistan is currently ranked 30th and "high risk" in the index, with security, double digit inflation, high food prices and poverty playing a large part in the country's ranking. However, overall country risk can mask the very acute risks in regions such as Punjab and Sindh province. The recent extreme weather events in Pakistan and Russia are expected to result in a further increase in risk to their own food security next year.
Finland (163) is the country considered least at risk, whilst the other Scandinavian countries - Sweden (162), Denmark (161) and Norway (160) - follow closely behind. Other low risk countries include Canada, (159), USA (158), Germany (156), UK (146) and France (142).
The Food Security Risk Index is one component of Maplecroft's Resource Security Series of indices, which also encompass, water security, energy security and a combined index for overall resource security. These are developed by Maplecroft to enable businesses and investors to identify risks in supply chains, operations and investments, including sovereign bonds.
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