Global Food Security Index 2013: An annual measure of the state of global food security

Global Food Security Index 2013: An annual measure of the state of global food security Sponsored by 2 July 2013

Agenda Overview Methodology Results

Overview In 2012 the Economist Intelligence Unit was commissioned by DuPont to produce the innovative Global Food Security Index designed to develop a common framework for understanding the root causes of food insecurity. This year s first annual update of the index reveals food security challenges countries face over the course of a year. Two new countries Ireland and Singapore and two new indicators corruption and urban absorption capacity were added to deepen the analysis. Defining food security Food security exists when people at all times have physical, social and economic access to sufficient and nutritious food that meets their dietary needs for a healthy and active life. The Global Food Security Index: ranks 107 countries according to their relative levels of food security using 27 indicators divided into three categories: Affordability; Availability; Quality and Safety.

Objectives To provide a rigorous, structured framework for understanding the drivers of food security. To enhance the understanding of food security in a global context. Specifically, the index seeks to identify: The factors affecting food security The relationship between these factors Leading and lagging countries How countries can improve food systems to reduce food insecurity Priority areas for each country (eg. trade policy, infrastructure, agricultural R&D) 4

What are we measuring? This index is the first to examine food security comprehensively across the three internationally established dimensions of food security: Availability, Affordability, and Utilisation called Quality and Safety in the index It looks beyond hunger to the underlying factors that influence the ability of consumers to access sufficient amounts of safe, high-quality and affordable food. It employs a quarterly adjustment factor for food price fluctuations to examine the risks countries face throughout the year. It includes several unique qualitative indicators, developed and scored by Economist Intelligence Unit analysts, to capture drivers of food security not currently measured in any international dataset. This year s update includes two new indicators that aim to capture the effects on food security of corruption and an economy s ability to cope with urbanisation. 5

Agenda Overview Methodology Results 6

Geographic coverage: 107 countries Canada, United States of America Austria, Belarus, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Spain, Sweden, Switzerland, Ukraine, UK Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela Algeria, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Cote d Ivoire, Congo, Egypt, Ethiopia, Ghana, Guinea, Kenya, Madagascar, Malawi, Mali, Morocco, Mozambique, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, Sudan, Tanzania, Togo, Tunisia, Zambia Australia, Azerbaijan, Bangladesh, Cambodia, China, India, Indonesia, Israel, Japan, Jordan, Kazakhstan, Malaysia, Myanmar, Nepal, New Zealand, Pakistan, Philippines, Saudi Arabia, Singapore, South Korea, Sri Lanka, Syria, Tajikistan, Thailand, Turkey, Uzbekistan, Vietnam, Yemen 7

Index framework Food consumption as a share of household expenditure Percent of population under global poverty line GDP per capita, $US, PPP Agricultural import tariffs Presence of food safety nets Access to finance for farmers Diet diversification Nutritional standards Micronutrient availability Protein quality Food safety Affordability Quality and Safety Index Sufficiency of supply Public expenditure on agricultural R&D Availability External Adjustment Agricultural infrastructure Volatility of agricultural production Political stability risk Corruption Urban absorption capacity Food Price Adjustment Factor FAO global food price index adjusted for income growth and pass-through coefficient of global to national food prices on a quarterly basis Applied to Affordability score Next update in October 2013 8 * Composite indicators are bolded.

Agenda Overview Methodology Results 9

Overall results: 2013 GFSI Score 0-100, 100=best environment Score 69.5 to 86.8 Score 52.3 to 69.4 Score 35.9 to 52.2 Score 20.8 to 35.8 10

Results: Top and bottom performers The most food-secure countries still share these characteristics: Ample food supply High incomes Low spending on food relative to other outlays As was the case last year, high income countries dominate the top of the rankings. They account for all of the first 28 countries, except for the 26 th position, which is held by Chile. The bottom of the rankings consists of low income countries, particularly from Sub-Saharan Africa. Myanmar is the highest low income country in the index, at 74 th overall, out of 107 countries. BEST ENVIRONMENT 1 United States 86.8 2 Norway 86.5 3 France 83.7 4 Austria 83.4 =5 Switzerland 83.2 =5 Netherlands 83.2 7 Belgium 82.4 8 Canada 82.1 9 New Zealand 82.0 10 Denmark 81.8 WORST ENVIRONMENT =96 Madagascar 29.3 =96 Rwanda 29.3 98 Sierra Leone 29.0 99 Malawi 28.3 100 Zambia 28.1 101 Haiti 27.6 102 Mali 26.8 103 Burundi 26.3 104 Sudan 25.2 105 Togo 22.7 106 Chad 22.1 107 Congo (Dem. Rep.) 20.8 11

Results: Year-on-year changes Overall food security was little changed from last year. No region s score improved dramatically, but Sub-Saharan Africa showed the biggest gain, climbing by just under one point Developing countries made the greatest food security gains in the past year. Rising incomes and larger average food supplies improved food security in many developing countries. Falling national incomes hurt food security in some developed countries over the past year. Income per person dropped in most advanced economies in the past year, the result of weak economies; although, they remain, for the most part, in the top 20% of the index. Political conflict reduced food security in Mali, Yemen and Syria during the past year. Violent conflict not only reduced political stability but also hurt GDP growth, road infrastructure, access to potable water, and curbed the ability of formal grocery sectors to provide food. LARGEST RANK IMPROVEMENTS Ethiopia 90 +11 Botswana 43 +7 Dominican Republic 55 +7 Niger 91 +7 Israel 17 +6 Madagascar 96 +6 Malaysia 34 +5 Myanmar 74 +5 Senegal 82 +5 Uruguay 32 +5 LARGEST RANK DECLINES Mali 102-14 Russia 40-7 Sudan 104-7 Syria 79-7 Yemen 93-7 El Salvador 63-6 Greece 25-6 Guatemala 68-6 Ukraine 47-5 Zambia 100-5 12

Results: Affordability The populations of South Asia and sub-saharan Africa are the most vulnerable to food price shocks. Food consumption as a share of household expenditure averages 52% in both regions, versus 20% in highincome countries. These regions have the highest and second highest incidence of those living under the global poverty line. After North America, Latin America & Caribbean has the lowest agricultural import tariffs. The top two Latin American countries, Peru and Chile, respectively rank fourth and seventh overall. Sub-Saharan Africa lags all other regions in providing adequate access to financing for farmers. AFFORDABILITY RANKINGS 1 Singapore 93.9 2 United States 91.7 3 Switzerland 88.9 4 Norway 88.1 5 Australia 87.8 6 Netherlands 87.3 7 Belgium 86.7 8 Ireland 86.6 9 Sweden 86.5 10 Denmark 86.3 30 Chile 70.8 * Chile ranked higher in Affordability than any other country in the region, just ahead of Brazil (31 st ) and Argentina (33 rd ). Chile has particularly low agricultural import tariffs, which contributed to its strong performance in the category. Chile also improved considerably in GDP per capita, which jumped to US$2,330, a 14.4% increase, since last year s index. Chile ranks the lowest in the category on proportion of people living under the global poverty line. 2.7% of the population lives on les than US$2/day (PPP). 13

Results: Availability High income countries performed well in all indicators except volatility of agricultural production and urban absorption capacity. High political instability, low urban absorption capacity, and high volatility of agricultural production all contribute to the moderate performance of the Middle East. While Asia and Latin America & Caribbean face challenges in food availability, volatility of agricultural production is an area of strength. South Asia and Latin America & Caribbean perform the best in the new urban absorption capacity index. Countries in the top-third of the rankings tended to have relatively high GDP growth rates and below-average urban growth rates, facilitating easier adaptation to urbanisation. AVAILABILITY RANKINGS 1 Norway 86.6 2 France 82.9 3 United States 82.4 4 New Zealand 81.5 5 Austria 81.2 6 Netherlands 79.1 7 Switzerland 78.9 8 Germany 78.7 9 Belgium 78.4 10 Canada 78.1 22 Chile 69.2 * Chile also ranked the higher in Availability than any other country in Latin America and the Caribbean. Chile did particularly well on the two new indicators: corruption (10 th ) and urban absorption capacity (12 th ), which contributed to its overall rank improvement from last year. Although its overall score did not change, Chile experienced a slight decline in its average food supply, which fell 12 kcal/capita/day. 14

Results: Quality and Safety Dietary protein consumption increased in 62% of the countries in the index. Average daily protein consumption is 1.7 grams greater in this year s index than it was the prior year. Low income countries, particularly those in Sub-Saharan Africa and the Middle East & North Africa, actually rank the highest for dietary availability of vegetal iron, while high income countries perform considerably worse. With the exception of Greece, the top 13 ranked countries are in Africa. South Asia, Latin America & Caribbean, and North America all had perfect scores for nutritional standards. All countries in these regions had sufficient government commitment to increasing nutritional standards. QUALITY AND SAFETY RANKINGS 1 Israel 88.5 2 France 87.5 3 Portugal 87.0 4 Greece 86.8 5 United States 86.4 =6 Ireland 85.6 =6 Spain 85.6 8 Australia 85.4 9 Italy 84.7 10 Netherlands 84.1 30 Chile 72.2 * In Latin America & Caribbean, Argentina had the highest rank for quality and safety (24 th ), while Chile and Mexico were tied for second in the region (30 th ). Protein quality in foods improved since last year, through greater overall consumption of protein. Dietary availability of vegetal iron in Chilean s food consumption is Chile s weakest area in this category. In Chile, the average person receives 9.4 mg/capita/day of vegetal iron per day, which is below the average of 11.1 mg/capita/day. 15

Regional results: Latin America and the Caribbean LAC made modest improvements to its food security in the 2013 GFSI. While food remains affordable to residents of LAC, its avalability remains a regional concern. LAC residents continue to spend less on food as share of their income - than other regions with similar income levels. In Brazil, the average household spends only 19.8 percent of their incomes on food. The sustainability of these policies is unclear given the mounting inflationary pressures in the country. Peru, Colombia, Bolivia, and Panama improved their food affordability by decreasing tariffs on agricultural products, partly from the implementation on trade agreements with the US and other countries. Underinvestment in both Agricultural R&D and infrastructure persist. Sufficient amounts of healthy food are not available for considerable portions of the region, which still depends significantly on external food aid. On average, residents of Bolivia, Ecuador, Guatemala, and Haiti consume less than 2,300 calories per day the UN recommended amount for healthy, active adults. Rank Regional Global Score / 100 1 26 Chile 70.3 2 29 Brazil 67 3 30 Mexico 66.2 4 32 Uruguay 65.3 5 35 Argentina 63.8 6 36 Costa Rica 63.7 7 41 Venezuela 60.8 8 44 Panama 59.7 9 50 Peru 56 10 52 Colombia 54.5 11 53 Paraguay 52.9 12 55 Dominican Republic 51.9 13 57 Ecuador 51.6 14 62 Honduras 48.4 15 63 El Salvador 47.5 16 65 Bolivia 46.2 17 68 Guatemala 45.2 18 72 Nicaragua 41.6 19 101 Haiti 27.6 16

EIU s outlook on Chile - Overview Chile will continue to stand out as the economy in Latin America with the soundest macroeconomic fundamentals, reflecting decades of good economic management. The Banco Central de Chile (BCCh, the Central Bank) will continue to preserve the country s hard-earned reputation for price stability, while seeking to curb peso volatility and shield the economy from external shocks. Chile s robust economic fundamentals and political and institutional stability will be supportive of growth in 2013-17. Although the economy is expected to cool after GDP growth of 5.6% in 2012, continuing strong consumption and investment will result in GDP growth of 4.7% (down from our previous forecast of 5%) in 2013. 17

EIU s outlook on Chile agriculture and prices Agriculture, Chile s second largest source of exports, is expected to grow by 3.5-4% annually in 2013 17, supported by privileged market access afforded by the country s large network of FTAs. Sound policies will limit inflationary pressures the monetary policy rate, at 5%, is currently close to neutral and we forecast that inflation will mostly remain within the 24% official target range over the outlook period. Domestic risks to this forecast could emerge from the national electricity grid s vulnerability to weather shocks (predominantly droughts), which could result in energy price rises. Also, volatility in global fuel and food prices could again exert inflationary pressure, as occurred in 2007-08. 18

Results: Chile s strengths Overall rank: 26/107 Overall score: 70.3/100 Chile ranked 1 st in the region for affordability and availability and 2 nd in quality and safety. Food in Chile is affordable and available, relative both to the region and globally. High incomes, low financial outlays on food and robust public expenditure on agricultural research and development all supported strong scores in these categories. Food availability a regional weakness continues to improve in Chile. Continued foreign investment has improved road infrastructure improving the transportation and delivery of food throughout Chile. In late 2012, the Chilean Foreign Investment Committee (CFIC) announced a series of foreign investments in infrastructure. The projects included: terminal upgrades at Arturo Merino Benítez International Airport in Santiago and El Tepual Airport in Puerto Montt; railroad investments in the Transandino Central Railway several others. In its most recent report, the CFIC offers foreign investors 7.9 billion in concessions for transportation projects, targeting highways, ports and railways, investments. Chile is the highest ranked upper-middle income country in the GFSI, ahead of multiple high income countries. Chile ranks 26 th overall in food security. 20

Results: Chile, cont d. Chile ranks 2 nd overall in the region for food Quality and Safety, but needs greater diet diversification The presence of nutritional institutions and strong food safety support Chile s overall score in the category. Chile s greatest weakness is in diet diversification. While food consumption is relatively rich in micronutrients and protein, it has less non-starchy foods than in many other countries in the region. Diet diversification Micronutrient availability 1 Dominican Republic 69.00 1 Mexico 63.4 =2 Argentina 67.00 2 Peru 58.2 =2 Costa Rica 67.00 3 Chile 56.5 4 Brazil 64.00 4 Argentina 56.0 5 Ecuador 63.00 5 Venezuela 50.5 =6 Colombia 60.00 6 Uruguay 49.7 =6 Venezuela 60.00 7 El Salvador 38.5 8 Paraguay 58.00 8 Paraguay 37.5 9 Chile 56.00 9 Brazil 36.9 =10 Honduras 55.00 10 Costa Rica 35.7 =10 Mexico 55.00 11 Honduras 34.3 =10 Panama 55.00 12 Panama 32.6 13 El Salvador 54.00 13 Guatemala 32.5 14 Uruguay 53.00 14 Colombia 31.7 =15 Guatemala 48.00 15 Bolivia 29.3 =15 Nicaragua 48.00 16 Dominican Republic 28.8 17 Bolivia 46.00 17 Ecuador 25.3 18 Haiti 45.00 18 Nicaragua 17.0 19 Peru 41.00 19 Haiti 8.9 21

Results focus: Nutrition and obesity in Chile The problem: According to the World Health Organization, being obese or overweight is now the fifth leading risk for death in the world, surpassing underweight as a global public health issue. The rapid modernisation and urbanisation, of the 1980s and 1990s changed the lifestyles of many Chileans and thus the country s health profile. By the end of the 1980s, undernutrition had virtually vanished, but obesity was on the rise. Results of the 2010 National Health Survey found that 25.1% of Chileans are overweight, an increase of 3.2 percentage points from the last survey in 2003. Compared with other countries, Chile s nutritional transition has been particularly rapid. Chile s ranked 6th in a survey of infant and child obesity rates in OECD countries, and it has one of the highest infant and child obesity rates in Latin America, outside of Mexico. 22

Results focus: Nutrition and obesity in Chile Results: Chile The response: In 1998, the newly-created National Board for Health Promotion (VIDA Chile) introduced a calorie reduction policy in Chilean schools. The program focused on decreasing fat, sugar, and salt consumption while incorporating greater amounts of fruits, vegetables, fish, and legumes. The Ministry of Health launched additional initiatives in 2005 and 2010 to reduce obesity prevalence, including the Global Strategy Against Obesity (EGO Chile) and Choose to Live Healthily program (Elige Vivir Sano). Elige Vivir Sano increased physical activity requirements in schools from 2 to 4 hours per week, active plazas were created through the installation of exercise equipment, and media campaigns encouraged exercise at home using household items like a kilo of rice. 23

Results focus: Nutrition and obesity in Chile The results: It is too early to know the population level impacts of these programs, but there is reason for optimism. Although obesity continues to rise, the rate of its ascent is slowing. A recent consumer survey in Chile showed increased interest in healthy food, opening the door for private companies to develop and market healthy, tasty products. Global problems, local solutions: Although the problem of obesity is global, each country needs to develop strategies and solutions appropriate to its local context. Food-security experts in Chile face a new challenge today: developing complementary strategies to ensure that people get enough to eat in a way that fits individual lifestyles, while not eating too much of the unhealthy foods that lead to obesity. 24

Contact information David Humphreys Director, Custom Research, Americas Economist Intelligence Unit Email: DavidHumphreys@eiu.com Irene Mia Regional Director, Latin America and Caribbean Economist Intelligence Unit Email: IreneMia@eiu.com The 2013 GFSI can be found at: http://foodsecurityindex.eiu.com 25