Risks of Multiple Breadbasket Failures

In our paper, we compare the global ramifications of two hypothetical multiple breadbasket failures caused by extreme climate events in different regions. The first examines extreme weather shocks in Southern and Eastern Africa and South Asia. The second analyzes the impacts of MBBFs concentrated in North America and Europe. For illustrative purposes we considered crop yield declines in the affected regions of 25% for all crops. We estimate the ex-ante ramifications of such a scenario using IFPRI’s global MIRAGRODEP model, which is well-suited to assess the transmission of agricultural productivity shocks through local and global market channels and implications for household incomes and food security.

This study examines Major Breadbasket Failure (MBBF) scenarios to understand how global food security and markets would respond depending on where the failure occurs in high-income regions or in low- and middle-income regions.

Our findings show that MBBFs can lead to substantial increases in global food insecurity and poverty. They also show that these shocks are dramatically more serious if they occur in developing countries where many people are vulnerable to poverty and food insecurity.

An MBBF causing a 25% loss in yields in Eastern and Southern Africa and South Asia would cause an estimated 2 percentage point increase in the global prevalence of undernourishment (compared with the baseline), affecting 160 million more people. In the affected regions, food insecurity could increase between 4 and 10 percentage points, as farm households are hurt by lower output and incomes and other vulnerable households by sharply rising food prices.

Simultaneous shocks to production in the high-income countries in Europe and North America will have large impacts on global staple food prices that indirectly affect households in poor countries. However, we find that these impacts would be much more serious if the extreme weather hits production areas in low- and middle-income countries.

An MBBF in North America and Europe would cause a bigger fall in global incomes and a larger increase in world food prices, as a result of their large weight in the global economy and in international trade. The impact on global food security and poverty would be much more muted, with farm incomes rising in most developing country regions. Countries in Eastern and Southern Africa, however, with many net buyers of food, however, would suffer more poverty and food insecurity in this scenario.

Figure 1 Comparison of food insecurity impacts of MBBFs in HICs and LMICs in the year of the shock, % points

A natural disaster may not just cause a temporary decline in agricultural production but sustained reductions from loss of physical and human capital. These losses are perhaps most obvious with livestock grazing systems where livestock inventories can be severely depleted during droughts. Droughts, floods and fires may also cause physical loss of physical and natural capital such as water management systems, buildings, fruit trees and standing timber.

Such capital losses, especially when associated with MBBFs in developing-country regions would exacerbate the impacts on global poverty and food insecurity. Yet, permanent losses may be limited even in these scenarios, if subsequent recovery of agricultural production and gradual recovery of agricultural capital stock

Our analysis has not, as yet, considered policy responses. Popular responses to adverse climate shocks in the past have included reductions in tariffs on food products in importing countries and the imposition of export bans in shock-affected producer countries. Such responses have  exacerbated the magnitude of global food price shocks and further increased price volatility, and worsening food security. In follow-up research, we plan to assess the effects of such trade policy responses, as well as of domestic price insulation measures to inform policy makers of what anticipatory measures would effectively protect the food security of vulnerable populations against global market shocks driven by extreme weather.