Presentation prepared by Xinshen Diao, Paul Dorosh, Josee Randriamamonjy, Jenny Smart, James Thurlow, all with the International Food Policy Research Institute, Washington DC. This is part of the Global Crisis Country Series.
Senegal: Impacts of the Ukraine and Global Crisis on Food Systems and Poverty
1. Version: 15 June 2022
Senegal
Impacts of the Ukraine and Global
Crisis on Food Systems and Poverty
Xinshen Diao, Paul Dorosh, Josee Randriamamonjy, Jenny Smart, James Thurlow
International Food Policy Research Institute, Washington DC
These country studies are conducted by IFPRI with financial support from
BMGF, FCDO, and USAID. All studies use data and models developed with
ongoing support from BMGF, USAID and the CGIAR’s “Foresight and Metrics”
initiative.
Xinshen Diao (x.diao@cgiar.org) | Paul Dorosh (p.dorosh@cgiar.org) | James Thurlow (j.thurlow@cgiar.org)
2. Version: 15 June 2022
Overview
• Series of country case studies
• Economywide modeling
• Capture world market shocks
• Estimate impacts on economy, agri-food
system, poverty, food security, etc.
• Simulate policy responses
• Three phases of analysis:
1. Initial data collection and impact assessment
2. Data revisions and analysis of broad policy options
• Cash transfers, food aid, and fertilizer subsidies
• Fiscal implications for national governments
3. In-country engagement and tailored policy analysis
Impact
assessment
Policy
analysis
Country coverage
Countries with IFPRI RIAPA models
May June
July
3. Version: 15 June 2022
11%
-13%
100%
56%
34%
88%
101%
Maize Rice Wheat Palm oil Crude oil Natural gas Fertilizer
Change in real world prices (June 2021 to April 2022)
30 Jun 2021 - 31 Jan 2022 31 Jan 2022 - 30 Apr 2022
30 Jun 2021 - 30 Apr 2022
Shocks | World Food, Fuel and Fertilizer Prices
World price
Trade share
Direct use
Indirect use
Incomes
How big is the increase in world price?
How important are imports in local market?
Can local producers substitute for imports?
Which sectors use the product as an input?
Which other sectors are affected via supply chains?
What kinds of workers and households earn
incomes within the affected sectors?
Final use Which households consume the affected products?
Impact Channel Considerations World Price Shocks
Source: World Bank Pink Sheets
Global data
4. Version: 15 June 2022
Shocks | World Food, Fuel and Fertilizer Prices
World price
Trade share
Direct use
Indirect use
Incomes
How big is the increase in world price?
How important are imports in local market?
Can local producers substitute for imports?
Which sectors use the product as an input?
Which other sectors are affected via supply chains?
What kinds of workers and households earn
incomes within the affected sectors?
Final use Which households consume the affected products?
Impact Channel Considerations Supply and Demand
Supply
(% by source)
Demand
(% by use)
Senegal data
Source: IFPRI Senegal RIAPA Model
73%
86%
36%
27%
100%
14%
64%
Maize Wheat Edible oils Oil products
Imports
Domestic
51% 44%
31%
89%
49% 56%
63%
11%
6%
Maize Wheat Edible oils Oil products
Exports
Final use
Input use
+ Others = 100%
+ + +
0.6% 0.5% 2.6% 4.7%
Products’ share of the
value of total demand
throughout the economy
5. Version: 15 June 2022
Shocks | World Food, Fuel and Fertilizer Prices
World price
Trade share
Direct use
Indirect use
Incomes
How big is the increase in world price?
How important are imports in local market?
Can local producers substitute for imports?
Which sectors use the product as an input?
Which other sectors are affected via supply chains?
What kinds of workers and households earn
incomes within the affected sectors?
Final use Which households consume the affected products?
Impact Channel Considerations Consumption Baskets
Senegal data
Source: IFPRI Senegal RIAPA Model
13.6%
28.4%
9.0%
33.3%
12.0%
44.2%
55.9%
45.7%
56.0%
47.7%
42.3%
35.4%
51.9%
34.1%
48.9%
All households Rural Urban Poor Nonpoor
Composition of household consumption spending
Cereals & edible oils Other foods Non-food goods & services
6. Version: 15 June 2022
Shocks | Fertilizer Response (crop productivity effect)
Adoption
Application
Price
Demand
Response
What share of cultivated land uses fertilizers?
How much fertilizer is being used?
(i.e., fertilizer application rate)
How big is the domestic fertilizer price increase?
How do farmers react to rising fertilizer prices?
(i.e., price elasticity of fertilizer demand)
How do yields change with reduced fertilizer use?
(i.e., fertilizer response ratio)
Impact Channel Considerations Fertilizer Adoption Rate
Source: Harmonized Survey on Household Living Conditions (EHCVM) 2018/19, Senegal
Timing When is the fertilizer needed?
Senegal data
40.9%
27.2%
70.8%
2.1%
1.3%
29.4%
9.8%
96.8%
80.5%
52.4%
52.4%
93.7%
42.7%
Maize
Sorghum & millet
Rice
Other cereals
Pulses
Groundnuts
Cassava
Irish potatoes
Sweet potatoes
Leafy vegetables
Other vegetables
Cotton
Fruits
Share of cultivated land using fertilizer
7. Version: 15 June 2022
Shocks | Fertilizer Response (crop productivity effect)
Adoption
Application
Price
Demand
Response
What share of cultivated land uses fertilizers?
How much fertilizer is being used?
(i.e., fertilizer application rate)
How big is the domestic fertilizer price increase?
How do farmers react to rising fertilizer prices?
(i.e., price elasticity of fertilizer demand)
How do yields change with reduced fertilizer use?
(i.e., fertilizer response ratio)
Impact Channel Considerations
Crop Calendar
Source: FEWSNET Senegal
Timing When is the fertilizer needed?
Planting for Senegal’s 2022 season is underway
Senegal
8. Version: 15 June 2022
Results | GDP and Employment
• National GDP and employment declines
• Negative terms-of-trade shock
(i.e., negative effect of higher import prices outweighs positive
effect of higher export prices)
• Rising import costs reduces spending on
domestically produced goods
• Falling production leads to job losses
• Impacts occur throughout the economy
• Agri-food system GDP and employment also fall
• GDP declines in both primary agriculture and off-
farm agri-food sectors (e.g., processing, trading)
• Larger GDP declines in off-farm agri-food system
(equal to 21% of overall GDP losses in the country)
• Job losses only in off-farm sectors, and agriculture’s
jobs are largely not affected
• More job losses outside agri-food systems (equal to
75% of overall job losses in the country)
Source: IFPRI Senegal RIAPA Model
Contribution to total change
GDP
Jobs
-0.7%
-0.6%
-0.5%
-0.8%
-0.7%
-1.7%
-0.9%
0.0%
-3.5%
-2.3%
-4.0% -3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5%
Whole economy
Whole AFS
Agriculture
Off-farm
Outside AFS
Agri-food
system
Change in GDP and employment due to
food, fuel and fertilizer shocks (%)
GDP Employment
11%
21%
68%
Agriculture
Off-farm
Outside AFS
25%
75%
9. Version: 15 June 2022
Results | Drivers of GDP Losses
• Fuel shock drives most of the decline in national GDP
• Agri-food GDP losses mostly driven by fertilizer shocks
• Fertilizer directly affects primary agricultural production
• Disrupts downstream processing via supply chains
• Off-farm also adversely affected by higher fuel prices,
which raise the cost of transport services
• Fuel shock has little impact on agri-food GDP
• GDP losses outside the agri-food system driven all by
higher fuel prices
• Higher transaction costs
• Lower consumer demand
Source: IFPRI Senegal RIAPA Model
Contribution
to change
-0.1%
-0.3%
-0.6%
-0.02%
-0.5%
0.0%
-0.7%
-0.1%
-0.4%
-0.6%
-0.2%
0.04%
-0.7%
-0.6%
-0.5%
-0.8%
-0.7%
Whole economy
Whole AFS
Agriculture
Off-farm
Outside AFS
Agri-food
system
Percentage change in real GDP due to food, fuel
and fertilizer shocks (%)
Food prices Fuel prices Fertilizer prices & response
17%
67%
16%
10. Version: 15 June 2022
Results | Household Consumption
Source: IFPRI Senegal RIAPA Model
• Household consumption falls significantly
• Much larger than GDP losses as households are hit twice, by
rising prices and falling incomes
• Rising fuel price is an important driver of consumption
losses similar as for GDP losses, while higher food prices is
also important
• Importance of shocks differs across population groups:
• Fertilizer shocks important for rural and poor households
• Rely more on farm incomes
• Consume more domestically-produced foods
• Fuel shocks important for urban and nonpoor households
• Earn more income outside the agri-food system
• More import-intensive consumer basket
• Consume products with larger transaction cost margins
• Food prices affect all households
• Higher food consumption share for rural households, means
slightly larger impacts
Contribution
to change
-1.5%
-1.7%
-1.4%
-1.5%
-1.5%
-2.2%
-2.0%
-2.4%
-2.1%
-2.3%
-0.4%
-0.9%
-0.2%
-1.0%
-0.3%
-4.2%
-4.6%
-4.0%
-4.5%
-4.1%
National
Rural
Urban
Poor
Nonpoor
Percentage change in real consumption
Food prices Fuel prices Fertilizer prices & response
36%
54%
10%
11. Version: 15 June 2022
Results | Changes in Inequality
• Differential effects on poor/nonpoor households drive
changes in inequality:
• Fuel shocks cause larger consumption losses for
households in the fourth quintile
• Fertilizer shocks affect lowest quintile much more than
top quintile
• Food prices have larger impact on households in the third
quintile
• Overall, inequality rises
• Larger consumption losses in poorer quintiles, driven
mostly by fertilizer shock, causes inequality to increase
Source: IFPRI Senegal RIAPA Model
-6.0%
-5.5%
-5.0%
-4.5%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
Q1 Q2 Q3 Q4 Q5
Percentage change in quintile consumption
Food prices
Fuel prices
Fertilizer prices & response
Combined food, fuel and fertilizer shocks
12. Version: 15 June 2022
Share of population
falling into poverty
Results | Poverty
• Poverty rises significantly
• Headcount rate up 2.5% points
• About 400 thousand more people pushed into
poverty
• Larger increase in poverty in rural areas
• 65% of expanded poor population
• Larger increase in rural poverty headcount rate
• Rural population slightly larger than urban population
• Mainly driven by fuel and food price shocks
Source: IFPRI Senegal RIAPA Model
Contribution
to change
0.9%
0.8%
1.0%
1.2%
1.0%
1.4%
0.3%
0.1%
0.4%
2.5%
2.0%
2.8%
National
Urban
Rural
Change in poverty headcount rate (%-point)
Food prices Fuel prices Fertilizer prices & response
152
66
87
201
81
120
44
10
33
397
157
240
National
Urban
Rural
Change in poor population (1000s)
Food prices Fuel prices Fertilizer prices & response
38%
51%
11%
40%
60%
Urban
Rural
13. Version: 15 June 2022
• Global price shocks have differential effects on the cost of
six food groups for a healthy reference diet
• Reference diet is the EAT-Lancet’s “healthy” diet
thresholds for the six major food groups
• Rising prices for edible oils (in added fats) and cereals (in
staples) push up their costs, while falling incomes reduce
demand for vegetables, fruits, dairy, and proteins (meats &
fish), and thus lower their real cost
Results | Diet Quality
Source: IFPRI Senegal RIAPA Model
• Rising food prices and falling incomes cause diet quality to
worsen for many households
• Prior to the crisis, few households had consumption levels and
diversity needed for a healthy diet
• Rising food prices cause 1.6 million people to become deprived
in at least one additional food group
• Urban population accounts for slightly more of the
deterioration in diet quality
0.6%
0.3%
-0.2%
-0.2%
-0.4%
-0.3%
1.4%
Net change in
cost of healthy
diet
Contributions of
food groups to
change
Change in the real cost of a healthy
reference diet caused by rising world
prices (%)
Added fats
Proteins
Dairy
Fruits
Vegetables
Staples
15.3%
20.6%
13.2%
19.4%
17.6%
13.8%
Shares of six food groups
in total cost of a healthy
diet prior to the crisis
Added fats
Proteins
Dairy
Fruits
Vegetables
Staples
1,533
817
716
1,636
863
774
National
Urban
Rural
Number of people to become deprived in at least one
additional food group (1000s)
Food prices Fuel prices Fertilizer prices & response
14. Version: 15 June 2022
Headlines
• Food, fuel and fertilizer shocks lead to large reductions in
GDP and employment in Senegal
• Agri-food system adversely affected, alongside the broader
economy
• Agriculture is particularly at risk to fertilizer shocks, esp. if it
leads to lower fertilizer use in the current season
• Poor and rural households are especially vulnerable
• Larger income losses
• Greater increase in poverty (esp. number of poor people)
• Many become deterioration in diet quality
• Next steps
• Evaluate policy options available to governments and
development partners to mitigate impacts on food systems,
poverty, and food insecurity (e.g., cash transfers, food aid,
fertilizer subsidies, fiscal support, etc.)
Impact
assessment
Policy
analysis
Country coverage
May June
July