Food Security Outlook Update

Food prices decline in IRG-controlled areas alongside recovery of the local currency

December 2021

December 2021 - January 2022

February - May 2022

IPC v3.0 Acute Food Insecurity Phase

1: Minimal
2: Stressed
3: Crisis
4: Emergency
5: Famine
Would likely be at least one phase worse without current or programmed humanitarian assistance
FEWS NET classification is IPC-compatible. IPC-compatible analysis follows key IPC protocols but does not necessarily reflect the consensus of national food security partners.

IPC v3.0 Acute Food Insecurity Phase

1: Minimal
2: Stressed
3: Crisis
4: Emergency
5: Famine
Would likely be at least one phase worse without current or programmed humanitarian assistance
FEWS NET classification is IPC-compatible. IPC-compatible analysis follows key IPC protocols but does not necessarily reflect the consensus of national food security partners.

IPC v3.0 Acute Food Insecurity Phase

1: Minimal
2: Stressed
3+: Crisis or higher
Would likely be at least one phase worse without
current or programmed humanitarian assistance
FEWS NET classification is IPC-compatible. IPC-compatible analysis follows key IPC protocols but does not necessarily reflect the consensus of national food security partners.
FEWS NET Remote Monitoring countries use a colored outline to represent the highest IPC classification in areas of concern.

IPC v3.0 Acute Food Insecurity Phase

Presence countries:
1: Minimal
2: Stressed
3: Crisis
4: Emergency
5: Famine
Remote monitoring
countries:
1: Minimal
2: Stressed
3+: Crisis or higher
Would likely be at least one phase worse without
current or programmed humanitarian assistance
FEWS NET Remote Monitoring countries use a colored outline to represent the highest IPC classification in areas of concern.

Key Messages

  • Conflict has caused elevated levels of population displacement in recent months, particularly in Marib, where over 45,000 people were displaced from September to November, and in Al Hudaydah, where over 25,000 people were displaced in November. In Marib, conflict is close to Marib city. In southern Al Hudaydah, a stretch of the main commercial road used to transport goods north from Aden remains closed due to the shifting front lines, which will likely place upward pressure on food prices through increased transportation costs.

  • After losing 50 percent of its value from August to November 2021, the Yemeni Rial (YER) has recovered in areas controlled by the Internationally-Recognized Government (IRG). The recovery began in early December after a change in leadership of the Aden-based Central Bank of Yemen (CBY) and continued later in the month, potentially due to improved supply of foreign currency after two months of the CBY’s new currency auctioning mechanism. As of December 27, 2021, the local currency appreciated to 800 YER/USD, recovering around 53 percent of its value since December 1. In addition, negotiations are ongoing with donors to secure a new, large deposit of foreign currency to support Yemen’s economy.

  • Fuel has generally remained available at official stations in areas controlled by the Sana’a-Based Authorities (SBA) during early December. The availability is likely due to slightly increased levels of fuel imports through the Red Sea ports in September and October 2021. However, official stations have reportedly closed at the end of December and, given very low import volumes in November, fuel shortages are periodically expected at official stations during the outlook period, forcing households to pay higher prices at commercial stations instead. Meanwhile, in IRG-controlled areas, official petrol prices fell in December alongside the currency's appreciation and declining global oil prices. Despite this, prices remained 50 percent higher than in January 2021.

  • In rural areas, many households are likely experiencing a temporary increase in food availability from their own crop production given the recently concluded or ongoing main harvest of cereals. Meanwhile, market-dependent households in areas under IRG control are likely experiencing some improved food access due to declining prices following the recent currency appreciation. However, prices remain significantly above average and, nationwide, the lack of income-earning opportunities and high food prices will likely continue to drive below-average purchasing power during the projection period. Widespread Crisis (IPC Phase 3) outcomes are likely to continue at the governorate level through May 2022, even in the presence of large-scale food assistance, with worst-affected households likely to face Emergency (IPC Phase 4) or Catastrophe (IPC Phase 5) outcomes.

CURRENT SITUATION

Seven years of conflict have led to significant economic contraction, erosion of public services, and damage to livelihoods, with a growing number of people losing their jobs and falling below the poverty line. In November 2021, most conflict incidents affecting civilians occurred in Marib, Sa’ada, and Al Hudaydah, followed by Taizz, according to the Civilian Impact Monitoring Project (CIMP). Food security can rapidly worsen in areas affected by ground fighting as livelihoods, trade, and humanitarian operations may be disrupted, while access to other basic needs (such as healthcare and education) are likely deprioritized. In recent months, insecurity and shifting frontlines have caused significantly elevated levels of population displacement, particularly in Al Hudaydah and Marib. Displacement separates households from livelihoods and assets, reducing their ability to cope and respond to shocks as they have already exhausted most of their resources. Currently, Yemen is experiencing its colder winter period, when the needs of displaced people typically increase. Many live in makeshift shelters in open areas and lack basic items such as warm clothing and blankets, and are more vulnerable to infectious diseases due to their living conditions and inability to afford medical expenses.

In Al Hudaydah, UN OCHA reports that shifting frontlines of conflict displaced over 25,000 people in November. While fighting has slowed in mid-December, it remains more active in neighboring northwestern Taizz, according to a Yemeni security firm. Despite the slow-down, the main commercial road connecting Aden to Al Hudaydah’s districts of Al Khukhah, Hays, and Jabal Ra's (via the western coastal road) remains closed as of late December. Traders use this road to supply food to northern parts of the country in territory controlled by the Sana’a-Based Authorities (SBA) and the Internationally-Recognized Government (IRG). Due to the road closure, traders and truck drivers are currently using a rougher alternate road through Al Qubaytah. This is increasing transportation costs, putting additional upward pressure on food prices. Additionally, due to the road closure, key informants report that shortages of fuel and other commercial supplies were occurring in At Tuhayta and Hays as of early December 2021.

In Marib, IOM estimates that conflict displaced over 45,000 people from September to November as the frontlines shifted closer to Marib city. Intense fighting continues as of mid-December, with SBA forces launching daily attacks on the main barrier remaining between them and the southern entrance to Marib city, according to a Yemeni security firm. More recently, in late December, SBA forces took control of most remaining territory in Al Jawf.

Availability of foreign currency through legal channels has improved in recent months, though improvements are expected to be unsustainable in the absence of significant external financial support and sustained economic recovery. Despite the early October announcement of a new round of the Letter of Credit import financing mechanism, the Central Bank of Yemen (CBY) in Aden had not issued any currency to traders as of mid-December. However, on November 9, 2021, the CBY in Aden began selling foreign currency (US dollars) once per week through an open auction, reportedly at the advice of the IMF as a short-term measure to alleviate pressure on the exchange rate.[1] Commercial banks can now provide traders with hard currency through this system, reducing demand for hard currency from the parallel market. The results of the CBY’s eighth auction in late December suggest that demand for hard currency has decreased recently, as 70 percent of the total auctioned 15 million USD was sold at 730 YER/USD, lower than the auction rate. In addition, discussions regarding support to Yemen’s economy are taking place with donors on several levels. According to news reports on December 28, negotiations led by the Yemeni Prime Minister with Saudi Arabia and other Gulf countries are ongoing regarding a potential new deposit of foreign currency—and relevant regulation mechanisms—to support Yemen’s economy.

After months of accelerated depreciation, the local currency has recovered significantly in December. According to FAO data, the Yemeni Rial (YER) in IRG-controlled areas lost 50 percent of its value in just four months, reaching 1,510 YER/USD in the fourth week of November, on average (Figure 1). On December 1, the exchange rate in Aden (and some governorates under IRG control) exceeded 1,700 YER/USD for the first time in Yemen’s history. More recently, in early December, IRG authorities made changes to the board of directors of the CBY in Aden, prompting appreciation of the local currency to reach 1,300 YER/USD. However, the local currency remains unstable and, following this, it depreciated to reach 1,395 YER/USD in Aden as of December 14. More recently, as of December 27, the local currency appreciated to 800 YER/USD, recovering around 53 percent of its value since its peak on December 1, 2021, potentially linked to an improved supply of foreign currency after more than a month of the CBY’s new currency auctioning mechanism.

In 2021, significant fuel price increases have caused fuel to become increasingly unaffordable for households and businesses nationwide. In addition to putting upward pressure on food prices and straining livelihoods dependent on fuel—such as in the agriculture and transportation sectors—this is also impacting the provision of essential services, including the delivery of safe drinking water and the functioning of health facilities (of which only half are currently operating). However, in late December, the Yemen Petroleum Company (YPC) in Aden announced a second reduction in official petrol prices within one week. With this, in IRG-controlled areas, official petrol prices declined from 21,800 YER/20 liters to 13,200 YER/20 liters in December—representing a total 39 percent decline—due to currency appreciation and declining global oil prices in November. Nevertheless, official petrol prices remain 50 percent higher in December than in January 2021. Meanwhile, in SBA areas, key informants report that fuel generally remained available at both official and commercial stations throughout most of December, supported by a slight increase in fuel import levels through Yemen’s western Red Sea ports of Al Hudaydah and As Salif in September and October, according to data from UNVIM (Figure 2). However, November witnessed a decline in fuel imports, with import volumes 89 percent lower than the 2020 monthly average, and official stations reportedly closed at the end of December. Fuel prices have been generally stable in SBA areas since August 2021, though official petrol prices were still 46 percent higher in November compared to the same time last year, according to data from FAO.

Living conditions in the country have generally continued to deteriorate due to the poor economy. In 2021, food prices and the prices of other essential commodities have increased significantly beyond already above-average levels in IRG-controlled areas. By November 2021, the cost of the Minimum Food Basket (MFB) in areas under IRG control was 91 percent higher than in January 2021, according to WFP. As a result, foods that were previously commonly consumed—such as meat, fish, milk, and basmati rice—have become a luxury for most people, and traders have shifted to importing lower-quality goods due to declining purchasing power. More recently, with the currency appreciation in IRG-controlled areas, local authorities are conducting regular field visits to supervise traders' agreements to reduce prices. As a result, key informants report that prices of basic food commodities in IRG areas have declined by 30 percent or more alongside reductions in other living costs, including transportation, improving purchasing power for households. However, given many previously unsuccessful attempts by the government to regulate the exchange market, traders still lack confidence that these measures will sustain the improved value of the currency. As such, some traders and shop owners have refused to adjust food prices, though their shops have reportedly been closed by the government as a result.

Meanwhile, in SBA-controlled areas, the cost of the MFB in November 2021 was 4 percent higher than in October 2021 and 24 percent higher than in January 2021, according to data from FAO. Food price increases are mainly due to high fuel prices. More recently, the road closure in southern Al Hudaydah is further contributing to high transportation costs.  

Wages for laborers have generally continued to rise due to inflation but have not increased at the same rate as food prices. On average, at the national level, wage rates for unskilled labor were 52 percent higher in November 2021 than the same time last year and more than double the five-year average, according to data from FAO. However, the amount of wheat flour that unskilled laborers could purchase using a day’s wages fell by 23 percent compared to the same time last year and by 25 percent relative to the five-year average. The worst-affected households live in IRG-controlled areas, where unskilled laborers could purchase only 10.5 kg of wheat flour from one full day’s work in November 2021, which is 35 percent less than the five-year average and the lowest value on record since FAO started data collection in January 2016. At the governorate level, purchasing power relative to the five-year average has declined most significantly in inland Hadhramaut, Shabwah, Al Maharah, and Abyan (Figure 3). Though a full analysis of recent improvements in purchasing power in IRG-controlled areas in December will be forthcoming after price data become available, purchasing power is not expected to have improved beyond levels observed in December last year.

Seven years of conflict have heavily impacted Yemen’s agricultural sector which, prior to the conflict, provided a source of income for an even greater majority of Yemen’s population throughout the production and marketing chains. In recent years, fuel shortages and significantly above-average and rising fuel prices have forced many farmers—mainly those relying on underground water for irrigation—to shift to rainfed production, reducing crop production levels, according to FAO reporting. More recently, rainfall during the July to October 2021 rainy season was above average, which likely reduced farmers’ reliance on fuel for irrigation water. Despite this, high production costs—including for agricultural inputs and fuel—continue to constrain crop production. Production levels from the recent cereal harvest (which concluded in mid-November in highland areas and is ongoing in late December in lowland areas) are expected to be similar to previous recent years and below pre-conflict levels.

With the onset of winter, weather typically becomes drier and temperatures typically decrease. As such, vegetation and natural pastures are currently scarce across much of the country, increasing livestock owners’ reliance on fodder. In addition, the risk of livestock disease spread increases during the cold season. Due to limited access to veterinary services and high prices of livestock inputs, some livestock owners with limited financial capacity are likely being forced to sell their livestock, potentially at prices even lower than production costs.

Incidence of COVID-19 has continued to decline in Yemen since the peak of the third wave in September, though underreporting remains a concern due to limited testing capacity in most parts of the country and given the general absence of reporting in SBA areas. About 786,000 vaccine doses have been administered as of December 1 and, while it is unclear how many people have received a second dose, the estimated figure is thought to represent less than two percent of the Yemeni population. Yemenis in SBA areas have been largely unable to receive second doses of the vaccine due to the expiration of the remaining doses from a batch of 10,000 delivered to Sana’a, allegedly resulting from delays in being cleared by authorities. In Aden, over 100,000 additional doses of the AstraZeneca vaccine were delivered in late November.

No additional travel restrictions or requirements have been imposed on Yemeni workers crossing into Saudi Arabia. Pre-existing vaccination and negative PCR test requirements remain in place. However, it is expected that many Yemeni workers are now able to meet requirements, and key informants report that immigration services are functioning more smoothly, allowing many Yemeni workers to return to their workplaces in Saudi Arabia. In terms of international and intra-regional trade, import and export activity has resumed normally in Yemen, apart from global supply chain disruptions affecting prices and availability of commodities in domestic markets.  

Even though the Yemen Humanitarian Response Plan was only 58 percent funded as of mid-December 2021, humanitarian programs have been scaled up in recent months. In September and October 2021, an average of 12 million individuals (38 percent of the country’s population) received emergency food assistance from Food Security and Agriculture Cluster (FSAC) partners, with rations equivalent to approximately 80 percent of households’ total monthly caloric needs. While most beneficiaries receive monthly rations, beneficiaries in some SBA-controlled areas are still receiving assistance once every two months, with the greatest number in Ibb, Sana’a, Al Bayda, and Amanat Al Asimah (Sana’a City). In Marib, the number of individuals reached with emergency food assistance also increased, on average, from June/July/August to September/October, from an estimated 500,000 to 600,000 beneficiaries.[2] In Lahj, the proportion of assisted individuals reduced slightly from 68 to 64 percent of the population.

Of the 12.2 million who received FSAC emergency food assistance in October 2021, 71 percent received in-kind assistance, 17 percent received commodity vouchers, and 12 percent received cash assistance. Beneficiaries who receive cash assistance—mainly in IRG-controlled areas—remain vulnerable to food price increases. According to recent information from key informants, partners agreed to implement the September 2021 revision of the cost of the MFB in November. Most partners—including WFP—implemented the revised value for cash assistance beneficiaries in November and December, though beneficiaries in Aden received a reduced amount (63,000 YER instead of 91,000 YER) in December.

In rural areas, many households are expected to be experiencing a temporary improvement in access to food from their own crop production given the recently concluded or ongoing main harvest of cereals, though these households are likely still depending on market purchases to some extent. As a result, a lower number of households are likely facing Crisis (IPC Phase 3) or worse outcomes in rural areas across the country. Meanwhile, in IRG-controlled areas, rapidly declining purchasing power continues to affect millions, leading many households to exhaust their remaining assets and adopt more severe negative coping strategies. Despite recent reductions in food prices following the appreciation of the local currency in IRG-controlled areas, purchasing power has likely not yet improved beyond levels recorded at the same time last year, and the situation remains very fragile. Nationwide, poor households with limited or no income sources are likely employing relatively more severe coping strategies such as reducing their daily number of meals to one per day. Even in the presence of large-scale humanitarian assistance, Crisis (IPC Phase 3) and Crisis! (IPC Phase 3!) outcomes are expected at the area level, with some groups likely facing Emergency (IPC Phase 4). Poor households who lack access to humanitarian assistance and who are market dependent with no sources of income are expected to be worst affected.


[1] In August 2021, FEWS NET reported that the CBY in Aden had received a 665 million USD deposit from the IMF. However, as of December 21, 2021, the CBY had not yet withdrawn the allocated funds, with discussions around the withdrawal mechanism ongoing.

[2] Expected to be approach half the population, though population estimates vary due to the governorate’s growing population of displaced households

UPDATED ASSUMPTIONS

The assumptions used to develop FEWS NET’s most likely scenario for the period of October 2021 to May 2022 remain unchanged, except the following:

  • In addition to the conflict dynamics laid out on the October Food Security Outlook—including the expectation for continued high levels of conflict between SBA and IRG forces and the likelihood that SBA forces will take Marib city—the following additional details are noted. In Sana’a and Taizz, airstrikes by the Saudi-led coalition are expected to continue at current levels. The seizure of the main port in Al Hudaydah, strengthening the SBA’s position, and the capture of the main north-south highway in Al-Jawbah district (Marib) weakening IRG’s ability to resupply forces, are likely to contribute to the siege of Marib city and its subsequent collapse during the outlook period.
  • Given typical patterns of road closures in Yemen, the main commercial road running from Aden through the districts of Al Khukhah, Hays, and Jabal Ra's is expected to remain closed during the projected period.
  • Levels of civil unrest are likely to increase in southern areas affected by high prices and inadequate provision of public services, including electricity and water. Temporary access constraints are expected during protests. Hadhramaut and Shabwah are among the areas of highest concern given current high levels of civil unrest.
  • The exchange rate in IRG-controlled areas is expected to fluctuate but remain below 1,000 YER/USD throughout the projection period. This trajectory is based on recent economic policy developments, including signs that IRG authorities and the CBY in Aden are taking more serious steps to combat exchange rate speculation and control markets as they seek financial support from donors.
  • Fuel imports are expected to remain similar to current levels, with month-to-month volatility expected. In SBA areas, shortages of fuel at official stations are periodically expected given low import volumes in November and recently escalated tensions between SBA and Saudi Arabia (which could make it less likely for the Saudi-led coalition to grant clearances). As a result, households are expected to pay higher prices at commercial stations. Meanwhile, in IRG areas, fuel prices are expected to fluctuate alongside the exchange rate and global oil prices.
  • Food prices are generally expected to remain near current levels. In IRG areas, driven by recent appreciation of the Rial and lower fuel prices, prices of essential food and non-food items are expected to remain similar to recently reduced levels or decline further throughout the scenario period. Prices of staple wheat flour (imported) are expected to remain below 770 YER/kg, on average, across IRG areas. However, in SBA-controlled areas, longer travel routes and high transportation costs will continue to put upward pressure on commodity prices. Overall, prices of staple wheat flour are expected to remain below 430 YER/kg on average across SBA areas.
  • According to international ensemble forecasts, above-average mean temperatures are most likely across Yemen throughout the projection period.

PROJECTED OUTLOOK THROUGH MAY 2022

In rural areas, food from the main harvest of cereals is expected to support households’ food consumption for around two months following the conclusion of harvesting. As such, many rural households are expected to continue to experience temporarily improved food availability from their own production in the coming months. Nevertheless, food from own production contributes little to households’ overall food needs, and many households will continue to rely on markets during this time. Throughout the projection period, rural households in lowland areas are generally expected to experience seasonal improvements in food availability and income as the agricultural season progresses. Meanwhile, harvesting of fruits (especially citrus in the northern highlands in late 2021/early 2022 and mango in the Tihama lowland from March to May 2022) is expected to provide some income for many poor households throughout the production and marketing chains. In contrast, highland areas are expected to see a seasonal decline in the availability of food and income throughout most of the projection period, reaching seasonally low levels during the local lean season in February/March 2022, before improving with the winter harvest around April.

Given improved expectations for food prices and purchasing power, poor households in IRG-controlled areas are expected to experience some reduction in food consumption gaps relative to recent months, with fewer households expected to face Crisis (IPC Phase 3) or worse outcomes than previously projected. However, nationwide, the lack of income-earning opportunities and above-average food prices are expected to continue to push purchasing power significantly below levels observed during the pre-crisis era, with consumption gaps expected to persist for many poor households.     

An increase in humanitarian needs is anticipated among displaced populations during the projection period, due to both an increase in the number displaced and an increase in needs among displaced households. Many displaced households are expected to face food consumption gaps, particularly among those impacted by active conflict and access constraints in Hays and At Tuhayta districts of Al Hudaydah and in Maqbanah district of in Taizz.      

Overall, throughout the projection period, the number of poor households facing Crisis (IPC Phase 3), Crisis! (IPC Phase 3!), or worse outcomes is expected to increase in areas directly impacted by conflict, in rural highland areas, and among households who exhaust coping strategies due to limited income-earning opportunities and weak purchasing power. Crisis (IPC Phase 3) and Crisis! (IPC Phase 3!) outcomes are expected to persist at the governorate level. Areas that are directly impacted by conflict remain of highest concern.

Events that Might Change the Outlook

Possible events over the next eight months that could change the most-likely scenario:

Area

Event

Impact on food security outcomes

IRG areas

Central Bank of Yemen in Aden receives another large deposit of hard currency

Unconfirmed news reports indicate that Saudi Arabia and the UAE have each agreed to support Yemen’s economy with a deposit of 2 billion USD, for a total of 4 billion USD. In addition, discussions regarding the withdrawal mechanism of the previously allocated 665 million USD from the IMF are ongoing. Should news of these impending deposits be confirmed, this would likely lend some additional support to the value of the local currency. Should these funds be received during the projection period, the CBY in Aden would experience an increase in liquidity and would likely provide additional financing to mechanisms to support traders’ access to foreign currency, such as the new currency auction system or the Letter of Credit import finance mechanism. Along with strong regulations and control measures, this would support traders’ access to hard currency through legal channels, contributing to reduced demand for hard currency from the parallel market. This development, alongside the combatting of illegal money speculation by traders, would likely result in further appreciation of the currency (see below).

IRG areas

Local currency appreciates significantly, beyond what is anticipated (to levels around 500 YER/USD)

Prices of food and non-food items would likely decline further, leading to further improvements in households’ purchasing power and a reduction in the number of households facing consumption gaps. However, many households would likely not recover quickly given continued limited access to income and eroded coping capacity. Many households would likely continue facing Crisis (IPC Phase 3) or Crisis! (IPC Phase 3!) outcomes throughout the projection period.

About this Update

This monthly report covers current conditions as well as changes to the projected outlook for food insecurity in this country. It updates FEWS NET’s quarterly Food Security Outlook. Learn more about our work here.

About FEWS NET

The Famine Early Warning Systems Network is a leading provider of early warning and analysis on food insecurity. Created by USAID in 1985 to help decision-makers plan for humanitarian crises, FEWS NET provides evidence-based analysis on approximately 30 countries. Implementing team members include NASA, NOAA, USDA, USGS, and CHC-UCSB, along with Chemonics International Inc. and Kimetrica.
Learn more About Us.

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