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Atypically high prices continue to negatively impact households’ access to food across the region

  • Food Security Outlook
  • Latin America and the Caribbean
  • March 2022
Atypically high prices continue to negatively impact households’ access to food across the region

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  • Key Messages
  • OUTLOOK BY COUNTRY
  • EVENTS THAT MIGHT CHANGE THE OUTLOOK
  • Key Messages
    • In Central America, high prices are limiting access to food and resulting in Stressed (IPC Phase 2) outcomes for most poor rural households. Crisis (IPC Phase 3) outcomes are expected for the poorest households in the Honduran and Guatemalan Dry Corridor – who suffered significant agricultural losses in 2021 – as well as poor households affected by hurricanes Eta and Iota – who have yet to recover their livelihoods. These households are heavily reliant on the market with no savings and atypical debts and are likely to employ various unsustainable coping strategies as the lean season progresses.

    • Significant increases in the price of fuel across the region have resulted in elevated transportation, food, and other commodity prices. This compounds already above-average food prices following agricultural losses during the 2021 primera and postrera seasons and has limited improvements throughout the season of high demand for agricultural labor.  Markets remain well supplied, however, with local and imported staple foods as formal and informal trade from Mexico continued to be stable.

    • The apante/postrera tardía season is expected to be average. At the same time, weather forecasts indicate a normal start of the next rainy season for most of the region and accumulated rainfall within normal parameters. This will favor the development of 2022 primera crops. However, high prices for agricultural inputs are likely to encourage farmers to reduce cropped area, thus limiting demand for agricultural labor and overall production.

    • In Haiti, reduced income and continued disruptions to livelihood activities have reduced poor households’ access to food, particularly in gang violence-affected neighborhoods in Port-au-Prince, areas suffering residual impacts of the 2021 earthquake, as well as those in dry regions of the country most vulnerable to weather and price shocks. These areas are expected to experience Crisis (IPC Phase 3) outcomes, while others will remain Stressed (IPC Phase 2).

    • Markets are well supplied with local and imported products, despite likely below-average short-cycle winter crops. Near-average conditions are enabling soil preparation for the spring agricultural season, particularly in the South, which is expected to improve agricultural labor opportunities and earning potential for rural households. However, insecurity and sporadic food shortages in the capital, high staple food and transportation prices, and the continued depreciation of the Haitian Gourde are reducing household purchasing power and access to food via market purchase.


    OUTLOOK BY COUNTRY

    Haiti

    • Despite slightly above average rainfall in January, the production of short-cycle winter crops such as maize and beans will be below normal, due to rainfall deficits in November and December 2021. Furthermore, the forecast of an average rainy season from March-May favors an average spring harvest, in the event of adequate external support to farmers, especially in areas affected by last year’s shocks.
    • The Haitian gourde to the US Dollar exchange rate has increased by about 38 percent compared to February 2021. In part due to depreciation and the rising cost of public transport, prices of basic food commodities remain over 80 percent above their five-year averages.
    • Below to near average income from the winter and spring agricultural activities will significantly impact the purchasing power of households who remain dependent on the market for their food consumption in a context of above-average prices. Food insecurity persists among poor households in areas affected by the earthquake, and in dry regions of the country without irrigation systems, which are more vulnerable to irregular rainfall and price shocks. These areas will be in Crisis (IPC Phase 3); the others will remain Stressed (IPC Phase 2).

    For more information, see the Haiti Food Security Outlook for February to September 2022.

    Guatemala

    • Poor households in the eastern and western parts of the Dry Corridor, as well as in areas affected by storms Eta and Iota, have started the year with atypical debts and no savings. In addition to losses in recent harvests, these households will be affected by below-average local employment in sporadic agricultural activities. They will therefore depend on market purchase for their food needs at a time when prices are high, reducing their purchasing power. To meet their food needs, they will reduce the quality and quantity of foods in their diet and employ negative coping strategies that will put their livelihoods at risk, resulting in Crisis (IPC Phase 3) outcomes.
    • Urban areas will experience Minimal (IPC Phase 1) outcomes throughout the outlook period, as the adjustment to the COVID-19 traffic-light alert system is expected to support economic recovery. Meanwhile, rural households will experience Stressed (IPC Phase 2) outcomes in the first half of this outlook period. Below-normal incomes, atypical debt, and high prices for food, transportation, and agricultural inputs will lead households to reduce the quality and quantity of their food. As the lean season progresses, they will be less able to access food; as a result, they will increasingly use negative coping strategies, and will be in Crisis (IPC Phase 3) from June onward.
    • Plantings for the primera season and the sole agricultural season in the Altiplano will benefit from the residual moisture of recent cold fronts, a favorable first rainy season, and an average canícula (a period of hot, dry weather). However, high agricultural input costs will lead to a reduction in their use and in total cropped area, negatively affecting production and associated agricultural activities. In addition, fuel prices will remain above average and are expected to impact the cost of food. October marks the beginning of the harvest of the main cash crops (coffee, sugar, cardamom), which is expected to be within average ranges, and with it the season when demand for agricultural labor is highest. However, high transportation costs could reduce the number of trips and therefore number of days worked for casual laborers.  The economic upturn under way in urban areas is improving job recovery.

    For more information, see the Guatemala Food Security Outlook for February to September 2022.

    Remote Monitoring Countries[1]

    El Salvador, Honduras, and Nicaragua

    • Urban areas in the region are expected to continue experiencing Minimal (IPC Phase 1) outcomes thanks to economic recovery. However, difficulty accessing food as a result of rising inflation will lead to Stressed (IPC Phase 2) outcomes, especially for the region's rural poor households. In addition, Crisis (IPC Phase 3) conditions are expected for very poor households in eastern Honduras and in the Honduran Dry Corridor, who suffered significant agricultural losses in 2021. During the lean season, the proportion of households in Crisis (IPC Phase 3) is expected to increase, particularly in Nicaragua, without a change in area classification.
    • Sharp increases in fuel prices of up to 35 percent over the five-year average have had a negative impact on transportation costs. This, in addition to the climate-related agricultural losses of 2021, is increasing the prices of staple grains and reducing access to food. These conditions are expected to continue throughout the outlook period.
    • The apante/postrera tardía season is expected to yield average results, while weather forecasts indicate an average start to the rainy season for most of the region and rainfall accumulations within normal parameters. This will support the growth of primera crops. However, the high costs of agricultural inputs will result in smaller cropped areas, resulting in below-average production and a decrease in the demand for labor, especially for subsistence farmers.

    For more information, see the El Salvador, Honduras, and Nicaragua Remote Monitoring Update for February to September 2022.

     

    [1] With remote monitoring, an analyst typically works from a nearby regional office, relying on a network of partners for data. Compared to previous series of countries in which FEWS NET has a local office, reports on remote monitoring countries may offer less detail.


    EVENTS THAT MIGHT CHANGE THE OUTLOOK

    Table 1. Possible events over the next eight months that could change the most-likely scenario

    AreaEventImpact on food security outcomes
    RegionalAdditional increases in fuel, food, and transportation pricesA significant increase in the price of fuels and some grains in the international market, as well as the cost of transportation, as a result of the conflict in Ukraine and sanctions on Russia, could cause additional increases in the price of food, fertilizers, and raw materials, further reducing access to food for the poorest households, hindering economic recovery, and increasing the population facing Stressed (IPC Phase 2) and Crisis (IPC Phase 3) outcomes.
    RegionalAbove- or below-average rainfallAbove-average rainfall could cause a delay in planting due to excess moisture. Above- or below-average rainfall could affect crops in early development and result in below-average yields, leaving households with lower harvests than usual and putting them in either Stressed (IPC Phase 2) or Crisis (IPC Phase 3) conditions.
    RegionalHurricanesWhile there is currently nothing forecast for the 2022 hurricane season, the direct or indirect influence of a tropical event could change agricultural production prospects and other sources of income, which in turn could reduce food access and availability; this will depend on the hurricane's trajectory and magnitude. Loss of crops and other livelihoods could increase the population facing Stressed (IPC Phase 2) and Crisis (IPC Phase 3) conditions.
    Haiti

    Intensification or easing of socio-political unrest

    An escalation of violence would reduce market function and overall economic growth and, with it, access to food. This would result in additional households falling into Crisis (IPC Phase 3). Meanwhile, a stabilization of the socio-political environment would improve trade flows and market supply. Thus, fewer areas and households could be in Crisis (IPC Phase 3).
    HaitiA resurgence of African Swine Fever in the Dominican RepublicRestrictions at the Haitian-Dominican border meant to curb the spread of African swine fever would be likely to have a negative impact on this bilateral trade, increasing households facing Stressed (IPC Phase 2) and Crisis (IPC Phase 3) outcomes.
    Guatemala

    An unusually intense and prolonged canícula

    This would affect crop development and result in below-average yields, leaving households with smaller harvests than usual. This would put households in Stressed (IPC Phase 2) or Crisis (IPC Phase 3) conditions.
    GuatemalaA reduction in Mexican maize entering the countryThis could result in higher grain prices and poor households being unable to buy enough to meet their basic food needs. This would worsen outcomes and put more people in Stressed (IPC Phase 2) or Crisis (IPC Phase 3) conditions.

     

    Figures

    Figure 1

    SEASONAL CALENDAR FOR A TYPICAL YEAR

    Source: FEWS NET

    To project food security outcomes, FEWS NET develops a set of assumptions about likely events, their effects, and the probable responses of various actors. FEWS NET analyzes these assumptions in the context of current conditions and local livelihoods to arrive at a most likely scenario for the coming eight months. Learn more here.

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