World Bank helps Moldova to face rising food prices

The World Bank (WB) is to grant $7 million to Moldova to help it cope with the challenges determined by the rising food price crisis. The additional financing to the Moldova Health Services and Social Assistance Project aims to improve nutrition among new, expecting mothers, and children and to provide cash transfers to social institutions which provide food to children, the elderly, and other vulnerable groups to compensate for food price increases during the upcoming 2008/2009 winter season, Info-Prim Neo has learnt from the WB. “This financing provides some badly needed support to people who are being hit hardest by the sharp increase in food prices,” said Melanie Marlett, World Bank Country Manager for Moldova. “By targeting the most vulnerable groups, we’re hoping to ensure that an increase in food costs won’t mean a decrease in the health of the poorest Moldovans.” The impact of the global food crisis on Moldova’s market and social conditions has to be put into the context of the catastrophic drought in 2007 and its consequences for food production in the country. While generally Moldova is able to sustain its food self-sufficiency, the 2007 agricultural season was marked by a dramatic loss of crops and livestock. The most telling statistic is that the harvest of cereal crops in 2007 was only 30% of the 2006 harvest, while production of vegetables decreased by 33% and livestock fell by 25%. Overall losses in the sector amounted approximately to US$ 1 billion, leading to a production shock which has spanned into the 2008 agricultural season, reads a communique by the WB. Under normal circumstances, stocks of food would be replenished through imports from regional and global agricultural commodity markets. But the current global food squeeze has further increased Moldova’s short-term food supply vulnerability. Relative food scarcity in the country has led to a marked spike in food inflation, which is currently the main contributing source to the CPI inflation. Year on year food inflation in May, 2008 had risen to 24%, with bread, fruit, and milk prices rising by 20, 56, 24 and percent respectively. Tentative estimates indicate that with food inflation at 24%, Moldova could face a 13% increase in poverty rates, further exacerbating the challenge of ensuring access to food by the poor. A particular and direct nutritional challenge is represented by the situation of institutionalized groups, including children and elderly, who currently live on a ration valued at less than two dollars per day. The goal of the project is to improve the people's health. There are 3 components to the original project: the Health System Modernization component, the Social Assistance and Welfare component, Institutional Support component.. The grant will be made available to Moldova under the World Bank’s US$1.2 billion Global Fast-Track Facility for Food Crisis launched at the end of May. The new facility is designed to address the immediate needs of the most vulnerable countries through support to social safety nets, school feeding programs, food production, and other interventions.